Local Natural Resource Curse?

Lars-Erik Borge (), Pernille Parmer () and Ragnar Torvik
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Pernille Parmer: Department of Economics, Norwegian University of Science and Technology

Working Paper Series from Department of Economics, Norwegian University of Science and Technology

Abstract: The large variation in revenues among Norwegian local governments can partly be explained by revenues collected from hydropower production. This revenue variation, combined with good data availability, can be used to extend the literature on the re- source curse in two directions. First, to ensure that there is no problem of endogeneity in the analysis we obtain a purely exogenous measure of local revenue by instrumenting the variation in hydropower revenue, and thus total revenue, by topology, average pre- cipitation and meters of river in steep terrain. Second, using data for revenue derived from hydropower production in Norwegian local governments we test the 'Rentier State' hypothesis; that revenue derived from natural resources should harm efficiency more than revenue derived from other sources such as taxation. Although we do find that higher local government revenue reduces the efficiency in production of public goods, we do not find that this effect is stronger for natural resource revenue than for other revenue.

Keywords: resource curse; rentier state; identification; local government; political economy (search for similar items in EconPapers)
JEL-codes: D78 H11 H27 H71 H72 H75 Q2 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2013-06-19
New Economics Papers: this item is included in nep-ene, nep-pbe and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Local natural resource curse? (2015)
Working Paper: Local Natural Resource Curse? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:nst:samfok:14913

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