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Public expenses, credit and natural capital: Substitution or complementarity?

  • Jean-Louis COMBES

    ()

    (Centre d'Etudes et de Recherches sur le Développement International)

  • Pascale COMBES MOTEL

    ()

    (Centre d'Etudes et de Recherches sur le Développement International)

  • Philippe DELACOTE

    (Institut National de la Recherche Agronomique (INRA))

Improving access to capital through credit and public spendings is an important step toward development and poverty alleviation. At the same time, deforestation-related activities, like agricultural expansion, can be seen as relying on natural capital, through the depletion of forest resources and the use of land in an extensive way. It is then important to better understand how a better access to capital influences the use of land as a natural capital. This paper assesses the relationship between financial development, public spendings and deforestation. Are they substitute or complement? Our econometric analysis shows that deforestation is positively correlated to access to credit and public spendings, which gives some evidence that natural capital is a complement to credit and public spendings.

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Paper provided by CERDI in its series Working Papers with number 201409.

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Length: 20
Date of creation: 2014
Date of revision:
Handle: RePEc:cdi:wpaper:1549
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