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Local Natural Resource Curse?

Author

Listed:
  • Lars-Erik Borge

    () (Department of Economics, Norwegian University of Science and Technology)

  • Pernille Parmer

    () (Department of Economics, Norwegian University of Science and Technology)

  • Ragnar Torvik

    () (Department of Economics, Norwegian University of Science and Technology)

Abstract

The large variation in revenues among Norwegian local governments can partly be explained by revenues collected from hydropower production. This revenue variation, combined with good data availability, can be used to extend the literature on the re- source curse in two directions. First, to ensure that there is no problem of endogeneity in the analysis we obtain a purely exogenous measure of local revenue by instrumenting the variation in hydropower revenue, and thus total revenue, by topology, average pre- cipitation and meters of river in steep terrain. Second, using data for revenue derived from hydropower production in Norwegian local governments we test the 'Rentier State' hypothesis; that revenue derived from natural resources should harm efficiency more than revenue derived from other sources such as taxation. Although we do find that higher local government revenue reduces the efficiency in production of public goods, we do not find that this effect is stronger for natural resource revenue than for other revenue.

Suggested Citation

  • Lars-Erik Borge & Pernille Parmer & Ragnar Torvik, 2013. "Local Natural Resource Curse?," Working Paper Series 14913, Department of Economics, Norwegian University of Science and Technology.
  • Handle: RePEc:nst:samfok:14913
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    File URL: http://www.svt.ntnu.no/iso/WP/2013/11_localcurse_LEB_PP_RT.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Pernille Parmer, 2014. "Hydropower Policy and Energy Saving Incentives," Working Paper Series 16014, Department of Economics, Norwegian University of Science and Technology.
    2. Solé-Ollé, Albert & Viladecans-Marsal, Elisabet, 2017. "Housing booms and busts and local fiscal policy," ZEW Discussion Papers 17-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Acar, Sevil & Karahasan, Burhan Can, 2015. "Uncovering Norway’s regional disparities with respect to natural riches," REGION, European Regional Science Association, vol. 2, pages 1-31.
    4. Asatryan, Zareh & Heinemann, Friedrich & Yeter, Mustafa & Rubio, Eulalia & Rinaldi, David & Zuleeg, Fabian, 2016. "Public sector reform: How the EU budget is used to encourage it. Study," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 147039.
    5. repec:eee:pubeco:v:152:y:2017:i:c:p:47-54 is not listed on IDEAS
    6. Iacono, Roberto, 2016. "No blessing, no curse? On the benefits of being a resource-rich southern region of Italy," Research in Economics, Elsevier, vol. 70(2), pages 346-359.
    7. Maldonado, Stanislao, 2014. "The Non-Monotonic Political Effects of Resource Booms," MPRA Paper 85649, University Library of Munich, Germany, revised 18 Dec 2017.
    8. Erica Pani & Nancy Holman, 2014. "A Fetish and Fiction of Finance: Unraveling the Subprime Crisis," Economic Geography, Clark University, vol. 90(2), pages 213-235, April.
    9. James Cust & Torfinn Harding & Pierre-Louis Vezina, 2017. "Dutch Disease Resistance: Evidence from Indonesian Firms," OxCarre Working Papers 192, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    10. Petar Kurecic & Filip Kokotovic, 2017. "Examining the "Natural Resource Curse" and the Impact of Various Forms of Capital in Small Tourism and Natural Resource-Dependent Economies," Economies, MDPI, Open Access Journal, vol. 5(1), pages 1-24, February.
    11. Pernille Parmer, 2014. "Natural Rerources and public Sector Wages," Working Paper Series 16114, Department of Economics, Norwegian University of Science and Technology.

    More about this item

    Keywords

    resource curse; rentier state; identification; local government; political economy;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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