Distribution of Natural Resources, Entrepreneurship, and Economic Development: Growth Dynamics with two Elites

Josef Falkinger and Volker Grossmann

No 1562, CESifo Working Paper Series from CESifo

Abstract: This paper develops a model in which the interaction of entrepreneurial investments and power of the owners of land or other natural resources determines structural change and economic development. A more equal distribution of natural resources promotes structural change and growth through two channels: First, by weakening oligopsony power of owners and thereby easing entrepreneurial investments for credit-constrained individuals whose investment possibilities depend on their income earned in the primary goods sector. Second, by shifting the distribution of political power from resource owners towards the entrepreneurial elite, resulting in economic policy and institutions which are more conducive to entrepreneurship and productivity progress. We argue that these hypotheses are consistent with a large body of historical evidence from the Americas and with evidence on transition economies.

Keywords: credit constraints; distribution; economic development; entrepreneurship; institutions; oligopsony power; political elites (search for similar items in EconPapers)
JEL-codes: H50 O10 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-ene, nep-ent, nep-env, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Distribution of Natural Resources, Entrepreneurship, and Economic Development: Growth Dynamics with Two Elites (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1562

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