Corruption, the Resource Curse and Genuine Saving

Simon Dietz, Eric Neumayer and Indra de Soysa

Development and Comp Systems from University Library of Munich, Germany

Abstract: Genuine saving is an established indicator of weak sustainable development that measures the net level of investment a country makes in produced, natural and human capital less depreciation. Maintaining this net level of investment above zero is a necessary condition for sustainable development. However, data demonstrate that resource-rich countries are systematically failing to make this investment. Alongside the familiar resource curse on economic growth, resource abundance has a negative effect on genuine saving. In fact, the two are closely related insofar as future consumption growth is restricted 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 genuine saving on four indicators of institutional quality in interaction with an indicator of resource abundance. The indicators of institutional quality are corruption, bureaucratic quality, the rule of law and political constraints on the executive. We find that reducing corruption has a positive impact on genuine savings that is robust across different estimation procedures.

Keywords: weak sustainability; corruption; institutional quality; resources; curse (search for similar items in EconPapers)
JEL-codes: E21 E60 Q32 Q33 Q38 Q48 (search for similar items in EconPapers)
Date: 2004-05-13
Note: Type of Document -
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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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 (2007)
Working Paper: Corruption, the Resource Curse and Genuine Saving (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpdc:0405012

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