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Is there a fiscal resource curse?: Resource rents, fiscal capacity, and political institutions in developing economies

Tania Masi (), Antonio Savoia and Kunal Sen ()

No wp-2020-10, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: States' fiscal capacity plays a pivotal role in developing economies, but it is less clear what its determinants are or what explains cross-country differences. We focus on the impact of natural resources. Standard arguments suggest that natural resources rents may reduce incentives to invest in fiscal capacity. However, political institutions that limit rulers' discretion over the use of resource revenues may mitigate or neutralize this negative effect. We investigate this hypothesis using panel data for 1995 to 2015 for 62 developing countries.

Keywords: State capacity; Fiscal capacity; Resource curse; Institutions; Constraints on the executive; Economic development (search for similar items in EconPapers)
Date: 2020
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