Poverty Maps and Darkness

From the updated OxCARRE paper [pdf, oxcarre.ox.ac.uk], Left in the Dark of Brock Smith [brockdsmith.com] and Sam Wills [wordpress.com] come these interesting maps on rural poverty.

Read on at Sam's website [wordpress.com]

New Research: Labor market dynamics and the unconventional natural gas boom: Evidence from the Marcellus region

Timothy M. Komarek ([sites.google.com], Old Dominion University) writes on

Labor market dynamics and the unconventional natural gas boom: Evidence from the Marcellus region

Abstract

The energy extraction boom of the mid 2000s impacted local economies in areas with substantial shale oil and gas reserves. I examine the impact of the energy boom on the labor market by exploiting a natural experiment in the Marcellus region. In particular, I compare counties with fracking activity in Pennsylvania, Ohio and West Virginia to the control group of counties in New York, which imposed a moratorium and later ban on fracking. I look at how the benefits to the labor demand shock are shared between industries as well as how employment and wages in related industries adjust over the course of the resource boom. The results suggest total employment and wages per job increase by 7% and 11% respectively above pre-boom levels in the three years after the boom, but decline after 4 years or more. The results also show significant positive spillovers to related sectors, such as construction, transportation, retail trade and accommodations. However, there is no evidence of the so called ‘resource curse’ crowding out employment or increasing wages in manufacturing.

Published in Resource and Energy Economics, Volume 45, August 2016, Pages 1–17, available here [sciencedirect.com].

New research: Resource revenue management and wealth neutrality in Norway

Klaus Mohn ([uis.no], University of Stavanger) writes on

Resource revenue management and wealth neutrality in Norway

Abstract:

An important idea behind the Norwegian oil fund mechanism and the fiscal spending rule is to protect the non-oil economy from the adverse effects of excessive spending of resource revenues over the Government budget. A critical assumption in this respect is that public sector saving is not being offset by private sector dissaving, which is at stake with the hypothesis of Ricardian equivalence. Based on a framework of co-integrating saving rates, this model provides an empirical test of the Ricardian equivalence hypothesis on Norwegian time series data. Although the model rejects the strong-form presence of Ricardian equivalence, results indicate that the Norwegian approach does not fully succeed in separating spending of resource revenues from the accrual of the same revenues.

Published in Energy Policy, Volume 96, September 2016, Pages 446–457, find here [sciencedirect.com]

Journal of Development Studies special issue on natural resources

The Journal of Development Studies is brining out a special issue on Natural resources with the following papers:


Elissaios Papyrakis ([uea.ac.uk] University of East Anglia)

The Resource Curse - What Have We Learned from Two Decades of Intensive Research: Introduction to the Special Issue

There has been increasing interest in the so-called ‘resource curse’, that is the tendency of resource-rich countries to underperform in several development outcomes. This has generated a mountain of (often contradictory) evidence leaving many floundering in the flood of information. This special issue compiles eight papers from some of the most prominent contributors to this literature, combining original research with critical reflection on the current stock of knowledge. The studies collectively emphasise the complexities and conditionalities of the ‘curse’ – its presence/intensity is largely context-specific, depending on the type of resources, socio-political institutions and linkages with the rest of the economy.

read on here [tandfonline.com].


Frederick Van Der Ploeg ([oxcarre.ox.ac.uk] OxCARRE, University of Oxford) and Associate researcher Steven Poelhekke ([sites.google.com, Vrije Universiteit Amsterdam)

The Impact of Natural Resources: Survey of Recent Quantitative Evidence

The cross-country empirical evidence for the natural resource curse is ample, but unfortunately fraught with econometric difficulties. A recent wave of studies on measuring the impact of natural resource windfalls on the economy exploits novel datasets such as giant oil discoveries to identify effects of windfalls, uses natural experiments and within-country econometric analysis, and estimates local impacts. These studies offer more hope in the search of quantitative evidence.

Read on here [tandfonline.com].

Emma Gilberthorpe ([uea.ac.uk] University of East Anglia) & Dinah Rajak ([sussex.ac.uk] University of Sussex)

The Anthropology of Extraction: Critical Perspectives on the Resource Curse

Attempts to address the resource curse remain focussed on revenue management, seeking technical solutions to political problems over examinations of relations of power. In this paper, we provide a review of the contribution anthropological research has made over the past decade to understanding the dynamic interplay of social relations, economic interests and struggles over power at stake in the political economy of extraction. In doing so, we show how the constellation of subaltern and elite agency at work within processes of resource extraction is vital in order to confront the complexities, incompatibilities, and inequities in the exploitation of mineral resources.

read on here [tandfonline.com].

Elissaios Papyrakis ([uea.ac.uk] University of East Anglia), Matthias Rieger ([weebly.com] Erasmus University Rotterdam) & Emma Gilberthorpe ([uea.ac.uk] University of East Anglia)

Corruption and the Extractive Industries Transparency Initiative

The Extractive Industries Transparency Initiative (EITI) has received much attention as a scheme that can help reduce corruption in mineral-rich developing economies. To our knowledge, this paper provides the first empirical attempt (using panel data) to explore how EITI membership links to changes in corruption levels. We also examine whether the different stages in EITI implementation (initial commitment, candidature, full compliance) influence the pace of changes in corruption. We find that EITI membership offers, on the whole, a shielding mechanism against the general tendency of mineral-rich countries to experience increases in corruption over time.

read on here [tandfonline.com].


Doug Porter ([worldbank.org] Worldbank) & Michael Watts ([berkeley.edu] UC Berkeley Geography)

Righting the Resource Curse: Institutional Politics and State Capabilities in Edo State, Nigeria

The poor record of liberal reforms sponsored by the international community in postcolonial settings underscores the real politik of institutional change. What we call a ‘new normal’ in development policy and practice foregrounds the role of agency – leadership, networks of connectors and convenors, entrepreneurs and activists – but it has less to say about the political and economic conditions of possibility in which agents operate. The putative powers of agency seem most challenged in contexts of extreme resource dependency and the resource curse. The particular case of Edo, a state in the oil rich Niger delta region of Nigeria, illustrates the intersection of agency and structural conditions to show how ‘asymmetric capabilities’ can emerge to create, constrain and make possible particular reform options. 

Read on here [tandfonline.com].


R. M. Auty ([lancaster.ac.uk] University of Lancaster)

Natural Resources and Small Island Economies: Mauritius and Trinidad and Tobago

Historically, small economies, especially resource-rich ones, underperformed on average relative to their larger counterparts. Small island economies appear still more disadvantaged due to remoteness from both markets and agglomeration economies. Yet a comparison of two small island economies with similar initial conditions other than their mineral endowment suggests that policy outweighs size, isolation and resource endowment in determining economic performance. Resource-poor Mauritius adopted an unfashionable policy of export manufacturing that systematically eliminated surplus labour, which drove economic diversification that sustained rapid GDP growth and political maturation. Like most resource-rich economies, Trinidad and Tobago pursued policies that absorbed rent too rapidly, which impeded diversification and created an illusory prosperity vulnerable to collapse.

Read on here [tandfonline.com].

Gavin Hilson ([surrey.ac.uk] University of Surrey) & Tim Laing (University of the West Indies)

Guyana Gold: A Unique Resource Curse?

This article offers explanations for the underwhelming economic performance of Guyana, a country heavily dependent on the revenue generated from gold mining. Here, government intervention has spawned a gold mining sector which today is comprised exclusively of local small and medium-scale operators. But whilst this rather unique model appears to be the ideal blueprint for facilitating local development, the country seems to be experiencing many of the same setbacks that have beset scores of other resource-rich developing world economies. Unless these problems are anticipated, properly diagnosed and appropriately tackled, a resource curse-type outcome is inevitable, irrespective of the context.

Read on here [tandfonline.com].

New Research: Government size, misallocation and the resource curse

Radek Stefanski [weebly.com](University of St. Andrews and external research associate of OxCARRE) writes on

Government size, misallocation and the resource curse

I do two things in this paper: First, using a panel of macro cross-country data, I demonstrate that the share of public sector employment is greater in resource-rich countries than in resource-poor countries even controlling for the size of other non-traded sectors. Second, I construct and calibrate a small, open economy model with two production sectors and a government sector in which (optimally) higher government employment shares emerge as a consequence of windfall-induced labor reallocation. I then use a model to compare the optimal and observed size of government in order to obtain an estimate of the extent of government misallocation and the impact it has on welfare and productivity.

Chapter available here [bcentral.cl],

published in Commodity Prices and Macroeconomic Policy, edited by Rodrigo Caputo and Roberto Chang. Santiago, Chile. 2015. Central Bank of Chile. See here [bcentral.cl].

New Research: Election cycles in natural resource rents: Empirical evidence

Jeroen Klomp ([sites.google.com] University of Wageningen) Jakob de Haan ([rug.nl] University of Groningen) write on

Election cycles in natural resource rents: Empirical evidence

Abstract

We examine whether governments’ natural resource rents are affected by upcoming elections and if so, whether the incumbent uses these additional rents for re-election purposes. Estimates of a dynamic panel model for about 60 countries for 1975-2011 suggest that elections increase natural resource rents. The incumbent uses these rents for expanding public spending and reducing taxes before elections. However, these electoral cycle effects are statistically significant only in young democracies. Our results also suggest that election effects are stronger in countries with limited access to free media, limited political checks and balances, and a presidential system.

Forthcoming in Journal of Development Economics, available here [sciencedirect.com]

New Research: On the timing of political regime changes in resource-dependent economies

New research from Raouf Boucekkine ([greqam.fr] University of Aix-Marsaille) , Fabien Prieur ([tse-fr.eu], Toulouse School of Economics), Klarizze Puzon (Aix-Marseille School of Economics)

On the timing of political regime changes in resource-dependent economies

Abstract

We consider a resource-dependent economy initially ruled by the elite. The transition from the autocratic to a more democratic regime takes place only if the citizens decide to revolt against the elite. The occurrence of a revolution primarily depends on the autocratic regime vulnerability and the level of inequalities, both being driven by the elite's redistribution and repression policies. First, we show that when a political transition is inevitable, the elite choose the maximum rate of redistribution to lengthen their period in office. Second, we find that the duration of the autocratic regime is linked to resource abundance, and how it relates to the elite's policies. More resources lead to a shorter reign of a redistributive regime, which may not be the case of a repressive regime. Finally, we interpret the Arab spring sequence in light of our findings.

Forthcoming in European Economic Review, Available here [sciencedirect.com].

NYT: ExxonMobil investigated for frauding investors over climate research

Back in september we looked at a report on Exxon's shifts from climate export to being a fierce critic. The New York Times reports that the New York Attorney General has now started an investigation into the issue and whether ExxonMobil may have mislead investors.

The investigation focuses on whether statements the company made to investors about climate risks as recently as this year were consistent with the company’s own long-running scientific research.

World Energy Outlook cautiously optimistic on shift to low carbon future

The International Energy Agency issued its World Energy Outlook [worldenergyoutlook.org]. It's heavy on the connection between energy demand and climate change and aims to give some projections on short and long term developments.
Some interesting quotes from the Executive Summary [iea.org]:

There was also a tantalising hint in the 2014 data of a de-coupling in the relationship between CO2 emissions and economic activity, until now a very predictable link.

By 2040, Asia is projected to account for four out of every five tonnes of coal consumed globally, (...). However, its continued use around the world is compatible with stringent environmental policies only if it is used in the most efficient way, with advanced control technologies to reduce air pollution, and if progress is made in demonstrating that CO2 can be safely and cost-effectively captured and stored.

Despite the shift in policy intentions catalysed by COP21, more is needed to avoid the
worst effects of climate change. There are unmistakeable signs that the much-needed
global energy transition is underway, but not yet at a pace that leads to a lasting reversal 10 of the trend of rising CO2 emissions.

Geotermal energy as natural resource: a starter

Geothermal energy is not something that is much written about in economic journals. I think this is remarkable to say the least, because there is some nice potential on identification using spatial techniques, while the countries involved, those that have developed geothermal power are often not the ones we associate with having energy resources of the fossil kind (below I list 5, France, Italy, Iceland, Japan, and New Zealand). The main reason may be that the amount of energy created with it as a share of the total for many countries is minor, even thought the local impact might by quite large. 

However, one should note that geothermal has both the potential as a source of electricity production through steam power, and by using the heat directly, for instance to heat buildings. The use of the latter than would result in saving of, for instance, gas to heat houses. So measuring total exploitation of geothermal energy can be a bit tricky. 

Geophysically it's also an interesting topic with regards to other renewable energy sources. A geothermal source needs to be managed, in the sense that, when exploited too much at a time it will exhaust. So there is a limit to be observed in order to make it a sustainable long-term producer. Not much different from something like fisheries I suppose.

So here a small country overview to get you started on a topic. They were selected based on what I came across. In terms of use, the US and China are the largest [wikipedia.org]. In terms of capacity, Indonesia and the US are, but Indonesia has not much production installed. All interesting variations that may be used for new research.

France
A geothermal source exists tight under Paris, which is being exploited to heat 170,000 homes (NYTimes.com). France banned fracking [FT.com], and while the proponents of fracking found that inconsistent with the approval for geothermal development, the judge disagreed. Find some more information of french geothermal development here [ea-gia.org]

Iceland
As a share of total energy production, Iceland ranks top. 65% of its energy use is derived from geothermal resources [wikipedia.org], most of it used for heating homes. It is the major facilitator for its aim to become the first country that lives entirely of renewable resources. If you write a paper, perhaps you can present it here [geothermalconference.is] next year.

Italy
The economist writes about Italian geothermal development in tuscany this week. Italy is the major [geosee.eu] exploiter of geothermal in Europe. In terms of numbers it is still a small percentage of total energy production [wikipedia.org].

Japan
Japanese onsen are the ultimate enjoyment of geothermal activity. The fact that one can find onsen scattered all over the country means that geothermal energy can be exploited throughout the county [wikipedia.org]. About 10% of national energy production was provided by geotermal plants. This is still low [japanfs.org] given the capacity. Development is still ongoing [cleantechnica.com]. According to Japanfs, Japan has the largest capacity for geothermal use after Indonesia and the US. I don't feature these countries here, but they may still be very interesting to look at.

New Zealand
New Zealand is boiling over with geothermal activity, especially on the North Island. A significant part of the energy supply comes from geothermal resources. Here we also find Professor Basil Sharp, at the University of Auckland who was visiting Oxford last year and has written about the topic. The interesting thing I also found was that geothermal resources have a special value and (religious) meaning for Maoris. So in order to exploit these resources, their rights and preferences are taken into account. At the same time, since they have ownership rights over some of the locations where geotermal energy can be exploited for commercial production, they can receive a royalty income stream (Sharpe and Malafeh, 2005 Energy Policy). So similar to what is observed in mining, there is a potential for local spillovers and development from natural resources.

Time to get these papers written!

New research: poor institutions, rich mines: resource curse in the origins of the Sicilian mafia

Paolo Buonanno (Univerisity of Bologna), Ruben Durante [rubendurante.net] (Science Po), Giovanni Prarolo [google.com] (University of Bologna) and Paolo Vanin [unibo.it] (University of Bologna) write on

Poor institutions, rich mines: resource curse in the origins of the Sicilian mafia

Abstract:
With weak law-enforcement institutions, a positive shock to the value of natural resources may increase demand for private protection and opportunities for rent appropriation through extortion, favouring the emergence of mafia-type organisations. We test this hypothesis by investigating the emergence of the mafia in twentieth century Sicily, where a severe lack of state property-rights enforcement coincided with a steep rise in international demand for sulphur, Sicily's most valuable export commodity. Using historical data on the early incidence of mafia activity and on the distribution of sulphur reserves, we document that the mafia was more present in municipalities with greater sulphur availability.
Published in the Economic Journal, available here

New Research: Sovereignty, the ‘resource curse’ and the limits of good governance: a political economy of oil in Ghana

Jon Phillips [kcl.ac.uk], Elena Hailwood and Andrew Brooks [kcl.ac.uk], all King's College London

write on

Sovereignty, the ‘resource curse’ and the limits of good governance: a political economy of oil in Ghana

Abstract:

The idea of a resource curse has influenced policy makers and led to calls for good governance to avoid the pitfalls of oil sector development. Through discussion of Ghana’s recent insertion into the global political economy of oil, this paper describes the limits of the resource curse framing and associated liberal institutional management approaches to the inherently political nature of oil exploration and production. The paper describes ways in which sovereignty has been exercised both in opposition to and in support of foreign capital, and the role of discourses of ‘good governance’ in structuring the material politics of resource access.

Published in Review of African Political Economy, available here [tandfonline.com].

New Research: The Resource Curse Revisited

The Chatham House group on natural resources and conflict has released a new paper titled,

"The Resource Curse Revisited", available here, see also the comment on the FT, authored by Paul Stevens, Glada Lahn, and Jaakko Kooroshy.

The paper takes stock of the achievements of the 'extractives-led development agenda', where it has failed and how it should adapt to a new environment that is increasingly concerned with carbon intensity of fossil fuels and the emerging world of low commodity prices.

What I find interesting is the explicit question of the use of extra fast extraction of natural resources, and whether the option of leaving things 'under ground' may make actually more sense. A view not very often expressed indeed.

New Research on Australia's mining boom

David A. Fleming and Thomas G. Measham [csiro.au] from CSIRO in Canberra, Australia have a collection of published papers documenting the effects of the mining boom in Australia.

In Australian Journal of Agricultural and Resource Economics [wiley.com], with Dusan Paredes,
Understanding the resource curse (or blessing) across national and regional scales: Theory, empirical challenges and an application

The relationship between resource extraction activity and economic growth has been widely studied in the literature, and the resource curse hypotheses emerged as a theory to explain the effects of resource windfalls on national economies. However, within countries, resource booms and busts can have distinctive effects across local economies, as extractive regions face particular economic consequences unlikely to be observed in nonresource regions. Empirically, most studies analysing the resource curse have relied on cross-country models to estimate effects and inform policy; however, the use of regional – within-country – analysis has gained attention from scholars lately, promoted by two advantages: it avoids unobserved country heterogeneities confounding economic outcomes caused by resources and exploits the subnational quasi-natural experimental conditions generated by endowments. This paper contributes to the resource curse literature by discussing its theoretical causes across scale (regional vs. national effects) and highlighting the empirical challenges involved in the analysis of mining economic impacts across regions. We complement the discussions by econometrically modelling economic growth across nonmetropolitan substate regions of Australia during a period of resource windfalls, finding that in most cases, resources have been a blessing for local economies, although negative effects have also been experienced in parts of the country.

In Resources Policy [sciencedirect.com]

Local job multipliers of mining

The mining industry is capital intensive, and generally, direct labour employed is low compared to other industries. Considering this, when analysing local economic effects of mining it is important to observe local job multipliers that the industry generates in other sectors of the economy. In this study we use data from the recent Australian mining boom to estimate local job multipliers from mining, using econometric models and avoiding the rigidities and strong assumptions that input–output based models rely on. With census data and samples of Australian sub-state regions, our estimations show that local multipliers of mining are important for some local services sectors such as transport and rental and accommodation services, while local job spillovers into tradable goods sectors (manufacturing and agriculture) are statistically not significant. We also show how the magnitude of local multipliers varies nationwide from those of regions where operating mines are located.

In Australian Journal of Agricultural and Resource Economics [wiley.com]
Local economic impacts of an unconventional energy boom: the coal seam gas industry in Australia

Complementing the scarce economic literature about local impacts of energy extraction booms, this paper empirically investigates economic outcomes related to the new coal seam gas (CSG) industry located across southern Queensland. This Australian state has seen an unprecedented inflow of investments into the extraction of this previously unexploited unconventional natural gas over the last decade. We analyse census data to study income and employment effects associated with the CSG boom, exploiting the quasi-experimental conditions provided by CSG extraction areas (treatment regions) and regions without this development (control regions). Findings show that treatment regions have higher income growth than control areas during 2001–2011 for families residing locally and for individuals present on census night. Employment in the mining sector also shows higher growth as has non-mining employment in some areas. We include comparisons between CSG areas with no major mining history (the Surat basin) and CSG areas where mining was important before the CSG boom (the Bowen basin), to better understand boom effects in areas with different initial mining industry importance in their economies. Local job multipliers are also analysed for Surat basin CSG areas, where positive impacts (job spillovers) are restricted to construction and professional services jobs, while agricultural jobs have decreased.

In Australian Geographer [tandfonline.com],
Income inequality across Australian regions during the mining boom: 2001-11

As mining expands throughout the world, a growing body of literature is focusing on the relationship between mining and well-being in locations where resource extraction occurs. Although many topics such as employment and migration have been researched, the impacts of mining on income inequality have received less attention from scholars. Income inequality is a highly debated topic and the Gini coefficient (GC) one of the most popular indicators used to measure and discuss it. In this paper we estimate GCs for all sub-State regions of Australia and analyse their changes during the ‘mining boom decade’ (2001–11) across mining and non-mining regions. Our results show that, on average, income inequality increased by around 4.8 per cent in mining regions, compared to 8.7 per cent in the average non-mining region. However, the results also show important variation in changes of GC across mining regions, suggesting that the industry is likely to affect the distribution of local incomes in different ways. The method we propose to estimate GCs for regional areas and the results obtained across mining and non-mining regions provide important insights for future research and for regional policy makers, especially those concerned with the socio-economic impacts of industries such as mining across regions.

Book: Natural Resources and Economic Growth Learning from History

A new edited book appears to give a nice overview of some historical episodes of various countries and there dealings with natural resources:

Natural Resources and Economic Growth. Learning from History

edited by Marc Badia-Miró, Vicente Pinilla, Henry Willebald

Published by Routlegde, further info here [routledge.com] and a preview at Google Books [google.co.uk]

New research: The local economic impacts of resource abundance : what have we learned?

In the line with the reviews by Gamu, Le Billon and Spiegel, and Cust and Poelhekke [both oxcarre.blogspot.com],

Fernando M. Aragona, Punam Chuhan-Pole and Bryan Christopher Land of the World Bank present a new overview:

The local economic impacts of resource abundance : what have we learned?

Abstract:

What are the socioeconomic impacts of resource abundance? Are these effects different at the national and local levels? How could resource booms benefit (or harm) local communities? This paper reviews a vast literature examining these questions, with an emphasis on empirical works. First, the evidence and theoretical arguments behind the so-called resource curse, and other impacts at the country level, are reviewed. This cross-country literature highlights the importance of institutions. Then, a simple analytical framework is developed to understand how resource booms could impact local communities, and the available empirical evidence is examined. This emerging literature exploits within-country variation and is opening new ways to think about the relation between natural resources and economic development. The main message is that others factors, such as market mechanisms and local spillovers, are also relevant for understanding the impact of resource abundance. Finally, the paper discusses issues related to fiscal decentralization and provides ideas for future research.

available here [worldbank.org]

IMF: $5.3 Trillion Energy Subsidy Problem

The IMF direct blog writes [imf.org] about new estimations on the scope of energy subsidies, among which subsidies for energy derived from non-renewable resources. The blog has more links to technical papers.

US$5.3 trillion; 6½ percent of global GDP—that is our latest reckoning of the cost of energy subsidies in 2015. These estimates are shocking. The figure likely exceeds government health spending across the world, estimated by the World Health Organization at 6 percent of global GDP, but for the different year of 2013. They correspond to one of the largest negative externality ever estimated. They have global relevance. And that’s not all: earlier work by the IMF also shows that these subsidies have adverse effects on economic efficiency, growth, and inequality.

New Research: A Quantitative approach to assessing sovereign default risk in resource-rich emerging economies

Unurjargal Nyambuu [nyu.edu] (New York University)􏰀,􏰁 and Lucas Bernard [cuny.edu] (The City University of New York), write on

A quantitative approach to assessing sovereign default risk in resource-rich emerging economies
Abstract:

The problem of sovereign default is a tricky one for bankers, policy makers, politicians and investors alike. Purely financial models are likely to miss nuance and cultural idiosyncrasies. Nonetheless, risk metrics must play a role. Using a stochastic growth model in an open economy, we propose a Kealhofer, McQuown and Vasicek (KMV)-style approach for assessing sovereign default risk in resource-rich emerging economies. As is well known, financial effects, specifically external debt, can make a country vulnerable to economic shocks. Excessive external debt is, thus, a prime indicator for financial health in both resource-poor and resource-rich countries; yet, safe ratios are difficult to determine. Using a straightforward and easily implementable methodology, we show how optimal debt ratios may be used to define a ‘distance from default’ indicator variable. Further, we demonstrate that this is a plausible risk metric for a number of different developing countries, including representatives from Latin America, Africa and Asia.

Published in International Journal of Finance & Economics, available here [wiley.com].

New Research: Economic Freedom and Productivity Growth in Resource-rich Economies

A new paper by Minoo Farhadi [monash.edu.au], Md. Rabiul Islam [academia.edu], Solmaz Moslehi from Monash [moslehi.me] and Deakin Universities, Australia

published in World Development

Economic Freedom and Productivity Growth in Resource-rich Economies

Abstract:

The focus of this paper is to test whether free market institutions that protect property rights and support freedom of choice and voluntary exchange can change the curse of natural resources into a blessing. To examine the above question, this paper uses the Fraser Institute’s economic freedom index and its five sub-indices, namely government size, property rights, access to sound money, freedom to trade, and setting proper regulations. Using data from 99 sample countries over the period 1970–2010, the system GMM estimates suggest that the negative growth effects of resource rents may turn positive in countries with greater economic freedom.

New Research: On the relationship between resource funds, governance and institutions

New research from Stella Tsani (repec), of the The Centre for Euro-Asian Studies, University of Reading,

On the relationship between resource funds, governance and institutions: Evidence from quantile regression analysis

abstract:

This paper uses quantile regression estimation techniques so as to investigate the relationship between resource funds, governance and institutional quality by paying special attention to the distribution of the latter. The estimation results indicate that resource funds are associated with better governance and institutions. The positive correlation is identified for the entire distribution of governance and institutional quality variables indicating that resource-rich countries can benefit from the establishment of resource funds, irrespective of whether they are found at the lower or at the upper end of the ranking of governance and institutional performance. The results offer evidence in support of the view that resource funds are valid tools of insulation against the “resource curse” as manifested through governance and institutional quality deterioration. Resource funds may support policy making and strengthen governance and institutional formations not only in countries with good governance and institutions but also in countries which lag behind in the latter.

Paper published in Resources Policy [sciencedirect.com], it follows up on an earlier paper [sciencedirect.com] of her also published in Resources Policy.