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: Barro and Sala-i-Martin this paper analyzed the relationship between openness and productivity growth in 93 countries and found that more open countries experienced faster productivity growth, and used nine indexes of trade policy to investigate whether the evidence supports the view that total factor productivity growth is faster in more open economies.
Abstract: Comparative data for 93 countries are used to analyse the robustness of the relationship between openness and total factor productivity growth. Nine indexes of trade policy are used to investigate whether the evidence supports the view that total factor productivity growth is faster in more open economies. The results are robust to the use of openness indicator, estimation technique, time period and functional form, and suggest that more open countries experienced faster productivity growth. Although the use of instrumental variables help dealing with endogeneity, issues related to causality remain somewhat open, and require time series analyses to be adequately addressed. Old controversies die slowly. For over a century social analysts have debated the connection between trade policy and economic performance. While according to liberal economists freer trade results in faster growth, some analysts have argued that protectionism may help economic performance. This controversy continues today, even as the world is experiencing an unprecedented period of trade liberalisation, and in spite of numerous empirical studies that claim to have found a positive effect of openness on growth. The most prominent trade liberalisation sceptics include Krugman (1994) and Rodrik (1995), who have argued that the effect of openness on growth is, at best, very tenuous, and at worst, doubtful. Two issues have been at the core of these controversies: first, until recently theoretical models had been unable to link trade policy to faster equilibrium growth. And second, the empirical literature on the subject has been affected by serious data problems.1 During the last decade, however, the 'new' theories of growth pioneered by Romer (1986) and Lucas (1988) have provided persuasive intellectual support for the proposition that openness affects growth positively. Romer (1992), Grossman and Helpman (1991) and Barro and Sala-i-Martin (1995), among others, have argued that countries that are more open to the rest of the world have a greater ability to absorb technological advances generated in leading nations. Barro and Sala-i-Martin (1995, Ch. 8), for example, consider a twocountries world (one advanced and one developing), differentiated inputs, and no capital mobility. Innovation takes place in the advanced (or leading) nation, while the poorer (or follower) country confines itself to imitating the new techniques. The equilibrium rate of growth in the poorer country depends on the cost of imitation, and on its initial stock of knowledge. If the costs of imitation are lower than the cost of innovation, the poorer country will
1,694 citations
TL;DR: This paper reviewed a wide range of recent attempts in both economics and political science to explain the "resource curse" and found that much has been learned about the economic problems of resource exporters but less is known about their political problems.
Abstract: How does a state's natural resource wealth influence its economic development? For the past fifty years, versions of this question have been explored by both economists and political scientists. New research suggests that resource wealth tends to harm economic growth, yet there is little agreement on why this occurs. This article reviews a wide range of recent attempts in both economics and political science to explain the “resource curse.” It suggests that much has been learned about the economic problems of resource exporters but less is known about their political problems. The disparity between strong findings on economic matters and weak findings on political ones partly reflects the failure of political scientists to carefully test their own theories.
1,690 citations
01 Jan 2003
TL;DR: In this article, the authors used data for the period 1945 to 1999 on the 161 countries that had a population of at least half a million in 1990 and found that civil war has been a far greater scourge than interstate war in this period, though it has been studied far less.
Abstract: Between 1945 and 1999, about 3.33 million battle deaths occurred in the 25 interstate wars that killed at least 1,000 and had at least 100 dead on each side. These wars involved just 25 states that suffered casualties of at least 1,000 and had a median duration of not quite 3 months. In contrast, in the same period there were roughly 127 civil wars that killed at least 1,000, 25 of which were ongoing in 1999. A conservative estimate of the total dead as a direct result of these conflicts is 16.2 million, five times the interstate toll. These civil wars occurred in 73 states—more than a third of the United Nations system—and had a median duration of roughly six years. 1 The civil conflicts in this period surely produced refugee flows far greater than their death toll and far greater than the refugee flows associated with interstate wars since 1945. Cases such as Afghanistan, Somalia, and Lebanon testify to the economic devastation that civil wars can produce. By these crude measures, civil war has been a far greater scourge than interstate war in this period, though it has been studied far less. What explains the recent prevalence of violent civil conflict around the world? Is it due to the end of the Cold War and associated changes in the international system, or is it the result of longer-term trends? Why have some countries had civil wars while others have not? and Why did the wars break out when they did? We address these questions using data for the period 1945 to 1999 on the 161 countries that had a population of at least half a million in 1990.
1,660 citations
01 Mar 1993
TL;DR: The characteristics of recent capital inflows into Latin America are discussed in this paper, where it is argued that these inflows are partly explained by conditions outside the region, like the recession in the United States and lower international interest rates.
Abstract: The characteristics of recent capital inflows into Latin America are discussed. It is argued that these inflows are partly explained by conditions outside the region, like the recession in the United States and lower international interest rates. The importance of external factors suggests that a reversal of those conditions may lead to a future capital outflow, increasing the macroeconomic vulnerability of Latin American economies. Policy options, it is argued, are limited.
1,527 citations
"On the looting of nations" refers background in this paper
...Similarly, international capital flows to the developing world tend to surge when G-7 interest rates are low (see Calvo et al. 1993, and Calvo et al. 1994)....
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TL;DR: The authors argue that politicians tend to over-extract natural resources relative to the efficient extraction path because they discount the future too much, and resource booms improve the efficiency of the extraction path.
1,456 citations
"On the looting of nations" refers background in this paper
...…quality is one of the main drivers of economic development in general (Acemoglu et al. 2001; Rodrik et al. 2004), and it has been argued that the fates of resource-rich economies in particular are influenced by the quality of their institutions (Robinson et al. 2006; Mehlum et al. 2006)....
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