IDEAS home Printed from https://ideas.repec.org/p/oxf/oxcrwp/002.html
   My bibliography  Save this paper

Voracious Transformation of a Common Natural Resource into Productive Capital

Author

Listed:
  • Frederick van der Ploeg

Abstract

We analyze a power struggle about the control of natural resources where competing factions in society have a private stock of financial assets and a common stock of natural resources with inadequately defined private property rights. We solve a dynamic common-pool problem and obtain political economy variants of the Hotelling rule for resource depletion and the Hartwick saving rule necessary to sustain constant consumption in an economy with exhaustible natural resources. The rate of increase in the price of natural resources and resource depletion are faster than demanded by the Hotelling rule. As a result, the country substitutes away from resources to capital too rapidly so that it saves and invests more than a homogenous society. The power struggle boosts output, but depresses aggregate consumption and social welfare. Genuine saving is nevertheless zero in a fractionalized society, since the too rapid depletion of natural resources is exactly in line with the too rapid accumulation of physical capital. World Bank measures of genuine saving are likely to be over-estimated. This exacerbates the pzzle of why many resource-rich countries experience negative genuine saving rates.

Suggested Citation

  • Frederick van der Ploeg, 2008. "Voracious Transformation of a Common Natural Resource into Productive Capital," OxCarre Working Papers 002, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  • Handle: RePEc:oxf:oxcrwp:002
    as

    Download full text from publisher

    File URL: http://www.oxcarre.ox.ac.uk/images/stories/papers/ResearchPapers/oxcarrerp200802.pdf
    Download Restriction: no

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aronsson, Thomas & Johansson-Stenman, Olof, 2014. "Genuine Saving and Conspicuous Consumption," Umeå Economic Studies 900, Umeå University, Department of Economics.
    2. Tenryu, Yohei, 2013. "The Role of the Private Sector under Insecure Property Rights," MPRA Paper 74893, University Library of Munich, Germany, revised 27 Oct 2016.
    3. Laurent-Lucchetti, Jérémy & Santugini, Marc, 2012. "Ownership risk and the use of common-pool natural resources," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 242-259.
    4. repec:spr:joptap:v:163:y:2014:i:2:d:10.1007_s10957-013-0462-x is not listed on IDEAS
    5. van der Ploeg, Frederick & Rohner, Dominic, 2012. "War and natural resource exploitation," European Economic Review, Elsevier, vol. 56(8), pages 1714-1729.
    6. Klarizze Anne Martin Puzon, 2013. "Cost-Reducing R&D in the Presence of an Appropriation Alternative: An Application to the Natural Resource Curse," Working Papers 2013.30, Fondazione Eni Enrico Mattei.
    7. van der Ploeg, Frederick, 2006. "Challenges and Opportunities for Resource Rich Economies," CEPR Discussion Papers 5688, C.E.P.R. Discussion Papers.
    8. Raul Caruso, 2012. "Differentials in property Rights in a two-sector economy," Revue d'économie politique, Dalloz, vol. 122(2), pages 257-278.
    9. Corneo Giacomo, 2011. "Stakeholding as a New Development Strategy for Saudi Arabia," Review of Middle East Economics and Finance, De Gruyter, vol. 7(1), pages 1-19, May.
    10. Thampanishvong Kannika, 2012. "Provision of Public Goods with the Presence of Inter-Class Conflicts," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(1), pages 1-29, April.
    11. van der Ploeg, Frederick, 2010. "Why do many resource-rich countries have negative genuine saving?: Anticipation of better times or rapacious rent seeking," Resource and Energy Economics, Elsevier, vol. 32(1), pages 28-44, January.
    12. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    13. Ngo Van Long & Fabien Prieur & Klarizze Puzon & Mabel Tidball, 2013. "Markov Perfect Equilibria in Differential Games with Regime Switching Strategies," Working Papers 13-06, LAMETA, Universtiy of Montpellier, revised Jan 2014.
    14. Eisenkopf, Gerald, 2014. "The impact of management incentives in intergroup contests," European Economic Review, Elsevier, vol. 67(C), pages 42-61.
    15. Gerald Eisenkopf, 2013. "The Impact of Leadership Incentives in Intergroup Contests," Working Paper Series of the Department of Economics, University of Konstanz 2013-06, Department of Economics, University of Konstanz.
    16. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," Working Paper Series of the Department of Economics, University of Konstanz 2013-26, Department of Economics, University of Konstanz.
    17. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," TWI Research Paper Series 87, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    18. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.
    19. Eisenkopf, Gerald, 2013. "Management Impact in an Experimental Intergroup Contest," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79863, Verein für Socialpolitik / German Economic Association.
    20. Frederick van der Ploeg, 2009. "Rapacious Resource Depletion and Excessive Investment Fuelled by Rival Factions and Insecure Property Rights," OxCarre Working Papers 016, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    21. Frederick Van der Ploeg, 2010. "Rapacious Resource Depletion, Excessive Investment and Insecure Property Rights," CESifo Working Paper Series 2981, CESifo Group Munich.

    More about this item

    Keywords

    Exhaustible resources; Hotelling rents; Hartwick rule; sustainable consumption; common pool; fractionalization;

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oxf:oxcrwp:002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antonella Surdi) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/oxcaruk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.