Are Natural Resources Cursed? An Investigation of the Dynamic Effects of Resource Dependence on Institutional Quality
This paper examines whether natural resource dependence has a negative influence on various indicators of institutional quality when controlling for the potential effects of other geographic, economic and cultural initial conditions. Analysis of a...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/07/16558571/natural-resources-cursed-investigation-dynamic-effects-resource-dependence-institutional-quality http://hdl.handle.net/10986/11992 |
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okr-10986-11992 |
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oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTABILITY ADVANCED ECONOMIES AGGREGATE GOVERNANCE INDICATORS AGGREGATE INDICATORS ALLOCATIVE EFFICIENCY ANTICORRUPTION ASYMMETRIC INFORMATION AUCTION AVERAGE RESPONSES BENCHMARK BOND BUSINESS DEVELOPMENT BUSINESS ENVIRONMENT BUSINESS PRACTICES BUSINESS SECTOR BUSINESS SECTOR DEVELOPMENT CAPITAL INFLOWS CAUSAL EFFECT CITIZENS CIVIL SOCIETY COAL COLLECTIVE ACTION COMMERCIAL RISK RATING AGENCIES COMMODITIES COMPARATIVE ECONOMICS COMPETITION POLICIES COMPETITIVENESS CONTRACT ENFORCEMENT CORRUPTION CORRUPTION INDICATOR CORRUPTION LEVELS COUNTRY CHARACTERISTICS COUNTRY DUMMIES COUNTRY DUMMY COUNTRY FIXED EFFECTS COUNTRY REPORTS COUNTRY SPECIFIC VARIABLES CRIME DECENTRALIZATION DEMOCRACY DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DEVELOPMENT PATHS DEVELOPMENT POLICY DIRECT INVESTMENT DOLLAR VALUE DOMAIN DOMESTIC COMPETITION DOMESTIC MARKET ECONOMETRICS ECONOMIC CONDITIONS ECONOMIC CONSEQUENCES ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC FACTORS ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC THEORY ECONOMICS ELASTICITIES ELASTICITY EMPIRICAL EVIDENCE EMPIRICAL STUDIES ENVIRONMENTAL ENVIRONMENTAL ECONOMICS EXCHANGE RATE EXPORT MARKETS EXPORTS EXPOSURE FACTORS OF PRODUCTION FINANCIAL SECTORS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FREE PRESS GDP GDP PER CAPITA GLOBAL COMPETITIVENESS GOVERNANCE INDICATORS GOVERNMENT EFFECTIVENESS GOVERNMENT EXPENDITURE GROWTH PERFORMANCE GROWTH POLICY GROWTH POTENTIAL GROWTH RATES GROWTH THEORIES HUMAN CAPITAL HUMAN RESOURCES INCOME INCOME DISTRIBUTION INCOME LEVELS INCOMES INDUSTRIAL PRODUCTION INEQUALITY INNOVATION INNOVATION POLICY INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL ENVIRONMENT INSTITUTIONAL FRAMEWORK INSTITUTIONAL MEASURES INSTITUTIONAL QUALITY INTERNATIONAL COMPARISON INTERNATIONAL COMPETITIVENESS JUDICIAL SYSTEM JURISDICTION LAW INDEX LEGAL ORIGIN LEGAL ORIGINS LEGAL SYSTEM LIVING STANDARDS MACROECONOMIC MANAGEMENT MANUFACTURING MARKET COMPETITION MARKET ECONOMY MARKET REGULATION MEASURING GOVERNANCE METALS MONETARY ECONOMICS MONOPOLIES NATURAL RESOURCE NATURAL RESOURCES NEGATIVE EXTERNALITIES NEW TECHNOLOGIES OIL OIL PRICES OIL SECTOR OPEN ACCESS OPERATING ENVIRONMENT OUTPUT PER CAPITA INCOME POLICY FORMULATION POLICY MAKERS POLITICAL ACCOUNTABILITY POLITICAL ECONOMY POLITICAL INFLUENCE POLITICAL INSTABILITY POLITICAL POWER POLITICAL STABILITY POSITIVE EFFECTS POSITIVE EXTERNALITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTION PROCESS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC POLICIES PUBLIC POLICY RAPID ECONOMIC GROWTH REGRESSION ANALYSIS REGULATORS REGULATORY CAPTURE REGULATORY ENVIRONMENT REGULATORY FRAMEWORK REGULATORY OUTCOMES REGULATORY QUALITY REGULATORY REGIME REGULATORY_CAPTURE RENT SEEKING RESOURCE ALLOCATION RESOURCE MANAGEMENT RESULT RESULTS REVERSE CAUSALITY RULE OF LAW SHAREHOLDERS SMALL BUSINESS SMALL BUSINESSES SOCIAL INTERACTIONS STAGFLATION STATE CAPTURE STATISTICAL DATA TAX TAX BREAKS TAXATION TERMS OF TRADE TERRORISM THEORETICAL MODELS TRADE POLICY TRANSITION ECONOMIES TRANSMISSION TRANSPARENCY UNOBSERVED COMPONENTS MODEL VESTED INTERESTS VOLATILITY WEALTH WEB WORLD DEVELOPMENT INDICATORS WORLD TRADE WORLD TRADE ORGANIZATION WORLDWIDE GOVERNANCE INDICATORS |
| spellingShingle |
ACCOUNTABILITY ADVANCED ECONOMIES AGGREGATE GOVERNANCE INDICATORS AGGREGATE INDICATORS ALLOCATIVE EFFICIENCY ANTICORRUPTION ASYMMETRIC INFORMATION AUCTION AVERAGE RESPONSES BENCHMARK BOND BUSINESS DEVELOPMENT BUSINESS ENVIRONMENT BUSINESS PRACTICES BUSINESS SECTOR BUSINESS SECTOR DEVELOPMENT CAPITAL INFLOWS CAUSAL EFFECT CITIZENS CIVIL SOCIETY COAL COLLECTIVE ACTION COMMERCIAL RISK RATING AGENCIES COMMODITIES COMPARATIVE ECONOMICS COMPETITION POLICIES COMPETITIVENESS CONTRACT ENFORCEMENT CORRUPTION CORRUPTION INDICATOR CORRUPTION LEVELS COUNTRY CHARACTERISTICS COUNTRY DUMMIES COUNTRY DUMMY COUNTRY FIXED EFFECTS COUNTRY REPORTS COUNTRY SPECIFIC VARIABLES CRIME DECENTRALIZATION DEMOCRACY DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DEVELOPMENT PATHS DEVELOPMENT POLICY DIRECT INVESTMENT DOLLAR VALUE DOMAIN DOMESTIC COMPETITION DOMESTIC MARKET ECONOMETRICS ECONOMIC CONDITIONS ECONOMIC CONSEQUENCES ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC FACTORS ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC THEORY ECONOMICS ELASTICITIES ELASTICITY EMPIRICAL EVIDENCE EMPIRICAL STUDIES ENVIRONMENTAL ENVIRONMENTAL ECONOMICS EXCHANGE RATE EXPORT MARKETS EXPORTS EXPOSURE FACTORS OF PRODUCTION FINANCIAL SECTORS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FREE PRESS GDP GDP PER CAPITA GLOBAL COMPETITIVENESS GOVERNANCE INDICATORS GOVERNMENT EFFECTIVENESS GOVERNMENT EXPENDITURE GROWTH PERFORMANCE GROWTH POLICY GROWTH POTENTIAL GROWTH RATES GROWTH THEORIES HUMAN CAPITAL HUMAN RESOURCES INCOME INCOME DISTRIBUTION INCOME LEVELS INCOMES INDUSTRIAL PRODUCTION INEQUALITY INNOVATION INNOVATION POLICY INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL ENVIRONMENT INSTITUTIONAL FRAMEWORK INSTITUTIONAL MEASURES INSTITUTIONAL QUALITY INTERNATIONAL COMPARISON INTERNATIONAL COMPETITIVENESS JUDICIAL SYSTEM JURISDICTION LAW INDEX LEGAL ORIGIN LEGAL ORIGINS LEGAL SYSTEM LIVING STANDARDS MACROECONOMIC MANAGEMENT MANUFACTURING MARKET COMPETITION MARKET ECONOMY MARKET REGULATION MEASURING GOVERNANCE METALS MONETARY ECONOMICS MONOPOLIES NATURAL RESOURCE NATURAL RESOURCES NEGATIVE EXTERNALITIES NEW TECHNOLOGIES OIL OIL PRICES OIL SECTOR OPEN ACCESS OPERATING ENVIRONMENT OUTPUT PER CAPITA INCOME POLICY FORMULATION POLICY MAKERS POLITICAL ACCOUNTABILITY POLITICAL ECONOMY POLITICAL INFLUENCE POLITICAL INSTABILITY POLITICAL POWER POLITICAL STABILITY POSITIVE EFFECTS POSITIVE EXTERNALITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTION PROCESS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC POLICIES PUBLIC POLICY RAPID ECONOMIC GROWTH REGRESSION ANALYSIS REGULATORS REGULATORY CAPTURE REGULATORY ENVIRONMENT REGULATORY FRAMEWORK REGULATORY OUTCOMES REGULATORY QUALITY REGULATORY REGIME REGULATORY_CAPTURE RENT SEEKING RESOURCE ALLOCATION RESOURCE MANAGEMENT RESULT RESULTS REVERSE CAUSALITY RULE OF LAW SHAREHOLDERS SMALL BUSINESS SMALL BUSINESSES SOCIAL INTERACTIONS STAGFLATION STATE CAPTURE STATISTICAL DATA TAX TAX BREAKS TAXATION TERMS OF TRADE TERRORISM THEORETICAL MODELS TRADE POLICY TRANSITION ECONOMIES TRANSMISSION TRANSPARENCY UNOBSERVED COMPONENTS MODEL VESTED INTERESTS VOLATILITY WEALTH WEB WORLD DEVELOPMENT INDICATORS WORLD TRADE WORLD TRADE ORGANIZATION WORLDWIDE GOVERNANCE INDICATORS De Rosa, Donato Iootty, Mariana Are Natural Resources Cursed? An Investigation of the Dynamic Effects of Resource Dependence on Institutional Quality |
| geographic_facet |
Europe and Central Asia Russian Federation Canada |
| relation |
Policy Research working paper ; no. WPS 6151 |
| description |
This paper examines whether natural
resource dependence has a negative influence on various
indicators of institutional quality when controlling for the
potential effects of other geographic, economic and cultural
initial conditions. Analysis of a panel of countries from
1996 to 2010 indicates that a high degree of resource
dependence, measured as the share of mineral fuel exports in
a country's total exports, is associated with worse
government effectiveness, as well as with reduced levels of
competition across the economy. Furthermore, estimation of
long-run elasticities suggests that government effectiveness
and the intensity of domestic competition decrease over time
as the dependence on natural resources increases. An
illustration of the Russian case shows that the negative
effects accumulate in the long run, leading to a worse
deterioration of government effectiveness in Russia than in
Canada, a country with a comparable resource endowment but
far better overall institutional quality. This result is
corroborated by a significant negative correlation found
between regional resource dependence and an indicator of
regulatory capture in Russian regions, which indicates that
the regulatory environment is more likely to be subverted in
regions that are more dependent on extractive industries.
Overall, the findings would be consistent with a situation
in which a generally weak institutional environment would
allow resource interests to wield the bidding power accruing
from export revenues to subvert the content of laws and
regulations, as well as their enforcement. The fact that
this is associated with negative externalities for the rest
of the economy, notably by undermining a level playing field
across non-resource sectors, sheds light on a potential
channel for the resource curse. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
De Rosa, Donato Iootty, Mariana |
| author_facet |
De Rosa, Donato Iootty, Mariana |
| author_sort |
De Rosa, Donato |
| title |
Are Natural Resources Cursed? An
Investigation of the Dynamic Effects of Resource Dependence
on Institutional Quality |
| title_short |
Are Natural Resources Cursed? An
Investigation of the Dynamic Effects of Resource Dependence
on Institutional Quality |
| title_full |
Are Natural Resources Cursed? An
Investigation of the Dynamic Effects of Resource Dependence
on Institutional Quality |
| title_fullStr |
Are Natural Resources Cursed? An
Investigation of the Dynamic Effects of Resource Dependence
on Institutional Quality |
| title_full_unstemmed |
Are Natural Resources Cursed? An
Investigation of the Dynamic Effects of Resource Dependence
on Institutional Quality |
| title_sort |
are natural resources cursed? an
investigation of the dynamic effects of resource dependence
on institutional quality |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2012/07/16558571/natural-resources-cursed-investigation-dynamic-effects-resource-dependence-institutional-quality http://hdl.handle.net/10986/11992 |
| _version_ |
1764418654003265536 |
| spelling |
okr-10986-119922021-04-23T14:02:58Z Are Natural Resources Cursed? An Investigation of the Dynamic Effects of Resource Dependence on Institutional Quality De Rosa, Donato Iootty, Mariana ACCOUNTABILITY ADVANCED ECONOMIES AGGREGATE GOVERNANCE INDICATORS AGGREGATE INDICATORS ALLOCATIVE EFFICIENCY ANTICORRUPTION ASYMMETRIC INFORMATION AUCTION AVERAGE RESPONSES BENCHMARK BOND BUSINESS DEVELOPMENT BUSINESS ENVIRONMENT BUSINESS PRACTICES BUSINESS SECTOR BUSINESS SECTOR DEVELOPMENT CAPITAL INFLOWS CAUSAL EFFECT CITIZENS CIVIL SOCIETY COAL COLLECTIVE ACTION COMMERCIAL RISK RATING AGENCIES COMMODITIES COMPARATIVE ECONOMICS COMPETITION POLICIES COMPETITIVENESS CONTRACT ENFORCEMENT CORRUPTION CORRUPTION INDICATOR CORRUPTION LEVELS COUNTRY CHARACTERISTICS COUNTRY DUMMIES COUNTRY DUMMY COUNTRY FIXED EFFECTS COUNTRY REPORTS COUNTRY SPECIFIC VARIABLES CRIME DECENTRALIZATION DEMOCRACY DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DEVELOPMENT PATHS DEVELOPMENT POLICY DIRECT INVESTMENT DOLLAR VALUE DOMAIN DOMESTIC COMPETITION DOMESTIC MARKET ECONOMETRICS ECONOMIC CONDITIONS ECONOMIC CONSEQUENCES ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC FACTORS ECONOMIC GROWTH ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC THEORY ECONOMICS ELASTICITIES ELASTICITY EMPIRICAL EVIDENCE EMPIRICAL STUDIES ENVIRONMENTAL ENVIRONMENTAL ECONOMICS EXCHANGE RATE EXPORT MARKETS EXPORTS EXPOSURE FACTORS OF PRODUCTION FINANCIAL SECTORS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FREE PRESS GDP GDP PER CAPITA GLOBAL COMPETITIVENESS GOVERNANCE INDICATORS GOVERNMENT EFFECTIVENESS GOVERNMENT EXPENDITURE GROWTH PERFORMANCE GROWTH POLICY GROWTH POTENTIAL GROWTH RATES GROWTH THEORIES HUMAN CAPITAL HUMAN RESOURCES INCOME INCOME DISTRIBUTION INCOME LEVELS INCOMES INDUSTRIAL PRODUCTION INEQUALITY INNOVATION INNOVATION POLICY INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL ENVIRONMENT INSTITUTIONAL FRAMEWORK INSTITUTIONAL MEASURES INSTITUTIONAL QUALITY INTERNATIONAL COMPARISON INTERNATIONAL COMPETITIVENESS JUDICIAL SYSTEM JURISDICTION LAW INDEX LEGAL ORIGIN LEGAL ORIGINS LEGAL SYSTEM LIVING STANDARDS MACROECONOMIC MANAGEMENT MANUFACTURING MARKET COMPETITION MARKET ECONOMY MARKET REGULATION MEASURING GOVERNANCE METALS MONETARY ECONOMICS MONOPOLIES NATURAL RESOURCE NATURAL RESOURCES NEGATIVE EXTERNALITIES NEW TECHNOLOGIES OIL OIL PRICES OIL SECTOR OPEN ACCESS OPERATING ENVIRONMENT OUTPUT PER CAPITA INCOME POLICY FORMULATION POLICY MAKERS POLITICAL ACCOUNTABILITY POLITICAL ECONOMY POLITICAL INFLUENCE POLITICAL INSTABILITY POLITICAL POWER POLITICAL STABILITY POSITIVE EFFECTS POSITIVE EXTERNALITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTION PROCESS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC POLICIES PUBLIC POLICY RAPID ECONOMIC GROWTH REGRESSION ANALYSIS REGULATORS REGULATORY CAPTURE REGULATORY ENVIRONMENT REGULATORY FRAMEWORK REGULATORY OUTCOMES REGULATORY QUALITY REGULATORY REGIME REGULATORY_CAPTURE RENT SEEKING RESOURCE ALLOCATION RESOURCE MANAGEMENT RESULT RESULTS REVERSE CAUSALITY RULE OF LAW SHAREHOLDERS SMALL BUSINESS SMALL BUSINESSES SOCIAL INTERACTIONS STAGFLATION STATE CAPTURE STATISTICAL DATA TAX TAX BREAKS TAXATION TERMS OF TRADE TERRORISM THEORETICAL MODELS TRADE POLICY TRANSITION ECONOMIES TRANSMISSION TRANSPARENCY UNOBSERVED COMPONENTS MODEL VESTED INTERESTS VOLATILITY WEALTH WEB WORLD DEVELOPMENT INDICATORS WORLD TRADE WORLD TRADE ORGANIZATION WORLDWIDE GOVERNANCE INDICATORS This paper examines whether natural resource dependence has a negative influence on various indicators of institutional quality when controlling for the potential effects of other geographic, economic and cultural initial conditions. Analysis of a panel of countries from 1996 to 2010 indicates that a high degree of resource dependence, measured as the share of mineral fuel exports in a country's total exports, is associated with worse government effectiveness, as well as with reduced levels of competition across the economy. Furthermore, estimation of long-run elasticities suggests that government effectiveness and the intensity of domestic competition decrease over time as the dependence on natural resources increases. An illustration of the Russian case shows that the negative effects accumulate in the long run, leading to a worse deterioration of government effectiveness in Russia than in Canada, a country with a comparable resource endowment but far better overall institutional quality. This result is corroborated by a significant negative correlation found between regional resource dependence and an indicator of regulatory capture in Russian regions, which indicates that the regulatory environment is more likely to be subverted in regions that are more dependent on extractive industries. Overall, the findings would be consistent with a situation in which a generally weak institutional environment would allow resource interests to wield the bidding power accruing from export revenues to subvert the content of laws and regulations, as well as their enforcement. The fact that this is associated with negative externalities for the rest of the economy, notably by undermining a level playing field across non-resource sectors, sheds light on a potential channel for the resource curse. 2012-12-21T19:00:03Z 2012-12-21T19:00:03Z 2012-07 http://documents.worldbank.org/curated/en/2012/07/16558571/natural-resources-cursed-investigation-dynamic-effects-resource-dependence-institutional-quality http://hdl.handle.net/10986/11992 English Policy Research working paper ; no. WPS 6151 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Europe and Central Asia Russian Federation Canada |