Sovereign Wealth Funds and the Resource Curse

2017 ◽  
Author(s):  
Jędrzej George Frynas
Keyword(s):  
Resource Curse ◽  
Policy Instrument ◽  
Fiscal Rules ◽  
Sovereign Wealth Funds ◽  
Political Consequences ◽  
Effective Policy ◽  
Resource Wealth ◽  
Natural Resource Wealth ◽  
The Relationship

Historically, a key purpose of sovereign wealth funds (SWFs) has been to help manage and minimize a range of negative economic and political consequences of natural resource wealth, often lumped together as the “resource curse.” This chapter asks to what extent SWFs—specifically “resource funds”—can mitigate the resource curse. It discusses the available empirical evidence for the effectiveness of resource funds as well as the relationship between societal governance and the effectiveness of resource funds. The available findings suggest that wider societal governance is of significantly greater importance for tackling the resource curse than the existence of a resource fund. Bad governance in a country prevents even the most transparent and robust resource funds from becoming an effective policy instrument. Conversely, resource funds can be successful in countries with effective societal institutions such as sound fiscal rules, good quality of government budget documentation, free civil society and independent media.

The Politics of the Resource Curse

2016 ◽  
Author(s):  
Michael L. Ross
Keyword(s):  
Resource Curse ◽  
Authoritarian Regimes ◽  
Violent Conflict ◽  
Middle Income ◽  
Middle Income Countries ◽  
Mineral Wealth ◽  
Resource Wealth ◽  
Natural Resource Wealth ◽  
Harmful Effects

This article considers the debate over the “resource curse” (i.e., whether too much natural-resource wealth is harmful for developing countries) along with the debate about the mechanisms and conditions that likely generate the reported problems. After reviewing the literature on the resource curse, this article discusses the ways that scholars define “natural resources.” It then analyzes research on how resource wealth affects democracy, the quality of government institutions, and the incidence of violent conflict. It cites evidence showing that petroleum wealth, in particular, seems to have at least three harmful effects: to make authoritarian regimes more durable, to increase certain types of corruption, and to foster the onset of violent conflict in low- and middle-income countries, particularly when this form of mineral wealth is found in the territory of marginalized ethnic groups.

Islamic Constitutions and Democracy

2021 ◽  
pp. 106591292199124
Author(s):  
Moamen Gouda ◽  
Shimaa Hanafy
Keyword(s):  
Islamic Law ◽  
Muslim Population ◽  
Informal Institution ◽  
Additional Control ◽  
Negative Effect ◽  
Alternative Measures ◽  
Resource Wealth ◽  
Muslim Majority ◽  
Natural Resource Wealth ◽  
The Relationship

There is an ongoing debate on the relationship between Islam and (lack of) democracy. Considerable literature shows that Islam, represented as an informal institution by Muslim population share, has a negative effect on democracy. This study examines the effects of formal institutions, specifically constitutions that prescribe Islamic law ( Shari’a) as a source of legislation, on democracy. We use a newly developed coding of the degree to which Islam is incorporated in constitutions. Our empirical results show that the constitutional entrenchment of Islamic law has a negative and significant effect on democracy. Our findings are robust to using different estimators and instrumental variable regressions, employing alternative measures of democracy and controlling for Muslim population, natural resource wealth, and additional control variables. While we show that Islamic constitutionalism is a reason for a democracy deficit in Muslim-majority countries, we find no evidence that Islam is inimical to democracy when not entrenched in the constitution.

scholarly journals A meta-analysis of natural resources and conflict

2019 ◽  
Vol 6 (1) ◽  
pp. 205316801881823 ◽  
Author(s):  
William O’Brochta
Keyword(s):  
Natural Resources ◽  
Natural Resource ◽  
Meta Analysis ◽  
Civil Conflict ◽  
Future Research ◽  
Aggregate Effect ◽  
Resource Wealth ◽  
Natural Resource Wealth ◽  
The Relationship ◽  
Variable Measurement

The relationship between natural resource wealth and civil conflict remains unclear, despite prolonged scholarly attention. Conducting a meta-analysis—a quantitative literature review—can help synthesize this broad and disparate field to provide clearer directions for future research. Meta-analysis tools determine both the aggregate effect of natural resources on conflict and whether any particular ways in which variables are measured systematically bias the estimated effect. I conduct a meta-analysis using sixty-nine studies from sixty-two authors. I find that there is no aggregate relationship between natural resources and conflict. Most variation in variable measurement does not alter the estimated effect. However, measuring natural resource wealth using Primary Commodity Exports and including controls for mountainous terrain and ethnic fractionalization all do significantly impact the results. These findings suggest that it may be worth exploring more nuanced connections between natural resources and conflict instead of continuing to study the overall relationship.

Political Risk, Reputation, and the Resource Curse

2011 ◽  
Vol 44 (6) ◽  
pp. 662-688 ◽  
Author(s):  
Nathan M. Jensen ◽  
Noel P. Johnston
Keyword(s):  
Natural Resource ◽  
Insurance Industry ◽  
Resource Curse ◽  
Political Risk ◽  
Positive Association ◽  
The Political ◽  
Data Set ◽  
Resource Wealth ◽  
Risk Insurance ◽  
Natural Resource Wealth

There is a growing literature on how natural resources affect both economic performance and political regimes. In this article the authors add to this literature by focusing on how natural resource wealth affects the incentives of governments to uphold contracts with foreign investors across all sectors. They argue that although all states suffer reputation costs from reneging on contracts, governments in natural-resource-dependent economies are less sensitive to these costs, leading to a greater probability of expropriation and contract disputes. Specifically, leaders weigh the benefits of reneging on contracts with investors against the reputation costs of openly violating agreements with firms. The authors’ theoretical model predicts a positive association between resource wealth and expropriation. Using a data set from the political risk insurance industry, the authors show that resource dependent economies have much higher levels of political risk.

Conditioning the “Resource Curse”: Globalization, Human Capital, and Growth in Oil-Rich Nations

2011 ◽  
Vol 44 (6) ◽  
pp. 747-770 ◽  
Author(s):  
Marcus J. Kurtz ◽  
Sarah M. Brooks
Keyword(s):  
Human Capital ◽  
Economic Integration ◽  
Natural Resource ◽  
Resource Curse ◽  
Capital Formation ◽  
Human Capital Formation ◽  
Economic Sectors ◽  
Resource Wealth ◽  
Oil Wealth ◽  
Natural Resource Wealth

Since the 1990s it has become conventional wisdom that an abundance of natural resources, most notably oil, is very likely to become a developmental “curse.” Recent scholarship, however, has begun to call into question this apparent consensus, drawing attention to the situations in which quite the opposite result appears to hold, namely, where resources become a developmental “blessing.” Research in this vein focuses predominantly on the domestic political and economic institutions that condition the growth effects of natural resource wealth. Less attention, however, has been paid to whether or how the context of economic integration has conditioned the domestic political economy of natural resource development. This article specifically addresses this theoretical disjuncture by arguing first that the developmental consequences of oil wealth are strongly conditioned by domestic human capital resources, which, where sizeable, make possible the management of resources in ways that encourage the absorption of technology and development of valuable new economic sectors. In the absence of robust human capital formation, however, the archetypal “resource curse” is likely to result. The authors argue moreover that international economic integration further amplifies the divergence between these outcomes by simultaneously raising the growth-enhancing effects of large stocks of human capital and by directly facilitating economic growth. Analysis of global data on growth and oil abundance (1979-2007) supports their main hypotheses that natural resource wealth can be either a “curse” or a “blessing” and that the distinction is conditioned by domestic and international factors, both amenable to change through public policy, namely, human capital formation and economic openness.

The Political Economy of the Resource Curse

1999 ◽  
Vol 51 (2) ◽  
pp. 297-322 ◽  
Author(s):  
Michael L. Ross
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Resource Curse ◽  
The Political ◽  
Economic Problems ◽  
The Past ◽  
Wide Range ◽  
Resource Wealth ◽  
New Research ◽  
Natural Resource Wealth

How does a state's natural resource wealth influence its economic development? For the past fifty years, versions of this question have been explored by both economists and political scientists. New research suggests that resource wealth tends to harm economic growth, yet there is little agreement on why this occurs. This article reviews a wide range of recent attempts in both economics and political science to explain the “resource curse.” It suggests that much has been learned about the economic problems of resource exporters but less is known about their political problems. The disparity between strong findings on economic matters and weak findings on political ones partly reflects the failure of political scientists to carefully test their own theories.

scholarly journals Can More Be Less? An Experimental Test of the Resource Curse

2014 ◽  
Vol 1 (1) ◽  
pp. 39-58 ◽  
Author(s):  
Omar Al-Ubaydli ◽  
Kevin McCabe ◽  
Peter Twieg
Keyword(s):  
Natural Resources ◽  
Experimental Test ◽  
Economic Performance ◽  
Second Life ◽  
Virtual World ◽  
Resource Curse ◽  
Naturally Occurring ◽  
Resource Wealth ◽  
Randomized Control ◽  
Natural Resource Wealth

AbstractSeveral scholars have argued that abundant natural resources can be harmful to economic performance under bad institutions and helpful when institutions are good. These arguments have either been theoretical or based on naturally occurring variation in natural resource wealth. We test this theory by using a laboratory experiment to reap the benefits of randomized control. We conduct this experiment in a virtual world (Second Life™) to make institutions more visceral. We find support for the theory.

Energy Issues in the Context of the Regime Transition of Post-Soviet Eurasia: National and International Dimension

2010 ◽  
Vol 72 (2) ◽  
pp. 325-336
Author(s):  
Anastassia Obydenkova
Keyword(s):  
Economic Development ◽  
Resource Curse ◽  
Energy Resources ◽  
International Dimension ◽  
Mineral Wealth ◽  
Bureaucratic Power ◽  
Seeking Behavior ◽  
Resource Wealth ◽  
Nondemocratic Regimes

In political science, democracy is generally associated with high levels of economic development. However, some scholars note that this is true only as long as economic development is not based on possession of rich energy resources. Many resource-rich states are nondemocratic regimes. This is sometimes called the “resource curse.” This means that “natural resource abundance may stimulate rent-seeking behavior that, together with highly concentrated bureaucratic power, induces corruption in the economy and hence lowers the quality of institutions.” It also means that “resource wealth itself may harm a country's prospects for development” and that “oil and mineral wealth tends to make states less democratic.”

scholarly journals Population and Climate Change: Consensus and Dissensus among Demographers

2021 ◽  
Author(s):  
Hendrik P. van Dalen ◽  
Kène Henkens
Keyword(s):  
Climate Change ◽  
Global Warming ◽  
Family Planning ◽  
Population Policy ◽  
Policy Instrument ◽  
Crucial Difference ◽  
Effective Policy ◽  
Taking Action ◽  
The Relationship ◽  
Global Population

AbstractWhat role does population play in thinking about the problem of climate change and some of its solutions? In a survey conducted between February and April 2020, we asked European demographers to state their views on the relationship between climate change and population developments, and asked them to rate their concern about climate change and other socio-demographic issues. We found that climate change is at the top of the list of demographers’ concerns, but that their sense of urgency with respect to taking action to redress global warming is not matched by their belief that population policy can make a crucial difference in reducing CO2 emissions: demographers are highly divided on the question whether the global population size should be reduced to lower CO2 emissions, as well as on the question whether family planning is an effective policy instrument.

Natural resource wealth and the informal economy

2021 ◽  
pp. 019251212199197
Author(s):  
Robert G Blanton ◽  
Dursun Peksen
Keyword(s):  
Natural Resource ◽  
Informal Sector ◽  
Informal Economy ◽  
Economic Activity ◽  
Resource Curse ◽  
Multiple Model ◽  
Formal Sector ◽  
Spending Patterns ◽  
Resource Wealth ◽  
Natural Resource Wealth

The ‘resource curse’ associated with natural resource abundance has long been a subject of study across multiple disciplines. Though much research has focused on possible effects of resource wealth on the formal economy, little is known about how such wealth affects the informal sector, a substantial portion of global economic activity. We posit that resource windfalls directly contribute to growth in the informal economy, as investment and spending patterns associated with such revenues limit opportunities within the formal sector and thus channel more labor and businesses into the informal sector. We test these claims across a panel of over 120 countries for the period 1985 to 2012. Across multiple model specifications, we find that resource wealth growth is associated with increased informal economic activity.

Sign in / Sign up

Export Citation Format

Share Document