Resources for Sale: Corruption, Democracy and the Natural Resource Curse

R. Damania, E.H. Bulte

Research output: Contribution to journalArticleAcademicpeer-review

62 Citations (Scopus)

Abstract

A puzzling piece of empirical evidence suggests that resource-abundant countries tend to grow slower than their resource-poor counterparts. We attempt to explain this phenomenon by developing a lobbying game in which rent seeking firms interact with corrupt governments. The presence or absence of political competition, as well as the potential costs of political transitions, turn out to be key elements in generating the `resource curse.¿ These variables define the degree of freedom that incumbent governments have in pursuing development policies that maximize surplus in the lobbying game, but put the economy off its optimal path. We test our predictions by adding measures of democracy and authoritarianism to existing regression models of the resource curse, and obtain support for our hypotheses
Original languageEnglish
Article number5
JournalThe B.E. Journal of Economic Analysis & Policy
Volume8
Issue number1
DOIs
Publication statusPublished - 2008

Keywords

  • political-economy
  • rent-seeking
  • civil-war
  • big push
  • growth
  • institutions
  • allocation
  • booms

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