The resource curse revisited: governance and natural resources

Busse, Matthias; Gröning, Steffen

doi:10.1007/s11127-011-9804-0

Cited by 145 publications

(56 citation statements)

References 34 publications

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“…The attempts to explain these diverging experiences over the public choice approach can be classified into two groups. These are the rentier state theory and the theories of illicit rent-seeking (Isham et al 2003;Leite and Weidmann 2002;Acemoglu et al 2004;Busse and Gröning 2013;Mehlum et al 2006). These works deliver interesting extensions of the analytical framework of Sachs and Warner (1995) and provide strong cross-country evidence that resource dependence induces negative growth effects mainly in the countries with inferior (rent-seeking) institutional quality.…”

Section: Literature Reviewmentioning

confidence: 96%

Commodity Revenues, Agricultural Sector and the Magnitude of Deindustrialization: A Novel Multisector Perspective

2019

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This study puts forward a model of a multisector economy and embeds it in a novel theoretical framework to address the relationship between commodity revenues and manufacturing output with a special focus on the role of the agricultural sector. The three-sector model lays the groundwork for analyzing policy choices in more complex sectoral settings. Based on the theoretical analysis, the study identifies the weight of the individual economic sectors in the public revenue generation as a determinant of the magnitude of rent seeking epitomized in the crowding out effect of investments in manufacturing. We find that enclave agriculture contributes to the deindustrialization pressure in the face of natural resource windfalls. The central finding of the multisector analysis is the conclusion that not diversification per se but rather a diversification with the substantial domestic factor or market orientation has the capability to limit the magnitude of deindustrialization. For the empirical validation of the theoretical findings, the study employs fixed effects, fully modified OLS, dynamic common correlated effects estimators and dynamic fixed effects estimators for the dataset of 113 developing and transition economies for 1963–2014 period. The estimations reveal that natural resource revenues correspond with a higher level of the manufacturing sector output. In the economies with a low level of economic diversification, commodity bonanza leads however to the shrinkage of the manufacturing. In the commodity revenue dependent settings, nevertheless, agricultural sector exports have a negative impact on the performance of the manufacturing sector. These findings are in line with the predictions of the theoretical model.

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Section: Literature Reviewmentioning

confidence: 96%

Commodity Revenues, Agricultural Sector and the Magnitude of Deindustrialization: A Novel Multisector Perspective

2019

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“…Busse & Gröning (2013) focus on the first problem. Using instrumental variables to address endogeneity www.annualreviews.org • The Resource Curse 5.11…”

Section: Resources and Institutionsmentioning

confidence: 99%

What Have We Learned about the Resource Curse?

Ross

2015

Annu. Rev. Polit. Sci.

751

305

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Since 2001, hundreds of academic studies have examined the "political resource curse," meaning the claim that natural resource wealth tends to adversely affect a country's governance. There is now robust evidence that one type of mineral wealth, petroleum, has at least three harmful effects: It tends to make authoritarian regimes more durable, to increase certain types of corruption, and to help trigger violent conflict in low-and middle-income countries. Scholars have also made progress toward understanding the mechanisms that lead to these outcomes and the conditions that make them more likely. This essay reviews the evidence behind these claims, the debates over their validity, and some of the unresolved puzzles for future research. 5.1

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“…The per capita GDP (PGDP) was used as an indicator, following several studies that considered PGDP as a proxy for the degree of development in a country [32][33][34][35]. There is a strong link between PGDP and human capital.…”

Section: Data and Variables Descriptionmentioning

confidence: 99%

“…Institution Quality (IQ), in the form of corruption and weak law and order, hinders human capital development [47][48][49] This study used corruption (CRP) and law and order (LO) as proxies for institutional quality (IQ) following [34,[50][51][52][53], and data from 1984-2014 were taken from the international country risk guide (ICRG) by the PRS Group [54]. The CRP variable assesses the level of corruption within a political system and includes financial corruption, e.g., demands for special payments and bribes in connection with import and export licenses, exchange controls, tax assessments, excessive patronage, nepotism, or secret party funding [34,55]. As stated by [51].…”

Section: Data and Variables Descriptionmentioning

confidence: 99%

Impact of Natural Resource Rents and Institutional Quality on Human Capital: A Case Study of the United Arab Emirates

Aljarallah

2019

Resources

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For many years, the United Arab Emirates has been using its natural resource wealth to develop infrastructure and attain economic growth. Nevertheless, human capital theory stresses the importance of human capital to reach sustainability in the long-term. This study examines the impacts of natural resource rents and institutional quality on human capital by applying the cointegration and error correction model based on the autoregressive distributed lag (ARDL) approach. The study uses corruption and law and order as proxies for institutional quality. The results indicate that one percent increases in resource rents and corruption decrease the human capital by 0.16% and 0.14%, respectively, in the long-term. Moreover, in the short-term, the current corruption and lag of resource rents have significant negative impacts on human capital. However, law and order has a positive impact on human capital in both the short and long-term. Thus, this study suggests that there is an instant need to prioritize education to reach long-term sustainability.

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The resource curse revisited: governance and natural resources

Cited by 145 publications

References 34 publications

Commodity Revenues, Agricultural Sector and the Magnitude of Deindustrialization: A Novel Multisector Perspective

Commodity Revenues, Agricultural Sector and the Magnitude of Deindustrialization: A Novel Multisector Perspective

What Have We Learned about the Resource Curse?

Impact of Natural Resource Rents and Institutional Quality on Human Capital: A Case Study of the United Arab Emirates

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