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
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TL;DR: The authors developed a model of rent-seeking in which the opportunity cost of rentseeking is foregone entrepreneurship and provided conditions under which resource booms tend to lead to an increase in rentseeking activity and those in which they induce entrepreneurship.
378 citations
TL;DR: In this paper, the authors use basic tools of economic theory to construct a simple model of the behavior of dictatorships and show that a decline in economic performance will lead a tin-pot regime to increase its repression of the population, whereas it will lead to a totalitarian government to reduce repression.
Abstract: I use basic tools of economic theory to construct a simple model of the behavior of dictatorships. Two extreme cases are considered: a “tin-pot” dictatorship, in which the dictator wishes only to minimize the costs of remaining in power in order to collect the fruits of office (palaces, Mercedes-Benzes, Swiss bank accounts), and a “totalitarian” dictatorship, whose leader maximizes power over the population. I show that the two differ in their responses to economic change. For example, a decline in economic performance will lead a tin-pot regime to increase its repression of the population, whereas it will lead a totalitarian government to reduce repression. The model also shows why military dictatorships (a subspecies of tin-pots) tend to be short-lived and often voluntarily hand power over to a civilian regime; explains numerous features of totalitarian regimes; and suggests what policies will enable democratic regimes to deal with dictatorships effectively.
362 citations
TL;DR: In this article, a simple model of international lending where the borrower can repudiate, without legal sanction, if this is to his advantage is examined, and it is shown that, although debt is initially restricted, in the long run consumption is completely stabilised.
358 citations
TL;DR: In this paper, Kletzer et al. show that intertemporal trade can be sustained in the absence of any exogenous enforcement of lending relationships whatsoever, and are supported by punishments that consist of cheating any cheater.
Abstract: Author(s): Kletzer, Kenneth M.; Wright, Brian D. | Abstract: Borrowing and lending between sovereign parties is modeled as intertemporal barter that smoothes the consumption of a risk-averse party subject to endowment shocks. The surplus anticipated in the relationship offers sufficient incentive for cooperation by all parties, including any other competitive agents who are potential lenders to the sovereign. The sole punishments consist of renegotiation-proof changes in the path of future payments. We show that intertemporal trade can be sustained in the absence of any exogenous enforcement of lending relationships whatsoever. That is, borrowing and lending are possible under anarchy, and are supported by punishments that consist of cheating any cheater. Long-term implicit relationships may be fulfilled as the continual renegotiation of simple incomplete short-term loans. The analysis suggests that the crucial role of the explicit loan contract is the identification of the relationship and the parties involved.
324 citations