scholarly journals The Political Economy of the Resource Curse: A Development Perspective

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
Antonio Savoia ◽  
Kunal Sen
Keyword(s):  
Natural Resource ◽  
Political Institutions ◽  
Resource Curse ◽  
Annual Review ◽  
Publication Date ◽  
Developmental Effects ◽  
Resource Rents ◽  
Development Goals ◽  
Development Outcomes ◽  
Resource Sector

This article reviews the recent literature on the developmental effects of resource abundance, assessing likely effects and channels with respect to key development outcomes. To date, this area has received less analysis, although it is relevant to the United Nations’ Sustainable Development Goals agenda, as a significant number of the world's poor live in African resource-rich economies. We argue that the presence of a natural resource sector per se does not necessarily translate into worse development outcomes. The natural resource experience varies to a significant extent. Countries with similar levels of resource rents can end up with significantly different achievements in terms of income inequality, poverty, education, and health. The challenge is to explain the different natural resource experiences. A pivotal mechanism behind the developmental effects of the natural resources sector is the type of states and political institutions that resource-abundant economies develop. Expected final online publication date for the Annual Review of Resource Economics, Volume 13 is October 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

The Political Economy of Policy Volatility in Latin America

2014 ◽  
Vol 56 (4) ◽  
pp. 1-21 ◽  
Author(s):  
David Doyle
Keyword(s):  
Political Economy ◽  
Latin America ◽  
Latin American ◽  
Natural Resource ◽  
Political Institutions ◽  
Statistical Tests ◽  
The Political ◽  
Political Actors ◽  
Resource Rents ◽  
Natural Resource Rents

AbstractWhy are some Latin American states plagued by persistent policy volatility while the policies of others remain relatively stable? This article explores the political economy of natural resource rents and policy volatility across Latin America. It argues that, all else equal, resource rents will create incentives for political leaders, which will result in repeated episodes of policy volatility. This effect, however, will depend on the structure of political institutions. Where political institutions fail to provide a forum for intertemporal exchange among political actors, natural resource rents will result in increased levels of policy volatility. Alternatively, where political institutions facilitate agreement among actors, resource rents will be conducive to policy stability. This argument is tested on a measure of policy volatility for 18 Latin American economies between 1993 and 2008. The statistical tests provide support for the argument.

Oil and Democracy: Endogenous Natural Resources and the Political “Resource Curse”

2016 ◽  
Vol 70 (2) ◽  
pp. 279-311 ◽  
Author(s):  
Sarah M. Brooks ◽  
Marcus J. Kurtz
Keyword(s):  
Natural Resource ◽  
Resource Curse ◽  
Political Regime ◽  
Democratic Development ◽  
Resource Rents ◽  
Oil Revenue ◽  
History Of ◽  
Quantitative Results ◽  
Oil Wealth ◽  
The Relationship

AbstractBy the end of the twentieth century, a scholarly consensus emerged around the idea that oil fuels authoritarianism and slow growth. The natural abundance once thought to be a blessing was unconditionally, and then later only conditionally, a curse for political and economic development. We re-examine the relationship between oil wealth and political regimes, challenging the conventional wisdom that such natural resource rents lead to authoritarian outcomes. We contend that most efforts to examine the causal linkages between natural resource abundance and political regime have been complicated by the likelihood that both democracy and oil revenue are endogenous to the industrialization processes itself, particularly in its developmentalist form. Our quantitative results, based on an analysis of global data from 1970 to 2006, show that both resource endogeneity and several mechanisms of intraregional regime diffusion are powerful determinants of democratic outcomes. Qualitative evidence from the history of industrialization in Latin America yields support for our proposed causal claim. Oil wealth is not necessarily a curse and may even be a blessing with respect to democratic development.

Corruption and banking soundness: Does natural resource dependency matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hamid Kordbacheh ◽  
Seyedeh Zahra Sadati
Keyword(s):  
Natural Resources ◽  
Natural Resource ◽  
Resource Curse ◽  
Banking System ◽  
Destructive Effect ◽  
Data Set ◽  
Content Type ◽  
Factors Affecting ◽  
Resource Rents ◽  
Almost All

Purpose The natural resources curse theory argues the higher dependency on natural resources leads to many socio-economic problems. The purpose of this study is to examine the relationship between corruption and banking soundness and also to compare the extent of this effect between the two groups of rich and poor in natural resources countries. Design/methodology/approach To this aim, the authors apply a panel data set comprised of 98 countries from 2012 to 2015. Findings The results show that nations with a higher level of corruption have poorer banking soundness. The authors also find that by considering the resource curse theory and the effect of natural resource rents in the model, the adverse impact of corruption on banking soundness is more substantial in countries with a higher natural dependency level (rich in natural resources). Originality/value Though studies have been conducted on corruption and banking soundness, this paper, by using resources curse theory, articulates that corruption is one of the most critical factors affecting banking soundness and has a destructive effect on the health of the banking system and the economy of almost all countries, especially in natural resource-based economies. This study will appeal to banks authorities, governments, policymakers, oversight financial institutions and those who have a vested interest in regulating financial crimes globally. They can prevent financial and banking crises by cooperating in the fight against corruption worldwide.

Gaining by Shedding Case Selection Strictures

2018 ◽  
Author(s):  
Ryan Saylor
Keyword(s):  
Latin American ◽  
Natural Resource ◽  
Political Institutions ◽  
Resource Curse ◽  
Area Studies ◽  
Regional Comparison ◽  
Case Selection ◽  
The Impact ◽  
Regional Comparisons

Advice on case selection often emphasizes selecting on some set of similar traits for controlled comparison—but without attention to regional contexts. This chapter highlights the benefits of unconventional cross-regional comparisons within the framework of comparative area studies (CAS), at least when analyzing the impact of natural resource booms on political institutions. Prevalent views on the resource curse see commodity booms as usually enervating institutions. However, a cross-regional comparison of African and Latin American cases can be employed to generate an alternative argument. Where resource booms simultaneously benefit exporters within and outside of the ruling coalition, threatened coalition insiders have responded with institutional fortification. This is true of the period of “dual enrichment” in Argentina (1852–86). In contrast, booms that exclusively benefit exporters within or outside of the ruling coalition do not create such existential threats and allow institutions to remain weak. This is evident in Colombia (1880–1905) and Ghana (1945–66).

scholarly journals Natural Resources and Civil Conflict: The Role of Military Expenditures

2021 ◽  
Vol 14 (12) ◽  
pp. 575
Author(s):  
Rabah Arezki ◽  
Markus Brueckner
Keyword(s):  
Natural Resources ◽  
Natural Resource ◽  
Resource Curse ◽  
Civil Conflict ◽  
Resource Rents ◽  
Important Message ◽  
Military Expenditures ◽  
Natural Resource Rents ◽  
The Relationship

Military expenditures significantly affect the relationship between the risk of civil conflict outbreak and natural resources. We show that a significant positive effect of natural resource rents on the risk of civil conflict outbreak is limited to countries with low military expenditures. In countries with high military expenditures, there is no significant effect of natural resource rents on civil conflict onset. An important message is thus that a conflict resource curse is absent in countries with sufficiently large military expenditures.

Increasing Natural Resource Rents from Farmland: A Curse or a Blessing for the Rural Poor?

2015 ◽  
Vol 21 (1) ◽  
Author(s):  
Anna Hvid
Keyword(s):  
Natural Resource ◽  
Agricultural Land ◽  
Economic Value ◽  
Resource Curse ◽  
Rent Seeking ◽  
Small Scale ◽  
Weak Institutions ◽  
Resource Rents ◽  
Welfare Losses ◽  
Natural Resource Rents

AbstractThe literature on the resource curse suggests that countries with large natural resource rents and weak institutions may experience rent seeking conflicts among different groups, potentially resulting in high inequality and welfare losses. While agricultural land has so far been categorized as a diffuse resource with low economic value, this categorization may no longer be appropriate, because demand for land is currently on the rise, and may continue to increase in the future. This study presents and discusses recent theoretical and empirical approaches to analyzing the effects of high-value agricultural land on rent seeking and rent distribution. Results suggest that the potential for small scale farmers to organize and obtain political power determines the extent of rent seeking and rent distribution, and that while more democratic institutions may increase the share of rents going to the farmers, they may have adverse welfare effects, because they may increase the competition for rents among groups, and hence the amount of resources spent on rent seeking.

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