Do Natural Resources Fuel Authoritarianism? A Reappraisal of the Resource Curse

2011 ◽  
Vol 105 (1) ◽  
pp. 1-26 ◽  
Author(s):  
STEPHEN HABER ◽  
VICTOR MENALDO
Keyword(s):  
Natural Resources ◽  
Large Body ◽  
Negative Relationship ◽  
Resource Curse ◽  
Omitted Variable Bias ◽  
Long Run ◽  
Variable Bias ◽  
Short Time ◽  
Time Invariant ◽  
Country Specific

A large body of scholarship finds a negative relationship between natural resources and democracy. Extant cross-country regressions, however, assume random effects and are run on panel datasets with relatively short time dimensions. Because natural resource reliance is not an exogenous variable, this is not an effective strategy for uncovering causal relationships. Numerous sources of bias may be driving the results, the most serious of which is omitted variable bias induced by unobserved country-specific and time-invariant heterogeneity. To address these problems, we develop unique historical datasets, employ time-series centric techniques, and operationalize explicitly specified counterfactuals. We test to see if there is a long-run relationship between resource reliance and regime type within countries over time, both on a country-by-country basis and across several different panels. We find that increases in resource reliance are not associated with authoritarianism. In fact, in many specifications we generate results that suggest a resource blessing.

scholarly journals A Reassessment of the Relationship Between Inequality and Growth

2000 ◽  
Vol 90 (4) ◽  
pp. 869-887 ◽  
Author(s):  
Kristin J Forbes
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Negative Relationship ◽  
Data Set ◽  
Omitted Variable Bias ◽  
Specific Effects ◽  
Variable Bias ◽  
Time Invariant ◽  
The Relationship ◽  
Country Specific

This paper challenges the current belief that income inequality has a negative relationship with economic growth. It uses an improved data set on income inequality which not only reduces measurement error, but also allows estimation via a panel technique. Panel estimation makes it possible to control for time-invariant country-specific effects, therefore eliminating a potential source of omitted-variable bias. Results suggest that in the short and medium term, an increase in a country's level of income inequality has a significant positive relationship with subsequent economic growth. This relationship is highly robust across samples, variable definitions, and model specifications. (JEL O40, O15, E25)

CYCLICAL BEHAVIOR OF PRICES IN THE G7 COUNTRIES THROUGH WAVELET ANALYSIS

2008 ◽  
Vol 11 (01) ◽  
pp. 119-130 ◽  
Author(s):  
MAURO GALLEGATI ◽  
ANTONIO PALESTRINI ◽  
MILENA PETRINI
Keyword(s):  
Time Scales ◽  
Time Scale ◽  
Negative Relationship ◽  
G7 Countries ◽  
Composite Effect ◽  
Long Run ◽  
The 1960S ◽  
Local Monotonicity ◽  
Short Time ◽  
Lag Structure

Our analysis, conducted using the GDP and the GDP deflator time series (OECD source; 1960–2001) for the G7 countries, shows the robustness of the negative covariance between the GDP and its deflator, but only over long run horizons. Through wavelet decomposition we evaluate the price–output relationship at different time scales, where most countries reveal similar patterns. More precisely, at short time scales a positive correlation seems to appear whereas, and consequently, a regime switch occurs at a time horizon of about two years leading to a negative relationship for higher horizons. These results seem to suggest that the negative or acyclical relationship usually found after the 1960s may be the composite effect of different time scale correlations, where the four-year-horizon component seems to have the greatest influence. In particular for Canada, France, and Italy we observe something like a rotation of the price–output relationship between the countercyclical and the procyclical relationship. Finally, our analysis shows that even the relationship between the two series does not seem to be very stable regarding the lead and lag structure also. The phase is nonlinear for all the countries and, consequently, the group delay (the lag) is not constant. In particular, looking at the time scale we observe an inversion of the local monotonicity at the frequency of about 0.3–0.35 for all G7 countries.

scholarly journals Natural Resources and the Economic Growth of West Africa Economies

2021 ◽  
Vol 8 (2) ◽  
pp. 20
Author(s):  
Michael Asiedu ◽  
Ebenezer Nana Yeboah ◽  
David Owusu Boakye
Keyword(s):  
Economic Growth ◽  
West Africa ◽  
Natural Resources ◽  
Oil And Gas ◽  
Correction Term ◽  
Negative Relationship ◽  
Mineral Resources ◽  
Significance Level ◽  
Long Run ◽  
Short Run

In this study, we employed the pooled mean group (PMG) regression to examine the effect of natural resources economic rent (coal rent, gas rent, oil rent, forest rent, minerals rent) and foreign direct investment (FDI) on economic growth in West Africa for the period 1996 to 2017. We found strong evidence of a positive relationship between FDI, total natural resources (TNR), total natural gas (TNG), and economic growth in the long-run. However, the study recorded a negative relationship between mineral resources rent, oil rent and gas rent, and economic growth in the long run. The rent from coal also exhibited neutrality on economic growth. While all the short-run coefficients are not statistically significant, the error correction term (ECT) is significant and a negative value of -0.889, signifying cointegration at a 1% significance level. This also implies that the short-run estimates converge towards the long-run estimates to achieve equilibrium at the speed of 89% per annum. Our findings highlight the significance of FDI and total rent from natural resources in stimulating West African economies' growth in the industrialization drive and general welfare. In contrast, this study also highlights the need for policy direction to redesign and realign ownership in the oil and gas sector from multinational co-operations (MNCs) to the locals and the domestic economy to benefit directly from the prevailing environment.

scholarly journals Disintegrated Impact of Trade Openness on Income Inequality: Empirical Evidence from Bangladesh

2021 ◽  
Vol 11 (3) ◽  
pp. 1
Author(s):  
Munem Ahmad Chowdhury ◽  
Hafsa Rahman Nijhum ◽  
Kazi Mohammed Kamal Uddin
Keyword(s):  
Income Inequality ◽  
Trade Openness ◽  
Export Sector ◽  
Omitted Variable Bias ◽  
Long Run ◽  
Labor Welfare ◽  
Import And Export ◽  
Variable Bias ◽  
Bound Test ◽  
The Relationship

There have been many studies on the relationship between trade and income inequality, but very few of them have distinguished the idea of trade by export and import. For this reason this study is conducted to see how the income inequality of Bangladesh get impacted with the presence of import and export separately. ARDL bound test is used to inspect whether they possess long run relation with income inequality for the period of 1975 to 2016. Thereupon export has been found to be widening the income gap in the long run. Though import improves the situation by abating the gap, it is not significant enough. Besides that other imperative macroeconomic variables are used to condense the omitted variable bias and their outcomes akin to the theory for developing country aspect. Furthermore, models like FMOLS, DOLS and CCR are used for ensuring the robustness of the result and other diagnostic tests support the validity of the result. Moreover policies related to labor welfare need to be set in a manner so that minimum wage allows a worker to lead a healthy life which will help keeping him or her productive. In addition, correspondent authority should frame the policies to diversify the export sector to give the opportunity to small entrepreneurs a chance to enter by providing the convenient environment.

scholarly journals Natural Expectations and Macroeconomic Fluctuations

2010 ◽  
Vol 24 (4) ◽  
pp. 67-84 ◽  
Author(s):  
Andreas Fuster ◽  
David Laibson ◽  
Brock Mendel
Keyword(s):  
Empirical Evidence ◽  
Rational Expectations ◽  
Financial Time Series ◽  
Large Body ◽  
Negative Relationship ◽  
Equity Returns ◽  
Macroeconomic Fluctuations ◽  
Economic Agents ◽  
Long Run ◽  
High Volatility

A large body of empirical evidence suggests that beliefs systematically deviate from perfect rationality. Much of the evidence implies that economic agents tend to form forecasts that are excessively influenced by recent changes. We present a parsimonious quasi-rational model that we call natural expectations, which falls between rational expectations and (naïve) intuitive expectations. (Intuitive expectations are formed by running growth regressions with a limited number of right-hand-side variables, and this leads to excessively extrapolative beliefs in certain classes of environments). Natural expectations overstate the long-run persistence of economic shocks. In other words, agents with natural expectations turn out to form beliefs that don't sufficiently account for the fact that good times (or bad times) won't last forever. We embed natural expectations in a simple dynamic macroeconomic model and compare the simulated properties of the model to the available empirical evidence. The model's predictions match many patterns observed in macroeconomic and financial time series, such as high volatility of asset prices, predictable up-and-down cycles in equity returns, and a negative relationship between current consumption growth and future equity returns.

scholarly journals Cointegration, Price-Adjustment Delays, and Optimal Hedge Ratio in the Precious Metal Markets

2019 ◽  
Vol 8 ◽  
pp. 14-23
Author(s):  
Hirofumi Nishi
Keyword(s):  
Precious Metal ◽  
Hedge Ratio ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Omitted Variable Bias ◽  
Hedge Accounting ◽  
Long Run ◽  
The Difference ◽  
Variable Bias ◽  
Optimal Hedge

Firms seeking to apply hedge accounting treatment under the Accounting Standards Codification Topic 815 must demonstrate higher hedge effectiveness, for which the regression analysis is commonly used as a testing method. An autoregressive distributed lag (ARDL) model is adopted in this article to examine the hedge effectiveness in the presence of nonsynchronous trading of spot and futures contracts as well as a long-run cointegrating relationship between their prices. Using precious metal market data, our study empirically demonstrates that a hedge ratio estimated with a conventional OLS model tends to be downwardly biased. Our finding also indicates that the omitted-variable bias becomes apparent only when the difference between the transaction frequencies in spot and futures markets is significantly large.

scholarly journals Does Human Capital Mitigate Resource Curse? Evidence in the Short- and Long-Run

2021 ◽  
Vol 13 (10) ◽  
pp. 157
Author(s):  
Ibrahima Coulibaly ◽  
Jebaraj Asirvatham
Keyword(s):  
Human Capital ◽  
Natural Resources ◽  
Positive Impact ◽  
Resource Curse ◽  
Dutch Disease ◽  
Model Framework ◽  
Distributed Lag ◽  
Long Run ◽  
Show Evidence

This paper examines the short-term and long-term relationships among natural resources, human capital, and growth in Mali in an Autoregressive Distributed Lag-Error Correction Model framework. In the presence of natural resources, we find that human capital has a positive impact on growth over time. Results show a long-term, stable and positive relationship between economic growth, natural resources, and human capital. Furthermore, the results do not show evidence of Dutch disease or the presence of any natural resource curse in Mali.

scholarly journals The Policy Framework of Natural Resource Management in Oil-Dependence Countries

2020 ◽  
Author(s):  
Basem Ertimi ◽  
Tamat Sarmidi ◽  
Norlin Khalid ◽  
Mohd Helmi Ali
Keyword(s):  
Economic Growth ◽  
Natural Resources ◽  
Natural Resource Management ◽  
Resource Curse ◽  
Policy Framework ◽  
Resource Flows ◽  
Long Run ◽  
Management Policies ◽  
Oil Revenues ◽  
Rich Countries

The resource curse indicates that economic growth performs poorly in countries with significant natural resources. Nevertheless, certain countries rich in energy managed to protect their resource riches in the long run. It is necessary to enforce effective policies in resource-rich countries to fully leverage the advantages which can come from the abundance of natural resources. This study aimed to evaluate how oil-rich countries would avoid resource flows by successful fiscal and management policies. By taking the guidance of Norway and implementing fiscal policy focused on tax rules on its oil management, it is proposed that oil-exporting countries benefit significantly. The framework attempts to mitigate this resource curse and utilise oil revenues in the interest of the country.

scholarly journals The Impact of Foreign Direct Investment on the Utilisation of Natural Resources in Nigeria

2018 ◽  
Vol 8 (2) ◽  
pp. 433-454
Author(s):  
Susan Nwadinachi Akinwalere
Keyword(s):  
Natural Resources ◽  
Resource Curse ◽  
Testing Procedure ◽  
Point Of View ◽  
Annual Data ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Industrial Sectors ◽  
Long Run ◽  
The Impact

The purpose of this article is to examine the impact of FDI on the utilization of natural resources in Nigeria. This article uses annual data from 1970 to 2015 and employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration, a testing procedure for level relationships developed by Pesaran and Shin (1999) and Pesaran et al. (2001). The ARDL cointegration approach examines the long-run relationship between FDI and natural resources on one hand and GDP on the other hand. The empirical results indicate that aggregate FDI has a positive and statistically significant impact on both natural resources and GDP in Nigeria. The ‘OIL’ variable presents a positive coefficient while GDP presents a negative estimated coefficient. From a policy point of view, countries such as Nigeria, endowed with natural resources, should pursue policies targeted at full deregulation (privatisation) of their natural resource sector to better utilise the abundance of their natural resources and attract additional FDI. Regarding GDP, there should be concerted efforts to boost the performance of the non-oil sector in Nigeria through more investments in the agricultural and industrial sectors which will make the growth of the economy spread across other sectors and, in turn, encourage national economic growth and development, reducing the possibility of the ‘resource curse’. This is the first paper that employs ARDL in determining the impact of FDI on the utilization of natural resources in Nigeria.

scholarly journals Natural Resources Curse in the long run? Bolivia, Chile and Peru in the Nordic countries’ mirror

2018 ◽  
Author(s):  
Cristian Ducoing ◽  
Jose Peres-Cajías ◽  
Marc Badia-Miró ◽  
Ann-Kristin Bergquist ◽  
Carlos Contreras ◽  
...  
Keyword(s):  
Natural Resources ◽  
Latin American ◽  
Resource Curse ◽  
Nordic Countries ◽  
Economic Indicators ◽  
Export Sector ◽  
Long Run ◽  
The Right ◽  
The 19Th Century

Were there extreme differences between Latin American and Nordic countries in the 19th century? Several economic indicators suggest the right answer is no. In the year 1850, the GDP per capita ratio between, for example, Bolivia and Sweden was 0.7; in 2010 this ratio had widened to 0.12. How these extremely high differences are possible between countries with similarly enormous natural resources endowments? The aim of this article is to compare public policies and economic indicators related with Natural Resources (NNRR) management in three Latin American countries (Bolivia, Chile and Peru) and two Nordic countries (Norway and Sweden) in a long-term perspective. The article analyses the following components of economic development: i) the composition of exports throughout time; ii) economic linkages between the export sector and the rest of the economy; iii) the composition of taxes; iv) human capital formation and the accumulation of knowledge. The comparison suggests new areas on the determinants of successful management of natural resources and the countries' ability to escape from the so-called resource curse.

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