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: This paper found that the negative relationship between resource abundance and growth in resource-abundance and economic growth is due to factors that are correlated with primary exports but that have been excluded from the regression.
Abstract: It has been widely believed that resource abundant economies grow less than other economies In a very influential paper, Sachs and Warner (1997), point out that there is a negative relationship between resource abundance and growth Two important econometric problems are present in the traditional empirical literature: First, the result might depend on factors that are correlated with primary exports but that have been excluded from the regression Second, total GDP includes the production in the resource sector that has been declining in the last 30 years We correct for those issues Our results indicate that the so called “Natural Resource Curse” might be related to a debt overhang In the 70’s when commodities’ prices were high, natural resource abundant countries used them as collateral for debt The 80’s witnessed an important fall in the prices that drove these countries to debt crises When we estimate the model taking these into account, we found that the effect of resource abundance disappears
213 citations
TL;DR: Inverse stochastic control as discussed by the authors, a statistician observes a realization of a controlled stochastically-constrained process and observes a sequence of states in the process.
Abstract: Consider the following “inverse stochastic control” problem. A statistician observes a realization of a controlled stochastic process $\{ d_t ,x_t \} $ consisting of the sequence of states $x_t$, a...
176 citations
TL;DR: In this paper, the authors argue that domestic private ownership can serve as a more viable way to avoid the resource curse by fostering institutions that more effectively constrain state leaders, encouraging them to invest in institution building, and enabling them to respond more successfully to commodity booms and busts.
Abstract: Countless studies document the correlation between abundant mineral resources and a series of negative economic and political outcomes, including poor economic performance, unbalanced growth, weakly institutionalized states, and authoritarian regimes across the developing world. The disappointing experience of mineral-rich countries has generated a large body of scholarship aimed at explaining this empirical correlation and a list of prescriptions for combating the resource curse. The most popular solutions emphasize macroeconomic policies, economic diversification, natural resource funds, transparency and accountability, and direct distribution to the general population. The success of these solutions has been limited because they either presuppose strong state institutions, which are widely absent in the developing world, or assume state ownership over mineral wealth and thus the need for external actors to constrain the state. At the same time, domestic private ownership is rarely proposed and often maligned. Yet, in some countries, it would serve as a more viable way to avoid the resource curse by fostering institutions that more effectively constrain state leaders, encouraging them to invest in institution building, and enabling them to respond more successfully to commodity booms and busts. he race to find new sources of petroleum has been ongoing since commercially viable oil was discovered in Titusville, Pennsylvania in 1859. Almost a century and a half later, the discovery of new oil wealth in several parts of the world, including Azerbaijan, Kazakhstan, East Timor, Chad, and Sudan has muffled increasingly popular cries that world oil production would
174 citations
"On the looting of nations" refers background in this paper
...…resource wealth; 1 The existence of "excessive resource-based lending" is reinforced by the observation that 12 of the world’s most mineral-dependent countries and six of the world’s most oil-dependent countries are currently classified as highly indebted poor countries (Weinthal and Luong 2006)....
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TL;DR: In this paper, a comparison between Mexico and Indonesia in their policy adjustments to the oil boom with special reference to the Dutch disease is made, showing that Mexico provides a clear-cut example of the resource curse thesis, but Indonesia is an exception.
150 citations
"On the looting of nations" refers background in this paper
...The evolution of these two indicators is indicative of the “boom-based borrowing capacity” highlighted by Usui (1997), and Manzano and Rigobon (2001)....
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