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Relationship Between Natural Resources and Institutions

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  • Mathieu Couttenier

    () (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics)

Abstract

This article analyses through a rent seeking model, the relationship between institutions' quality and natural resources. Depending on the institutions quality, each country has a specific structural capacity to stand natural resources dependency. It is shown that for each country, a threshold exists, such that beyond this point, any additional amounts of natural resources begin to have a negative impact on institutions. As the stock of natural resources increases, this improves the expected profitability of rent seeking, which in turn lowers the quality of institutions. The mechanism comes from a new balance of power within the country. However, the institutional degradation's intensity is determined by social interactions and depends on both the resources nature and their appropriability level. The inverse U-shaped curve obtained from empirical studies presented in this article supports the natural resources non-monotonic effect on institutions found in the model.

Suggested Citation

  • Mathieu Couttenier, 2008. "Relationship Between Natural Resources and Institutions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00332490, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00332490
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00332490
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    Cited by:

    1. Couttenier, Mathieu & Sangnier, Marc, 2015. "Living in the Garden of Eden: Mineral resources and preferences for redistribution," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 243-256.
    2. Felipe Starosta de Waldemar, 2010. "How costly is rent-seeking to diversification : an empirical approach," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00461486, HAL.
    3. Couttenier, Mathieu & Sangnier, Marc, 2015. "Living in the Garden of Eden: Mineral resources and preferences for redistribution," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 243-256.
    4. Mathieu Couttenier & Marc Sangnier, 2010. "Living in the garden of Eden: Mineral resources foster individualism," Working Papers halshs-00564920, HAL.

    More about this item

    Keywords

    rent seeking; Natural resources; institutions; rent seeking.; Ressources naturelles; recherche de rentes.;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • F10 - International Economics - - Trade - - - General

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