On the looting of nations
TL;DR: The authors developed a dynamic discrete choice model of an unchecked ruler making decisions regarding the development of a resource rich country, and showed that unstructured lending from international credit markets can create incentives to loot the country; and an enhanced likelihood of looting causes greater political instability, and diminishes growth.
Abstract: We develop a dynamic discrete choice model of an unchecked ruler making decisions regarding the development of a resource rich country. Resources serve as collateral and facilitate the acquisition of loans. The ruler chooses either to stay in power while facing the risk of being ousted, or loot the country’s riches by liquefying the resources through lending. We show that unstructured lending from international credit markets can create incentives to loot the country; and an enhanced likelihood of looting causes greater political instability, and diminishes growth. Using a treatment effects model, we find evidence that supports our predictions.
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TL;DR: The authors evaluated the impact of major natural resource discoveries since 1950 on GDP per capita using panel fixed-effects estimation and resource discoveries in countries that were not previously resource-rich as a plausibly exogenous source of variation.
212 citations
Cites background from "On the looting of nations"
...Another form treats institutions as exogenous to resource wealth, and the interaction between resources and institutions explains the divergent outcomes of resource-rich countries (Robinson et al 2006, Mehlum et al 2006, Sarr et al 2011)....
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TL;DR: This article examined the impact of military expenditure on economic growth on a large balanced panel, using an exogenous growth model and dynamic panel data methods for 106 countries over the period 1988-2010.
Abstract: This paper examines the impact of military expenditure on economic growth on a large balanced panel, using an exogenous growth model and dynamic panel data methods for 106 countries over the period 1988–2010 A major focus of the paper is to consider the possibility group heterogeneity and non-linearity Having estimated the model for all of the countries in the panel and finding that military burden has a negative effect on growth in the short and long run, the panel is broken down into various groupings based upon a range of potentially relevant factors, and the robustness of the results is evaluated The factors considered are different levels of income, conflict experience, natural resources abundance, openness and aid The estimates for the different groups are remarkably consistent with those for the whole panel, providing strong support for the argument that military spending has adverse effects on growth There are, however, some intriguing results that suggest that for certain types of countries
115 citations
01 Mar 2008
TL;DR: In this paper, the authors proposed a method to solve the problem of the lack of resources in the South Korean market, by using the concept of "social media" and "social networks".
Abstract: 본 논문은 자원부국들의 천연자원 수출이 각기 다른 경제적 영향을 보이는 이유에 대해 연구하였다. 가령 라틴아메리카의 경우 다른 자원부국들과는 달리 저조한 경제성장을 보였다. 이에 대해 선행연구에서는 천연자원의 풍요가 오히려 경제성장에 부정적인 영향을 준다고 논증한 바 있다. 그러나 본 연구에서는 1인당 국민소득이 어느 수준 이상일 경우 천연자원 수출과 경제성장 간의 역의 상관관계가 존재하지 않음을 보이고 있다. 분석에 따르면, 1인당 국민소득이 낮은 라틴아메리카 국가들의 경우 풍부한 천연자원이 경제성장에 부정적인 영향을 미치는 반면, 1인당 국민소득이 높은 선진국의 경우 이러한 음의 효과가 나타나지 않았다. 이같이 천연자원 수출이 자원부국들 간 서로 다른 영향을 보인 이유는, 정부의 효율성, 법치, 부패통제 등 ‘제도의 질’이 낮은 라틴아메리카의 경우 천연자원 수출로 얻은 자원을 비효율적으로 활용하여 인적·물적 자원을 축적하지 못했으며, 이로 인해 궁극적으로 저조한 경제성장을 이루게 되었다는 데 있다.
96 citations
References
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TL;DR: Archigos as discussed by the authors is a dataset with information on leaders in 188 countries from 1875 to 2004, which is used to identify the effective leaders of each independent state; it codes when and how leaders came into power, their age, and their gender, as well as their personal fate one year after they lost office.
Abstract: Scholars for a long time theorized about the role of political leaders, but empirical research has been limited by the lack of systematic data about individual leaders. Archigos is a new dataset with information on leaders in 188 countries from 1875 to 2004. We provide an overview of the main features of this data. Archigos specifically identifies the effective leaders of each independent state; it codes when and how leaders came into power, their age, and their gender, as well as their personal fate one year after they lost office. We illustrate the utility of the Archigos dataset by demonstrating how leader attributes predict other features of interest in International Relations and Comparative Politics. Crisis interactions differ depending on whether leaders face each other for the first time or have had prior interactions. Irregular leader changes can help identify political change in autocracies not apparent from data that consider only the democratic nature of institutions. Finally, transitions to democracy in the third wave are more likely to fail in instances where autocratic rulers were punished after leaving office. Our examples illustrate new empirical findings that simply could not be explored in existing data sources. Although selective, our overview demonstrates how Archigos bears considerable promise in providing answers to new and old research questions and opens up new avenues for research on individual leaders as decisionmakers.
742 citations
"On the looting of nations" refers methods in this paper
...Complementary data is available from Archigos, a database of political leaders developed by Goemans et al. (2009)....
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TL;DR: This article analyzed political and economic data from 121 countries during the period 1950-1982 and found that the probability of a government's being overthrown by a coup is significantly influenced by the level of economic well-being.
Abstract: The transfer of power through the use of military force is a commonplace event in world affairs. Although no two coups d'etat are alike, they all have a common denominator: poverty. We analyze political and economic data from 121 countries during the period 1950–1982 and find that the probability of a government's being overthrown by a coup is significantly influenced by the level of economic well-being. Thus, even authoritarian governments have powerful incentives to promote economic growth, not out of concern for the welfare of their citizens, but because poor economic performance may lead to their removal by force. When the simultaneity of low income and coups is accounted for, we find that the aftereffects of a coup include a heritage of political instability in the form of an increased likelihood of further coups. Although the effect of income on coups is pronounced, we find little evidence of feedback from coups to income growth.
693 citations
"On the looting of nations" refers background in this paper
...One is for annual changes in economic growth following Londregan and Poole (1990) and Alesina et al. (1996) who studied political instability and growth....
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TL;DR: In this article, the authors present a dynamic model of international lending in which borrowers cannot commit to future repayments and in which debtors can sometimes successfully negotiate partial defaults or rescheduling agreements.
Abstract: We present a dynamic model of international lending in which borrowers cannot commit to future repayments and in which debtors can sometimes successfully negotiate partial defaults or "rescheduling agreements." All parties in a debt rescheduling negotiation realize that today's rescheduling agreement may itself have to be renegotiated in the future. Our bargaining-theoretic approach allows us to handle the effects of uncertainty on sovereign debt contracts in a much more satisfactory way than in earlier analyses. The framework is readily extended to analyze the conflicting interest of different lenders and of banks and creditor country taxpayers.
681 citations
Book•
24 Jan 1996
TL;DR: The NBER Macroeconomics Annual as discussed by the authors presents, extends, and applies pioneering work in macroeconomics and stimulates work by macroeconomists on important policy issues, each paper in the Annual is followed by comments and discussion.
Abstract: The NBER Macroeconomics Annual presents, extends, and applies pioneering work in macroeconomics and stimulates work by macroeconomists on important policy issues. Each paper in the Annual is followed by comments and discussion.
680 citations
Posted Content•
TL;DR: In this article, the authors use simple theory and direct evidence to highlight a common thread that runs through these four episodes and suggest that this common thread may be relevant to other cases in which countries took on excessive foreign debt, governments had to bail out insolvent financial institutions, real estate prices increased dramatically and then fell, or new financial markets experienced a boom and bust.
Abstract: During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent - and the government picked up the tab. In Dallas, Texas, real estate prices and construction continued to boom even after vacancies had skyrocketed, and the suffered a dramatic collapse. Also in the United States, the junk bond market, which fueled the takeover wave, had a similar boom and bust. In this paper, we use simple theory and direct evidence to highlight a common thread that runs through these four episodes. The theory suggests that this common thread may be relevant to other cases in which countries took on excessive foreign debt, governments had to bail out insolvent financial institutions, real estate prices increased dramatically and then fell, or new financial markets experienced a boom and bust. We describe the evidence, however, only for the cases of financial crisis in Chile, the thrift crisis in the United States, Dallas real estate and thrifts, and junk bonds. Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.
633 citations
"On the looting of nations" refers background or methods in this paper
...The residuals are jointly statistically insignificant (χ2(3) = 2....
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...V (kt ,dt ,εt) = max χt∈{stay,loot} [v(kt ,dt)+ εt(χt)] (3)...
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...This is akin to the voluntary liquidation—or “looting”—option first modeled by Akerlof and Romer (1994) and discussed in the context of African economies by Bates (2008)....
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...Here we discuss a model based on Akerlof and Romer (1994) in which we investigate the effects of natural resource abundance, poor governance and unsound lending on political stability and ultimately on economic performance....
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...(2) transitory investment in the country’s capital base to build up additional liquidity for looting in the medium term; or (3) long-term investment in the economy (and possibly in shared consumption or political repression) in an attempt to secure tenure and to consume from the economy....
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