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The Resource Curse: A Corporate Transparency Channel


  • Durnev, Artyom
  • Guriev, Sergei


We propose and investigate a new channel through which the resource curse - a stylized fact that countries rich in natural resources grow slower - operates. Predatory governments are more likely to expropriate corporate profits in natural-resource industries when the price of resources is higher. Corporations whose profits are more dependent on the price of resources can mitigate the risk of expropriation by reducing corporate transparency. Lower transparency, in turn, leads to inefficient capital allocation and slower economic growth. Using a panel of 72 industries from 51 countries over 16 years, we demonstrate that the negative effect of expropriation risk on corporate transparency is stronger for industries that are especially vulnerable to expropriation, in particular, for industries whose profits are highly correlated with oil prices. Controlling for country, year, and industry fixed effects, we find that corporate transparency is lower in more oil price-dependent industries when the price of oil is high and property rights are poorly protected. Furthermore, corporate growth is hampered in oil price-sensitive industries because of less efficient capital allocation driven by adverse effects of lower transparency.

Suggested Citation

  • Durnev, Artyom & Guriev, Sergei, 2007. "The Resource Curse: A Corporate Transparency Channel," CEPR Discussion Papers 6547, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6547

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    References listed on IDEAS

    1. Christian Leuz & Felix Oberholzer-Gee, "undated". "Political Relationships, Global Financing and Corporate Transparency," Center for Financial Institutions Working Papers 03-16, Wharton School Center for Financial Institutions, University of Pennsylvania.
    2. Marianne Bertrand & Sendhil Mullainathan, 2000. "Do CEOs Set Their Own Pay? The Ones Without Principals Do," NBER Working Papers 7604, National Bureau of Economic Research, Inc.
    3. Black, Bernard S. & Love, Inessa & Rachinsky, Andrei, 2006. "Corporate governance indices and firms' market values: Time series evidence from Russia," Emerging Markets Review, Elsevier, vol. 7(4), pages 361-379, December.
    4. Daniel Berkowitz & Yadviga Semikolenova, 2006. "Privatization with Government Control: Evidence from the Russian Oil Sector," William Davidson Institute Working Papers Series wp826, William Davidson Institute at the University of Michigan.
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    Cited by:

    1. Kaznacheev, Peter, 2013. "Resource Rents and Economic Growth," Published Papers kazn01, Russian Presidential Academy of National Economy and Public Administration.
    2. van der Ploeg, Frederick, 2006. "Challenges and Opportunities for Resource Rich Economies," CEPR Discussion Papers 5688, C.E.P.R. Discussion Papers.
    3. Sergei Guriev & Alexander Plekhanov & Konstantin Sonin, 2009. "Development Based on Commodity Revenues?," Sciences Po publications info:hdl:2441/106i379teb8, Sciences Po.
    4. Ramos, Sofia B. & Veiga, Helena, 2011. "Risk factors in oil and gas industry returns: International evidence," Energy Economics, Elsevier, vol. 33(3), pages 525-542, May.
    5. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    6. Art Durnev & Vihang Errunza & Alexander Molchanov, 2009. "Property rights protection, corporate transparency, and growth," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(9), pages 1533-1562, December.
    7. Kaznacheev, Peter, 2013. "Resource Rents and Economic Growth: Economic and institutional development in countries with a high share of income from the sale of natural resources. Analysis and recommendations based on internatio," EconStor Research Reports 121950, ZBW - German National Library of Economics.
    8. Steven Poelhekke & Frederick van der Ploeg, 2010. "Do Natural Resources Attract FDI? Evidence from non-stationary sector level data," DNB Working Papers 266, Netherlands Central Bank, Research Department.

    More about this item


    Autocracy; Expropriation; Industry Growth; Investment Efficiency; Oil Reserves; Property rights; Resource Curse; Transparency and Disclosure;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L7 - Industrial Organization - - Industry Studies: Primary Products and Construction
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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