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Democracy and the curse of natural resources

  • Antonio Cabrales
  • Esther Hauk

We propose a theoretical model to explain empirical regularities related to the curse of natural resources. This is an explicitly political model which emphasizes the behavior and incentives of politicians. We extend the standard voting model to give voters political control beyond the elections. This gives rise to a new restriction into our political economy model: policies should not give rise to a revolution. Our model clarifies when resource discoveries might lead to revolutions, namely, in countries with weak institutions. Natural resources may be bad for democracy by harming political turnover. Our model also suggests a non-linear dependence of human capital on natural resources. For low levels of democracy human capital depends negatively on natural resources, while for high levels of democracy the dependence is reversed. This theoretical finding is corroborated in cross section regressions.

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Paper provided by FEDEA in its series Working Papers with number 2009-07.

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Date of creation: Feb 2009
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Handle: RePEc:fda:fdaddt:2009-07
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  1. Acemoglu,Daron & Robinson,James A., 2006. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521855266, September.
  2. Georgy Egorov & Sergei Guriev & Konstantin Sonin, 2006. "Media Freedom, Bureaucratic Incentives, and the Resource Curse," Working Papers w0063, Center for Economic and Financial Research (CEFIR), revised Jun 2006.
  3. Teresa Garcia-Milà & Albert Marcet & Eva Ventura, 2010. "Supply Side Interventions and Redistribution," Economic Journal, Royal Economic Society, vol. 120(543), pages 105-130, 03.
  4. Ola Olsson, 2004. "Conflict Diamonds," DEGIT Conference Papers c009_013, DEGIT, Dynamics, Economic Growth, and International Trade.
  5. Simeon Djankov & José García-Montalvo & Marta Reynal-Querol, 2005. "The curse of aid," Working Papers 257, Barcelona Graduate School of Economics.
  6. Gylfason, Thorvaldur, 2000. "Natural Resources, Education, and Economic Development," CEPR Discussion Papers 2594, C.E.P.R. Discussion Papers.
  7. Gernot Doppelhofer & Ronald I. Miller & Xavier Sala-i-Martin, 2000. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (Bace) Approach," OECD Economics Department Working Papers 266, OECD Publishing.
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