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Education, Rent-seeking and the Curse of Natural Resources

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  • Wadho, Waqar Ahmed

Abstract

Empirical evidence suggests that natural resources breed corruption and reduce educational attainments, dampening economic growth. The theoretical literature has treated these two channels separately, with natural resources affecting growth either through human capital or corruption. In this paper, we argue that education and corruption are jointly determined and depend on the endowment of natural resources. Natural resources affect the incentives to invest in education and rent seeking that in turn affect growth. Whether natural resources stimulate growth or induce a poverty-trap crucially depends on inequality in access to education and political participation, as well as on the cost of political participation. For lower inequality and higher cost of political participation, a high-growth and a poverty-trap equilibrium co-exist even with abundant natural resources.

Suggested Citation

  • Wadho, Waqar Ahmed, 2011. "Education, Rent-seeking and the Curse of Natural Resources," MPRA Paper 37831, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:37831
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    References listed on IDEAS

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    Cited by:

    1. Gadom Djal Gadom & Armand Mboutchouang Kountchou & Gbetoton Nad ge Ad le Djossou & Gilles Quentin Kane & Abdelkrim Araar, 2017. "The impact of oil exploitation on wellbeing in Chad," Working Papers PMMA 2017-06, PEP-PMMA.
    2. Wadho, Waqar & Ayaz, Umair, 2017. "Government Size and Economic Growth in an Endogenous Growth Model with Rent-seeking," GLO Discussion Paper Series 131, Global Labor Organization (GLO).
    3. repec:khe:scajes:v:3:y:2017:i:4:p:35-49 is not listed on IDEAS
    4. repec:eee:jrpoli:v:53:y:2017:i:c:p:328-339 is not listed on IDEAS
    5. repec:gam:jsusta:v:10:y:2018:i:5:p:1338-:d:143249 is not listed on IDEAS

    More about this item

    Keywords

    Natural resources; Resource curse; Growth; Human capital; Rent-seeking; Corruption;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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