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.

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.

Lessons from Strange Cases

2008 ◽  
Vol 41 (4-5) ◽  
pp. 477-514 ◽  
Author(s):  
Ellis Goldberg ◽  
Erik Wibbels ◽  
Eric Mvukiyehe
Keyword(s):  
Natural Resource ◽  
Resource Dependence ◽  
Resource Curse ◽  
Negative Association ◽  
Data Set ◽  
Resource Wealth ◽  
Natural Resource Wealth ◽  
Natural Resource Dependence ◽  
Developmental Performance ◽  
Cross National

The work linking natural resource wealth to authoritarianism and under-development suffers from several shortcomings. In this article, the authors outline those shortcomings and address them in a new empirical setting. Using a new data set for the U.S. states spanning 73 years and case studies of Texas and Louisiana, the authors are able to more carefully examine both the diachronic nature and comparative legs of the resource curse hypothesis than previous research has. They provide evidence that natural resource dependence contributes to slower economic growth, poorer developmental performance, and less competitive politics. Using this empirical setting, they also begin parsing the mechanisms that might explain the negative association between resource wealth and political and economic development. They draw implications from intranational findings for resource abundant countries across the world and suggest directions for future cross-national and cross-state work.

scholarly journals Informality and Economic Growth in Nigeria: 1980-2014

2017 ◽  
Vol 3 (3) ◽  
pp. 405 ◽  
Author(s):  
Mohammed Yelwa ◽  
A. J. Adam
Keyword(s):  
Economic Growth ◽  
Informal Sector ◽  
Informal Economy ◽  
Data Series ◽  
Formal Sector ◽  
Female Population ◽  
Demand Deposit ◽  
The Impact ◽  
Adf Test ◽  
The Relationship

<p><em>The paper examines the impact of informal sector activities on economic growth in Nigeria between 1980-2014. The contributions of informal sector activities to the growth of Nigerian economy cannot be over emphasized. It is the source of livelihood to the majority of poor, unskilled, socially marginalized and female population and is the vital means of survival for the people in the country lacking proper safety nets and unemployment insurance especially those lacking skills from formal sector jobs. The relationship between informality and economic growth is not clear because the sector is not regulated by the law also there is no concrete evidence that this sector enhances growth because the sector’s contributions to growth is not measured. The use of endogenous growth model becomes relevant in this study. The theory emphasizes the role of production on the long-run via a higher rate of technological innovation. The variables that were tested are official economy nominal GDP, informal economy nominal GDP, currency in circulation, demand deposit, ratio of currency in circulation to demand deposit, narrow money, informal economy as percentage of official economy. ADF test was conducted to establish that the data series of all variables are stationary t levels. Having established the stationarity test we also, conducted causality test of the response of official economy nominal GDP to informal economy nominal GDP. In conclusion, the impact of informal sector economy on economic growth in Nigeria is quiet commendable. Even though, the relationship between informality and economic growth is not straight. The paper recommended thus, the need for the government to integrate the activities of the informal economy into formal sector and size of the sector is measured and regulated because their roles are commendable. As it will improve tax collection and enhance fiscal policy.</em></p>

Neo-Dualism: Accumulation, Distress, and Proliferation of a Fissured Informality

2021 ◽  
pp. 048661342110121
Author(s):  
Kasturi Sadhu ◽  
Saumya Chakrabarti
Keyword(s):  
Informal Sector ◽  
Informal Economy ◽  
Growth Process ◽  
Jel Classification ◽  
Formal Sector ◽  
Firm Level ◽  
Macro Model ◽  
Long Run ◽  
Level Data ◽  
Firm Level Data

A dominant strand of orthodoxy argues that the problem of the informal sector could be mitigated through the capitalistic growth process. But our observations on India are different—with an expansion of the capitalistic formal sector, as the economy grows, there is a proliferation of fissured informality. Using a structuralist macro-model, we provide certain explanations for this phenomenon, which are also tested empirically using Indian subnational-state and firm-level data. Thus, we explore both the short- and long-run effects of the expansion of the formal sector on the heterogeneous informal economy. While a section of the population is pulled into the advanced informal activities, a vast segment is pushed to petty production. Accordingly, the orthodox transition narrative is questioned and alternative policy and political possibilities are introduced. JEL Classification: O11, O13, O17, P48

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.

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