Political incentives of the resource booms

James Robinson, Ragnar Torvik and Thierry Verdier

Post-Print from HAL

Abstract: In this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse. We show: (1) politicians tend to over-extract natural resources relative to the efficient extraction path because they discount the future too much, and (2) resource booms improve the efficiency of the extraction path. However, (3) resource booms, by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections, increase resource misallocation in the rest of the economy. (4) The overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes. Countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create. Countries without such institutions however may suffer from a resource curse.

Keywords: Natural resources; Political economy; Clientelism (search for similar items in EconPapers)
Date: 2006-04
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in Journal of Development Economics, 2006, 79 (2), pp.447-46. ⟨10.1016/j.jdeveco.2006.01.008⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754164

DOI: 10.1016/j.jdeveco.2006.01.008

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().