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

Josef Falkinger and Volker Grossmann

No 1756, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: oligopsony power; institutions; entrepreneurship; economic development; distribution; credit constraints; political elites (search for similar items in EconPapers)
JEL-codes: H50 O10 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2005-09
New Economics Papers: this item is included in nep-agr, nep-ene, nep-ent, nep-env and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published as 'Oligarchic Land Ownership, Entrepreneurship, and Economic Development' in: Journal of Development Economics, 2013, 101 (1), 206-215.

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Working Paper: Distribution of Natural Resources, Entrepreneurship, and Economic Development: Growth Dynamics with two Elites (2005)
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