Corruption, the resource curse and genuine saving

Simon Dietz, Eric Neumayer and Indra de Soysa

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Genuine saving measures net investment in produced, natural and human capital. It is a necessary condition for weak sustainable development that genuine saving not be persistently negative. However, according to data provided by the World Bank, resource-rich countries are systematically failing to meet this condition. Alongside the well-known resource curse on economic growth, resource abundance might have a negative effect on genuine saving. In fact, the two are closely related, as future consumption growth is limited by insufficient genuine saving now. In this paper, we apply the most convincing conclusion from the literature on economic growth – that it is institutional failure that depresses growth – to data on genuine saving. We regress gross and genuine saving on three indicators of institutional quality in interaction with an indicator of resource abundance. The indicators of institutional quality are corruption, bureaucratic quality and the rule of law. We find that reducing corruption has a positive impact on genuine saving in interaction with resource abundance. That is, the negative effect of resource abundance on genuine saving is reduced as corruption is reduced.

Keywords: weak sustainability; corruption; institutional quality; resources; curse (search for similar items in EconPapers)
JEL-codes: N0 (search for similar items in EconPapers)
Date: 2007-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)

Published in Environment and Development Economics, February, 2007, 12(1), pp. 33-53. ISSN: 1355-770X

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Related works:
Journal Article: Corruption, the resource curse and genuine saving (2007)
Working Paper: Corruption, the Resource Curse and Genuine Saving (2005)
Working Paper: Corruption, the Resource Curse and Genuine Saving (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:973

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