Shifting Frontiers in Global Resource Wealth: The Role of Policies and Institutions
Rabah Arezki (),
Frederik Toscani and
Frederick (Rick) van der Ploeg ()
No 11553, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper explores the impact of increased market orientation and improved institutions on global resource wealth using a novel dataset of major hydrocarbon and mineral discoveries. Guided by the predictions of a two-region model, we employ an instrumental variable strategy to test whether increased market orientation boosts discoveries. Our results indicate that if Latin America and sub-Saharan Africa were to adopt the same quality of institutions as the United States, discoveries worldwide would increase by 25 percent. Our results support the primacy of institutions by calling into question the commonly held view that resource endowments are exogenous.
Keywords: discoveries; endogenous reserves; institutions; liberalization; market orientation; Natural resources (search for similar items in EconPapers)
JEL-codes: E00 F3 F4 (search for similar items in EconPapers)
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