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Экономическая Политика, Качество Институтов И Механизмы "Ресурсного Проклятия"
[Economic Policy, Quality of Institutions, and Mechanisms of Resource Curse]

Author

Listed:
  • Polterovich, Victor
  • Popov, Vladimir
  • Tonis, Alexander

Abstract

Sachs, Warner (1995) were among the first to claim that «resource curse» is real and that resource abundant economies do indeed grow more slowly than the others. Hundreds of papers were published since then supporting the «resource curse» thesis and offering new explanations of mechanisms and effects that may inhibit growth in resource rich economies. Several recent papers, however (Alexeev, Conrad, 2005; Stijns, 2005; Brunnschweiler, 2006) question the mere existence of the «resource curse» and make it necessary to reconsider the hypotheses about the impact of resource abundance on economic growth. This paper compares various theories of «resource curse» with a special focus on models allowing for the varying — positive or negative — impact of resources on development depending on the quality of institutions and economic policies. Several mechanisms leading to a potentially inefficient use of resources are being examined; it is demonstrated that each of these mechanism is associated with market imperfections and can be «corrected» with appropriate government policies. Empirical evidence seems to suggest that resource abundant countries have on average lower budget deficits and inflation, higher foreign exchange reserves and higher inflows of FDI. Besides, lower domestic fuel prices that are typical for resource rich countries, have a positive effect on long term growth even though they are associated with losses resulting from higher energy intensity. On top of that resource abundance allows to reduce income inequalities. So, on balance, resource wealth turns out to be conducive to growth, especially in countries with strong institutions. However, resource abundance makes democratic political regimes very unstable — they tend to gravitate towards authoritarianism. A game theoretical model is developed to show that democracy in resource abundant countries is inherently unstable and the empirical evidence on the stability of resource democracies is provided.

Suggested Citation

  • Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2007. "Экономическая Политика, Качество Институтов И Механизмы "Ресурсного Проклятия"
    [Economic Policy, Quality of Institutions, and Mechanisms of Resource Curse]
    ," MPRA Paper 22454, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:22454
    as

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    File URL: https://mpra.ub.uni-muenchen.de/22454/1/MPRA_paper_22454.pdf
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    References listed on IDEAS

    as
    1. Thorvaldur Gylfason & Gylfi Zoega, 2002. "Inequality and Economic Growth: Do Natural Resources Matter?," CESifo Working Paper Series 712, CESifo Group Munich.
    2. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, January.
    3. Bulte, Erwin H & Damania, Richard & Deacon, Robert, 2003. "Resource Abundance, Poverty and Development," University of California at Santa Barbara, Economics Working Paper Series qt66z854gv, Department of Economics, UC Santa Barbara.
    4. R. Ahrend., 2006. "How to Sustain Growth in a Resource Based Economy? The Main Concepts and their Application to the Russian Case," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
    5. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
    6. Deacon, Robert & Mueller, Bernardo, 2004. "Political Economy and Natural Resource Use," University of California at Santa Barbara, Economics Working Paper Series qt68g1n1v8, Department of Economics, UC Santa Barbara.
    7. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    8. Ben-David, Dan, 1996. "Trade and convergence among countries," Journal of International Economics, Elsevier, vol. 40(3-4), pages 279-298, May.
    9. Michael Alexeev & Robert Conrad, 2009. "The Elusive Curse of Oil," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 586-598, August.
    10. Gylfason, Thorvaldur, 2004. "Natural Resources and Economic Growth: From Dependence to Diversification," CEPR Discussion Papers 4804, C.E.P.R. Discussion Papers.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    resource curse; economic growth;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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