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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Book•
01 Jan 2006
1,045 citations
"On the looting of nations" refers background in this paper
...…introduced by Hall and Jones (1999), the number of violent demonstrations and clashes (Banks 2001), the existence of an active guerrilla force (Banks 2001), and the number of peaceful demonstrations of 100 or more people in protest of the regime (Banks 2001) all help determine whether looting…...
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...Γ(k,d) = ⎧⎨⎩ k′ = f (k)+Zφ +(1−δ )k− c− (1+ r)d +d′ d′ = d + l d′ ≤ (1+ r) r (θzZ +θkk) l ≤ θzZ +θkk c≥ 0; k ≥ 0; d ≥ 0 k(0) = k0; d(0) = d0 (6)...
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...…fraction of people speaking a European language at birth introduced by Hall and Jones (1999), the number of violent demonstrations and clashes (Banks 2001), the existence of an active guerrilla force (Banks 2001), and the number of peaceful demonstrations of 100 or more people in protest of…...
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...…demonstrations and clashes (Banks 2001), the existence of an active guerrilla force (Banks 2001), and the number of peaceful demonstrations of 100 or more people in protest of the regime (Banks 2001) all help determine whether looting is in fact present in the observed irregular regime change....
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Book•
01 Jan 1998
TL;DR: In this paper, the authors present a long-term view of resource-based economic growth in resource-abundant countries, focusing on the following: 1. Natural Resources, Human Capital, and Growth, Capital Accumulation, Structural Change, and Welfare 2. The Social Foundations of Poor Economic Growth in Resource-Rich Countries, and 3. The Sustainability of Extractive Economies 4.
Abstract: I. INTRODUCTION Introduction and Overview II. CRITICAL PARAMETERS IN RESOURCE-BASED DEVELOPMENT MODELS 2. Natural Resources, Capital Accumulation, Structural Change, and Welfare 3. The Sustainability of Extractive Economies 4. Natural Resources, Human Capital, and Growth 5. The Social Foundations of Poor Economic Growth in Resource-Rich Countries III. LONG-TERM PERSPECTIVE ON, AND MODELS OF, RESOURCE-BASED GROWTH 6. Natural Resources and Economic Development: The 1870-1914 Experience 7. Short-Run Models of Contrasting Natural Resource Endowments 8. Political Economy of Resource-Abundant States IV. DEVELOPMENT TRAJECTORIES OF RESOURCE-ABUNDANT COUNTRIES 9. Competitive Industrialization with Natural Resource Abundance: Malaysia 10. A Growth Collapse with Diffuse Resources: Ghana 11. A Growth Collapse with Point Resources: Bolivia 12. A Growth Collapse with High Rent Point Resources: Saudi Arabia 13. Large Resource-Abundant Countries Squander their Size Advantage: Mexico and Argentina V. LESSONS FOR POLICY REFORM 14. Reforming a Small Resource-Rich Developing Market Economy: Costa Rica 15. Growth, Capital Accumulation, and Economic Reform in South Africa 16. Reforming Resource-Abundance Transition Economies: Kazakhstan and Uzbekistan 17. Reforming a Large Resource-Abundant Transition Economy: Russia 18. A Nordic Perspective on Natural Resource Abundance VI. CONCLUSIONS 19. Conclusions: Resource Abundance, Growth Collapse, and Policy
1,023 citations
TL;DR: This article showed that trade liberalization does not have a simple and straightforward relationship with growth using a large number of trade openness measures for a cross section of countries over the last three decades.
888 citations
TL;DR: In this article, the authors consider a group of roving bandits in an anarchic environment, where there is little incentive to invest or produce, and therefore not much to steal.
Abstract: Consider the interests of the leader of a group of roving bandits in an anarchic environment. In such an environment, there is little incentive to invest or produce, and therefore not much to steal. If the bandit leader can seize and hold a given territory, it will pay him to limit the rate of his theft in that domain and to provide a peaceful order and other public goods. By making it clear that he will take only a given percentage of output — that is, by becoming a settled ruler with a given rate of tax theft — he leaves his victims with an incentive to produce. By providing a peaceful order and other public goods, he makes his subjects more productive. Out of the increase in output that results from limiting his rate of theft and from providing public goods, the bandit obtains more resources for his own purposes than from roving banditry.
885 citations
"On the looting of nations" refers background in this paper
...5Comparing Figures 2 and 4 demonstrates the point of McGuire and Olson (1996)....
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TL;DR: This article showed that countries dependent on point source natural resources (those extracted from a narrow geographic or economic base, such as oil and minerals) and plantations are predisposed to heightened economic and social divisions and weakened institutional capacity.
Abstract: Many oil, mineral, and plantation crop-based economies experienced a substantial deceleration in growth following the commodity boom and bust of the 1970s and early 1980s. This article illustrates how countries dependent on point source natural resources (those extracted from a narrow geographic or economic base, such as oil and minerals) and plantation crops are predisposed to heightened economic and social divisions and weakened institutional capacity. This in turn impedes their ability to respond effectively to shocks, which previous studies have shown to be essential for sustaining rising levels of prosperity. Analysis of data on classifications of export structure, controlling for a wide array of other potential determinants of governance, shows that point source and coffee and cocoa exporting countries do relatively poorly across an array of governance indicators. These governance effects are not associated simply with being a natural resource exporter. Countries with natural resource exports that are diffuse relying primarily on livestock and agricultural produce from small family farms do not show the same strong effects and have had more robust growth recoveries.
804 citations
"On the looting of nations" refers background in this paper
...Reduced growth in resource-rich countries has been associated with (i) increased indebtedness (Manzano and Rigobon 2001), (ii) domestic conflict and political instability (Collier and Hoeffler 2004), and with (iii) autocratic regimes and poor institutions (Ross 2001; Isham et al. 2005)....
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