IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v108y2014icp136-149.html
   My bibliography  Save this article

Extending the concept of the resource curse: Natural resources and public spending on health

Author

Listed:
  • Cockx, Lara
  • Francken, Nathalie

Abstract

This paper extends the concept of the resource curse by studying whether and through which transmission channels natural resource wealth affects social spending. Even though the availability of vast natural capital reserves has commonly been linked to the neglect of human development, most of the literature has continued to focus on economic performance. This paper is the first to empirically investigate the link between natural resource wealth and public health expenditures in light of the hypothesis that resource wealth as a source of unearned state income enhances state autonomy and increases volatility, which leads to policies that fail to prioritize human development. Using a large panel dataset of world countries covering the period from 1995 to 2009, we find a robust, significant inverse relationship between natural resource dependence, and even abundance, and public health spending over time. The effect remains significant after controlling for state autonomy, volatility, and other factors. These findings have implications for national authorities as well as the extractive industry. Governments should be made accountable for natural resource wealth and correct taxation could provide additional resources, earmarked for health. The extractive industry could increase their investments in sustainable Corporate Social Responsibility operations, specifically in the health sector.

Suggested Citation

  • Cockx, Lara & Francken, Nathalie, 2014. "Extending the concept of the resource curse: Natural resources and public spending on health," Ecological Economics, Elsevier, vol. 108(C), pages 136-149.
  • Handle: RePEc:eee:ecolec:v:108:y:2014:i:c:p:136-149
    DOI: 10.1016/j.ecolecon.2014.10.013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800914003231
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thorvaldur Gylfason & Gylfi Zoega, 2002. "Inequality and Economic Growth: Do Natural Resources Matter?," CESifo Working Paper Series 712, CESifo Group Munich.
    2. Brunnschweiler, Christa N. & Bulte, Erwin H., 2008. "The resource curse revisited and revised: A tale of paradoxes and red herrings," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 248-264, May.
    3. Angus Deaton, 2003. "Health, Inequality, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 113-158, March.
    4. Brigitte Dormont & Michel Grignon & Hélène Huber, 2006. "Health expenditure growth: reassessing the threat of ageing," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 947-963.
    5. Neumayer, Eric, 2004. "Does the "Resource Curse" hold for Growth in Genuine Income as Well?," World Development, Elsevier, vol. 32(10), pages 1627-1640, October.
    6. Philip Keefer & Stuti Khemani, 2005. "Democracy, Public Expenditures, and the Poor: Understanding Political Incentives for Providing Public Services," World Bank Research Observer, World Bank Group, vol. 20(1), pages 1-27.
    7. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
    8. Bhattacharyya, Sambit & Hodler, Roland, 2010. "Natural resources, democracy and corruption," European Economic Review, Elsevier, vol. 54(4), pages 608-621, May.
    9. Thorvaldur Gylfason & Gylfi Zoega, 2006. "Natural Resources and Economic Growth: The Role of Investment," The World Economy, Wiley Blackwell, vol. 29(8), pages 1091-1115, August.
    10. Alok Bhargava & Dean T. Jamison & Lawrence J. Lau & Christopher J. L. Murray, 2006. "Modeling the effects of health on economic growth," World Scientific Book Chapters,in: Econometrics, Statistics And Computational Approaches In Food And Health Sciences, chapter 20, pages 269-286 World Scientific Publishing Co. Pte. Ltd..
    11. Shelton, Cameron A., 2008. "The aging population and the size of the welfare state: Is there a puzzle?," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 647-651, April.
    12. Jonathan Isham & Michael Woolcock & Lant Pritchett & Gwen Busby, 2005. "The Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth," World Bank Economic Review, World Bank Group, vol. 19(2), pages 141-174.
    13. Mare Sarr & Katharina Wick, 2010. "Resources, conflict and development choices: public good provision in resource rich economies," Economics of Governance, Springer, vol. 11(2), pages 183-205, April.
    14. World Bank, 2011. "The Changing Wealth of Nations : Measuring Sustainable Development in the New Millennium," World Bank Publications, The World Bank, number 2252, August.
    15. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    16. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
    17. Clemente, Jesus & Marcuello, Carmen & Montanes, Antonio & Pueyo, Fernando, 2004. "On the international stability of health care expenditure functions: are government and private functions similar?," Journal of Health Economics, Elsevier, vol. 23(3), pages 589-613, May.
    18. Sanjeev Gupta & Marijn Verhoeven & Erwin R. Tiongson, 2003. "Public spending on health care and the poor," Health Economics, John Wiley & Sons, Ltd., vol. 12(8), pages 685-696.
    19. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    20. Hodler, Roland, 2006. "The curse of natural resources in fractionalized countries," European Economic Review, Elsevier, vol. 50(6), pages 1367-1386, August.
    21. Carmignani, Fabrizio, 2013. "Development outcomes, resource abundance, and the transmission through inequality," Resource and Energy Economics, Elsevier, vol. 35(3), pages 412-428.
    22. Ning Ding & Barry C. Field, 2005. "Natural Resource Abundance and Economic Growths," Land Economics, University of Wisconsin Press, vol. 81(4).
    23. Kevin K. Tsui, 2011. "More Oil, Less Democracy: Evidence from Worldwide Crude Oil Discoveries," Economic Journal, Royal Economic Society, vol. 121(551), pages 89-115, March.
    24. Di Matteo, Livio, 2005. "The macro determinants of health expenditure in the United States and Canada: assessing the impact of income, age distribution and time," Health Policy, Elsevier, vol. 71(1), pages 23-42, January.
    25. Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," CSAE Working Paper Series 2007-15, Centre for the Study of African Economies, University of Oxford.
    26. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
    27. Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor & Zoega, Gylfi, 1999. "A Mixed Blessing," Macroeconomic Dynamics, Cambridge University Press, vol. 3(02), pages 204-225, June.
    28. Auty, Richard M., 1994. "Industrial policy reform in six large newly industrializing countries: The resource curse thesis," World Development, Elsevier, vol. 22(1), pages 11-26, January.
    29. Desmet, Klaus & Ortuño-Ortín, Ignacio & Wacziarg, Romain, 2012. "The political economy of linguistic cleavages," Journal of Development Economics, Elsevier, vol. 97(2), pages 322-338.
    30. Lago-Peñas, Santiago & Cantarero-Prieto, David & Blázquez-Fernández, Carla, 2013. "On the relationship between GDP and health care expenditure: A new look," Economic Modelling, Elsevier, vol. 32(C), pages 124-129.
    31. Clara Delavallade, 2006. "Corruption and distribution of public spending in developing countries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 30(2), pages 222-239, June.
    32. Getzen, Thomas E., 2000. "Health care is an individual necessity and a national luxury: applying multilevel decision models to the analysis of health care expenditures," Journal of Health Economics, Elsevier, vol. 19(2), pages 259-270, March.
    33. Billor, Nedret & Hadi, Ali S. & Velleman, Paul F., 2000. "BACON: blocked adaptive computationally efficient outlier nominators," Computational Statistics & Data Analysis, Elsevier, vol. 34(3), pages 279-298, September.
    34. de Soysa, Indra & Gizelis, Theodora-Ismene, 2013. "The natural resource curse and the spread of HIV/AIDS, 1990–2008," Social Science & Medicine, Elsevier, vol. 77(C), pages 90-96.
    35. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422.
    36. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
    37. Carmignani, Fabrizio & Avom, Desire, 2010. "The social development effects of primary commodity export dependence," Ecological Economics, Elsevier, vol. 70(2), pages 317-330, December.
    38. Anne D. Boschini & Jan Pettersson & Jesper Roine, 2007. "Resource Curse or Not: A Question of Appropriability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(3), pages 593-617, September.
    39. Vittorio Daniele, 2011. "Natural Resources and the 'Quality' of Economic Development," Journal of Development Studies, Taylor & Francis Journals, vol. 47(4), pages 545-573.
    40. Lane, Philip R., 2003. "The cyclical behaviour of fiscal policy: evidence from the OECD," Journal of Public Economics, Elsevier, vol. 87(12), pages 2661-2675, December.
    41. Hans Pitlik & Björn Frank & Mathias Firchow, 2010. "The demand for transparency: An empirical note," The Review of International Organizations, Springer, vol. 5(2), pages 177-195, June.
    42. Frederick van der Ploeg & Steven Poelhekke, 2009. "Volatility and the natural resource curse," Oxford Economic Papers, Oxford University Press, vol. 61(4), pages 727-760, October.
    43. Benedikt Goderis & Samuel W. Malone, 2011. "Natural Resource Booms and Inequality: Theory and Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 388-417, June.
    44. repec:cup:apsrev:v:105:y:2011:i:01:p:1-26_00 is not listed on IDEAS
    45. Graham A. Davis, 2013. "Replicating Sachs and Warner's Working Papers on the Resource Curse," Journal of Development Studies, Taylor & Francis Journals, vol. 49(12), pages 1615-1630, December.
    46. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
    47. Meena Seshamani & Alastair Gray, 2004. "Ageing and health-care expenditure: the red herring argument revisited," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 303-314.
    48. Kolstad, Ivar & Wiig, Arne, 2009. "Is Transparency the Key to Reducing Corruption in Resource-Rich Countries?," World Development, Elsevier, vol. 37(3), pages 521-532, March.
    49. Anca M. Cotet & Kevin K. Tsui, 2013. "Oil and Conflict: What Does the Cross Country Evidence Really Show?," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(1), pages 49-80, January.
    50. Christa N. Brunnschweiler & Erwin H. Bulte, 2009. "Natural resources and violent conflict: resource abundance, dependence, and the onset of civil wars," Oxford Economic Papers, Oxford University Press, vol. 61(4), pages 651-674, October.
    51. Fum, Ruikang Marcus & Hodler, Roland, 2010. "Natural resources and income inequality: The role of ethnic divisions," Economics Letters, Elsevier, vol. 107(3), pages 360-363, June.
    52. Anindya Sen, 2005. "Is Health Care a Luxury? New Evidence from OECD Data," International Journal of Health Economics and Management, Springer, vol. 5(2), pages 147-164, June.
    53. Matthias Basedau & Jann Lay, 2009. "Resource Curse or Rentier Peace? The Ambiguous Effects of Oil Wealth and Oil Dependence on Violent Conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 46(6), pages 757-776, November.
    54. Michael Alexeev & Robert Conrad, 2009. "The Elusive Curse of Oil," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 586-598, August.
    55. Torsten Persson & Guido Tabellini, 2004. "Constitutional Rules and Fiscal Policy Outcomes," American Economic Review, American Economic Association, vol. 94(1), pages 25-45, March.
    56. Nils Petter Gleditsch & Peter Wallensteen & Mikael Eriksson & Margareta Sollenberg & Hã…Vard Strand, 2002. "Armed Conflict 1946-2001: A New Dataset," Journal of Peace Research, Peace Research Institute Oslo, vol. 39(5), pages 615-637, September.
    57. Friedrich Breyer & Joan Costa-Font & Stefan Felder, 2010. "Ageing, health, and health care," Oxford Review of Economic Policy, Oxford University Press, vol. 26(4), pages 674-690, Winter.
    58. repec:dau:papers:123456789/3881 is not listed on IDEAS
    59. Gylfason, Thorvaldur, 2008. "Development and Growth in Mineral-Rich Countries," CEPR Discussion Papers 7031, C.E.P.R. Discussion Papers.
    60. Mick Moore, 2001. "Political Underdevelopment: What causes ‘bad governance’," Public Management Review, Taylor & Francis Journals, vol. 3(3), pages 385-418, September.
    61. William F. Maloney & Daniel Lederman, 2008. "In search of the Missing Resource Curse," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2008), pages 1-57, August.
    62. Dilan Ölcer, 2009. "Extracting the Maximum from the EITI," OECD Development Centre Working Papers 276, OECD Publishing.
    63. Joan Costa‐Font & Marin Gemmill & Gloria Rubert, 2011. "Biases in the healthcare luxury good hypothesis?: a meta‐regression analysis," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(1), pages 95-107, January.
    64. Papyrakis, Elissaios & Gerlagh, Reyer, 2004. "The resource curse hypothesis and its transmission channels," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 181-193, March.
    65. Bulte, Erwin H. & Damania, Richard & Deacon, Robert T., 2005. "Resource intensity, institutions, and development," World Development, Elsevier, vol. 33(7), pages 1029-1044, July.
    66. Murthy, Vasudeva N.R. & Okunade, Albert A., 2009. "The core determinants of health expenditure in the African context: Some econometric evidence for policy," Health Policy, Elsevier, vol. 91(1), pages 57-62, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amin Karimu & George Adu & George Marbuah & Justice Tei Mensah & Franklin Amuakwa-Mensah, 2017. "Natural Resource Revenues and Public Investment in Resource-rich Economies in Sub-Saharan Africa," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 107-130, November.
    2. Wigley, Simon, 2017. "The resource curse and child mortality, 1961–2011," Social Science & Medicine, Elsevier, vol. 176(C), pages 142-148.
    3. Gadom Djal Gadom & Armand Mboutchouang Kountchou & Gbetoton Nad ge Ad le Djossou & Gilles Quentin Kane & Abdelkrim Araar, 2017. "The impact of oil exploitation on wellbeing in Chad," Working Papers PMMA 2017-06, PEP-PMMA.
    4. de Soysa, Indra & Gizelis, Ismene Theodora, 2016. "More heat, less light! The resource curse & HIV/AIDS: A reply to Olivier Sterck," Social Science & Medicine, Elsevier, vol. 150(C), pages 268-270.
    5. Kim, Dong-Hyeon & Lin, Shu-Chin, 2017. "Human capital and natural resource dependence," Structural Change and Economic Dynamics, Elsevier, vol. 40(C), pages 92-102.
    6. repec:ebl:ecbull:eb-17-00542 is not listed on IDEAS
    7. Morten Endrikat, 2017. "Natural resource rents, autocracy and the composition of government spending," MAGKS Papers on Economics 201727, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. Cockx, Lara & Francken, Nathalie, 2016. "Natural resources: A curse on education spending?," Energy Policy, Elsevier, vol. 92(C), pages 394-408.
    9. repec:taf:ginixx:v:44:y:2018:i:1:p:88-106 is not listed on IDEAS

    More about this item

    Keywords

    Natural resources; Health; Public spending; Political economy;

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:108:y:2014:i:c:p:136-149. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.