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Journal ArticleDOI

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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Citations
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01 Jan 1906

578 citations

Journal ArticleDOI
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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Journal ArticleDOI
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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Journal ArticleDOI

2,337 citations


"On the looting of nations" refers background in this paper

  • ...This implies that: lt ≤ θzZ +θkkt (1) The second point captures the idea of a credit ceiling (Eaton and Gersovitz 1981)....

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ReportDOI
TL;DR: This article showed that countries with a high ratio of natural resource exports to GDP tended to have low growth rates during the subsequent period 1971-89, even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables.
Abstract: One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural-resource-scarce economies. In this paper we show that economies with a high ratio of natural resource exports to GDP in 1971 (the base year) tended to have low growth rates during the subsequent period 1971-89. This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables. We explore the possible pathways for this negative relationship by studying the cross-country effects of resource endowments on trade policy, bureaucratic efficiency, and other determinants of growth. We also provide a simple theoretical model of endogenous growth that might help to explain the observed negative relationship.

2,317 citations

Journal ArticleDOI
01 Oct 1998
TL;DR: The authors investigated whether civil wars have economic causes, and found that the relationship between civil wars and ethnic diversity is non-monotonic; highly fractionalised societies have no greater risk of experiencing a civil war than homogenous ones.
Abstract: We investigate whether civil wars have economic causes. The model is based on utility theory, rebels will conduct a civil war if the perceived benefits outweigh the costs of rebellion. Using probit and tobit models the propositions are tested empirically. Four variables, initial income, ethno-linguistic fractionalisation, the amount of natural resources, and initial population size are significant and strong determinants of the duration and the probability of civil wars. One important finding is that the relationship between civil wars and ethnic diversity is non-monotonic; highly fractionalised societies have no greater risk of experiencing a civil war than homogenous ones.

2,314 citations


"On the looting of nations" refers background or methods in this paper

  • ...Panel A represents growth equation (15) and Panel B presents the results from turnover equation (16)....

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  • ...Turnoverit = { 1 if Turnover∗ it > 0 0 otherwise (16) Turnover∗ it = β0 + β1Resourcesit + β2Lendingit + β3Resourcesit ∗ Lendingit + β4log(GDPcap)it + β5log(GDPcap) 2 it + β6X2it + ηit...

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  • ...We estimate equations (15) and (16) jointly by Full Information Maximum Likelihood (FIML) using a treatment regression approach....

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Journal ArticleDOI
TL;DR: In this article, the authors present a data set that improves the measurement of educational attainment for a broad group of countries, and they extend their previous estimates to 1995 for the population over ages 15 and 25.
Abstract: This paper presents a data set that improves the measurement of educational attainment for a broad group of countries. We extend our previous estimates to 1995 for educational attainment for the population over ages 15 and 25. We also provide projections for 2000. We discuss the estimation method for the measures of educational attainment and relate our estimates to alternative international measures of human capital stocks.

2,155 citations

Posted Content
TL;DR: In this article, the authors claim that the main reason for diverging experiences is differences in the quality of institutions, and they test this theory building on Sachs and Warner's influential works on the resource curse.
Abstract: Countries rich in natural resources constitute both growth losers and growth winners. We claim that the main reason for these diverging experiences is differences in the quality of institutions. More natural resources push aggregate income down, when institutions are grabber friendly, while more resources raise income, when institutions are producer friendly. We test this theory building on Sachs and Warner's influential works on the resource curse. Our main hypothesis: that institutions are decisive for the resource curse, is confirmed. Our results are in sharp contrast to the claim by Sachs and Warner that institutions do not play a role.

2,148 citations