The Political Economy of the Natural Resources Curse: A Survey of Theory and Evidence

Object of the analysis. Increasing defence expenditures bring back a discussion weather the national defence industry is necessary to sustain economic welfare of a country, boosts innovations and enhances own military sector. Investigation problem. The use of political economy theories in that case could facilitate further research steps and guide scientists that will look for a precise answer to this issue. The aim of this manuscript is to review political economy theories that can be used in defining defence industry as such, and consider practical applicability options of different methodological approaches in the context of defence industry. To reach this aim, following objectives were designed: 1. Describe political economy phenomena and define its evolution; 2. Evaluate traditions of political economy and define their practical significance; 3. Assess methods used in actual analysis of defence industry and define the main findings. Research methods. While writing this article, the comparative literature analysis method was used. The famous scientists such as R. Abdelal, C., Adam, S. Dercon, G. Agostino, J. P. Dunne, L. Pieroni, M. Blyth, G. Browning, A. Kilmister, J. P. Dunne, E. Skons, D. Braddon, A. Gilpin, A. Goldstein, R. Jacson, G. Sorensen, S. Jevons, R. O. Keohane, C. W. Mitchell, I. D. Salavrakos, A. Sen and R. M. Smith were cited and referenced. All used literature is referenced. This article is structured into two big parts. The first part is devoted to the analysis of political economy subject itself and its approaches towards empirical research. The second part is designed to reveal possible application options of different theoretical political economy approaches in the context of defence industry. Outcomes and conclusions. In the context of current analysis of different political economy theories, different approaches on methodology, analytical side, linkage with defence industry, defence spending and possible insights about investigation possibilities the following conclusions were found: Political economy that originated in the XVII–XVIIIth century and currently is adopting different theoretical approaches in most cases is still relying on “grand” theories such as realism (mercantilism), liberalism, and Marxism. The existing variety of research methodologies and tools suggests the “correct” way to examine features of situation based on selected theory. Researches should be aware that even a proper methodology does not guaranty the reliability of research results due to the complexity of political economy subject itself and its interdependency to both political and economic science features. There are different scholars explaining trends and proposing different theoretical approaches to analyse defence sector and its connections (influence) with state. Current dynamics of defence industry led to renewed debates over whether the increase of the military expenditure enhances or deteriorates economic growth and welfare of the state. There have been numerous studies done in defining military expenditure (also research and development programs in the military sector) impact on local and state economies. Regardless of different methodologies used (econometric analyses, macro econometric models, time series models, demand side model, supply side model, cross-country correlation analyses and historical case study) there was no strong evidence that military expenditure is likely to have the negative economic effects on states. Keywords: political economy, defence industry, military expenditure, defence.

Oil and political survival

This paper looks at the relationship between natural resource endowment, particularly the type associated with minerals and plantations, and economic development. It may not be natural resource endowment per se but its type that matters, when it comes to growth and development. Certain types of natural resources such as oil and minerals have a tendency to lead to production and revenue patterns that are concentrated, while revenue flows from other types of resources such as agriculture are more diffused throughout the economy. The former category is dubbed a point-source economies, while the latter type is referred to as diffuse. Most countries in the first group have been prone to growth failure in recent times, with notable exceptions such as Botswana and Indonesia. The paper reviews two sets of models, the first set outlining the onset of the resource curse, and the second category sketching conditions where resource booms actually aid growth, or policies to avoid the resource curse. The vast majority of these models stress intersectoral linkages. Political economy considerations associated with resource rents are also reviewed. The focus is on institutions that determine the policy superstructure. The importance of institutions is highlighted, followed by a sketch of institutional malfunctioning and an overview of the empirical models of institutional determination. An explicit model of growth collapse with micro-foundations in rent-seeking behaviour and contests is also presented. The empirical analysis put forward is one of the few econometric investigations into the resource curse that includes analysis over time, as it is a panel data estimation. Due to this time series property our proxy for institutional quality is the degree of democracy. Our findings suggest that a point-source type natural resource endowment does retard democratic and institutional development, which in turn hampers economic growth. Institutions and institutional functioning are the crucial link between resource endowments, geography and policies, on the one hand and economic outcomes on the other hand.

The novel coronavirus disease-2019 (COVID-19) is a deadly disease that increases global healthcare sufferings. Further, it affects the financial and natural resource market simultaneously, as both are considered complementary goods. The volatility in the oil prices deteriorates the global financial market to substantiate the “financial resource (oil) curse” hypothesis primarily filled with earlier studies. In contrast, this study moved forward and extended the given relationship during the COVID-19 pandemic in a panel of 81 different countries. The study’s main objective is to examine the volatility in the domestic credit provided to the private sector due to oil shocks and the COVID-19 pandemic across countries. The study is essential to assess the healthcare vulnerability in the COVID-19 pandemic, leading to the damage of financial stability, causing deterioration in the oil rents to affect the global sustainability agenda. The study employed statistical techniques to get sound inferences of the parameter estimates, including robust least squares regression, seemingly unrelated regression, and innovation accounting matrix to get a variable estimate at the level and inter-temporal framework. The results confirmed the U-shaped relationship between oil rents and financial development during the COVID-19 pandemic. Thus, it verifies the “financial resource (oil) curse” hypothesis at the initial stage of the COVID-19 pandemic. Later down, it supports the capital market when economies are resuming their economic activities and maintaining the SOPs to restrain coronavirus at a global scale. The qualitative assessment confirmed the negative effect of financial development and oil shocks on environmental quality during the pandemic crisis. The innovation accounting matrix shows that the COVID-19 pandemic will primarily be the main factor that intervenes in the relationship between oil rents and financial development, which proceed towards the “resource curse” hypothesis during the following years’ time period. Therefore, the need for long-term economic policies is highly desirable to support the financial and resource market under the suggested guidelines of restraining coronavirus worldwide.

The relation between Natural Resource and Political Economic Growth is a famous issue to discuss by scholars. By the Neo-liberalism theory suppose: a developing country has abundant resources, it would become a well-developed industrial country. But this point of issue was challenged by others school in 1980s.These scholars think: ”Resources didn't bring the well-developed in the developing country, on the contrary became a ”Resource Curse”.In Indonesia case, petroleum was the major of Indonesia's fiscal income , but the performance of petroleum resource’s income did not have a great help for Indonesia's economic development. One can find the cause of this condition, the allocation of petroleum in Indonesia is not only an economic but also a political issue. The petroleum resource and uneven economic growth are closed related to the role of Pertanima. Base on this background, one will focus on the petroleum resource for the effect of political economy in country's development. And one will try to proof that, Pertanima is a tool for governor to integrate politics and economy in a new order period, and it become the abundant petroleum resource cannot bring a well development but a ”Resource Curse” to Indonesia.In structure of this project, one will set up the research structure by literature review in the beginning. And then one will discuss that, why Indonesia which has abundant petroleum resource in the control of Pertanima emerges ”Resource Curse”, by the dimension of Political Economy. After the discussion about the Pertanima and ”Resource Curse” in Indonesia, one will use the ”New institutional Economy theory” to discuss the changing of institute on process of democratization in Pertanima and the allocation of petroleum resource. And one will get a conclusion at last. One considers that, if Indonesia want to close to the fifth BRICs in the future, it has to pursue the higher economic growth and reduce the gap between itself and developed countries, so it must reform the allocation of petroleum resource as soon as possible. Only transfer ”Comparable Advantage of Resource” to ”Competitive Advantage of Resource,” it would be a better strategy for state's development.

Extractive resource ownership and the subnational resource curse: Insights from Tanzania

This paper tests the political economy theory of the resource curse of the Iranian economy over the period 1984–2017. We find that natural resources dependence is harmful to economic development only if rent seeking activities exceed a minimum threshold. Empirical findings – based on Partial Least Square – Structural Equation Modelling approach – validate the hypothesis that institutions are decisive for the resource curse. According to our estimates, since 2012, rent seeking has surpassed this threshold, therefore, the ‘resource curse’ applies.

The purpose of this study is to find out whether there is a curse or blessing of Indonesia's natural resources and to find out how the long-term influence of natural resource rents, foreign direct investment, inflation, and the Covid-19 pandemic on economic growth. Based on the purpose of the study, the method used is a Fully Modified Ordinary Least Square (FMOLS). The results show that Indonesia is free from the curse of natural resources, meaning that Indonesia's natural resources have blessings for economic growth. In addition, based on the FMOLS test, it is known that foreign direct investment has not influenced economic development. Meanwhile, inflation and Covid-19 have a negative and significant influence on Indonesia's economic growth.

The Pure Theory of Government Finance: A Suggested Approach

The last sixty years have seen a significant shift away from seeing resource wealth as a key component of positive macro-economic reform, to acceptance of the negative impacts that an abundance of, or dependence on, natural resources can have on security, economic growth, and the development of accountable political institutions. The appropriation and extraction of natural resources emerge as expressions of complex relations existing within and between states, institutions and actors. At the same time, the attention given to this potential 'resource curse' has precipitated a number of critiques that challenge not only the data and statistical methods used to link resource wealth with negative development outcomes, but also the theoretical foundation and relevance of studies that reduce complex socio-political and economic relations to the presence of specific resources. This article draws on key literature from the field of political ecology to demonstrate how the concept of 'nature' has been omitted from these discussions. Critical analysis of 'nature' can refine the theoretical foundation and practical application of the 'resource curse' thesis. By re-inserting, re-politicizing and re-localizing the concept of nature we can include local production and consumption in the analysis, while also highlighting the link between our understanding of natural resources and historically rooted discourses of 'proper-use.'Key Words: Resource curse, political ecology, security, nature

Abstract. Unconventional oil and gas extraction efforts have raised the specter of the resource curse in affected communities, as has been demonstrated in other industries or geographies. Yet because these developments in unconventional extraction industries are so new, data for analysis is limited. This study examines recent activity in the Eagle Ford Shale area of South Texas with a time-series cross-sectional (TSCS) approach using data collected from 14 actively producing counties over a four year period from 2008-2011. Results indicate that the number of completed oil and gas wells has had a positive impact on per-capita income to-date. Previous research suggests that communities in South Texas have the opportunity to overcome the resource curse, but that it will require good local governance and thoughtful long-term planning.1. IntroductionRecent unconventional oil and gas exploration in the United States has produced unexpected benefits in the balance of trade and global energy security. The impacts are also being felt at the community level in several parts of the U.S. One such area is the Eagle Ford Shale in South Texas, which has historically been among the poorest areas in the state.The Eagle Ford is a unique formation; whereas most shale oil and gas fields are predominantly either oil or gas, Eagle Ford contains significant quantities of oil, gas, and condensate. As such, the recent boom in energy production presents an interesting case study about how local communities are addressing the opportunities and challenges. This study will take a very preliminary look at the shale oil and gas field in the Eagle Ford in South Texas in order to assess the prospect of the resource curse in the early stages of development.2. Theoretical frameworkThe relatively recent development of unconventional oil and gas fields in the United States has prompted research on economic impacts. Extant literature suggests that recent shale oil and gas exploration, while limited, can be examined in the context of the resource curse theoretical framework. Much research has been performed at the international level on the curse of natural resources, which proposes that resource-abundant countries have stagnated in terms of economic growth (Sachs and Warner, 1995, 2001). Other studies have focused on within-country impacts of resource abundance (Michaels, 2010; Weber, 2012). Whether researchers look across or within countries, it is difficult to find a clear validation of the resource curse theory (Brunnschweiler and Bulte, 2006; Torvik, 2009; Michaels, 2010; James and Aadland, 2011). The resource curse is cited frequently in the literature, which suggests that there is an inverse correlation between natural resource abundance and long-term economic growth (Mikesell, 1997). Yet the tendency for slower growth effects is not uniform across nations, states, or even counties, where the least amount of research has been done (Peach and Starbuck, 2011). While a significant number of the cases examined in the literature show some kind of negative impacts regarding the resource curse, there are enough successes to suggest that factors other than mineral resource abundance alone are at work.There is often a divide between economic development theory and practice. Further, despite a regional emphasis in the literature, development in the real world tends to be highly subject to more localized political boundaries (Currid-Halkett and Stolarick, 2011). The approach in this article will be to attempt to shed light on economic development and the resource curse by analyzing the applicable data that are available at the local level for the 14 counties most actively producing oil and gas in the Eagle Ford in South Texas.The limited number of counties makes a combination of time-series and cross-sectional analysis attractive from the standpoint of number of observations and corresponding degrees of freedom. Four years of data from 2008-2011 for 14 counties yields 56 total observations. …

PurposeThe purpose of this paper is to critically examine school health education in the USA and present alternative approaches for more critical and comprehensive health education.Design/methodology/approachAn ecological model framework is used to identify the limitations and opportunities for improvement in school health education in the USA. An argument is made for school health education that embraces ecological approaches, political economy theory, and critical pedagogies.FindingsUS schools have been tasked with providing health education that is primarily rooted in individualistic approaches. Often missing from this education is recognition of the social and structural determinants of health that greatly influence one’s ability to practice the health behaviors promoted in schools. This raises pedagogical and ethical concerns, which can be addressed by teaching health education that is grounded in ecological and political economy understandings of health and in critical pedagogies that allow students to more comprehensively and accurately understand health, how their worlds influence health, and their agency within those worlds.Practical implicationsThis paper offers justification for a critical model of school health education and for the professional preparation of school health educators that is grounded in critical pedagogy and ecological approaches.Originality/valueThis work complements other research on critical health education by adding explicit integration of the ecological model and the political economy theory within critical pedagogies.

By the end of the 2000s, the term 'resource curse' had become so widespread that it had turned into a kind of magic keyword, not only in the scholarly language of the social sciences, but also in the discourse of politicians, commentators and analysts all over the world-_like the term 'modernization' in the early 1960s or 'transition' in the early 1990s. In fact, the aggravation of many problems in the global economy and politics, against the background of the rally of oil prices in 2004D2008, became the environment for academic and public debates about the role of natural resources in general, and oil and gas in particular, in the development of various societies. The results of numerous studies do not give a clear answer to questions about the nature and mechanisms of the influence of the oil and gas abundance on the economic, political and social processes in various states and nations. However, the majority of scholars and observers agree that this influence in the most of countries is primarily negative. Resource Curse and Post-Soviet Eurasia: Oil, Gas, and Modernization is an in-depth analysis of the impact of oil and gas abundance on political, economic, and social developments of Russia and other post-Soviet states and nations (such as Kazakhstan and Azerbaijan). The chapters of the book systematically examine various effects of 'resource curse' in different arenas such as state building, regime changes, rule of law, property rights, policy-making, interest representation, and international relations in theoretical, historical, and comparative perspectives. The authors analyze the role of oil and gas dependency in the evolution and subsequent collapse of the Soviet Union, authoritarian drift of post-Soviet countries, building of predatory state and pendulum-like swings of Russia from 'state capture' of 1990s to 'business capture' of 2000s, uneasy relationships between the state and special interest groups, and numerous problems of 'geo-economics' of pipelines in post-Soviet Eurasia.

Rising use of digital technologies in the service sector is altering the rules of economic governance and of international trade. Theories of economic development and political economy, such as world-systems theory and Petty’s Law, are being contested by the digital revolution. As technological advances bypass old theory, the service sector is locating globally, with decreasing regard for geography and the assumptions of the old international economic order. This presents new challenges for a legal, commercial and international trade norms and system, which are designed to facilitate tangible cross-border commerce. Old theories of political economy must be revisited to account for the rise of digitally traded services and some, like Petty’s Law, may not survive emergent conditions. The services trade itself is inadequately considered in official government policy, and by international organizations seeking to promote trade, investment and greater cooperation. This work critically evaluates the policy initiatives of major players in trade in light of these trends in the digital economy. While economic institutions claim to advocate policies that are up to date with the new reality of trade, their approaches are still grounded in the superseded economic theories of the twentieth century.

The curse of natural resources is a well‐documented phenomenon for developing countries. Economies that are richly endowed with natural resources tend to grow slowly. Among the transition economies of the former ‘Eastern Bloc’, a similar pattern can be observed. This paper shows that a large part of the variation in growth rates among the transition economies can be attributed to the curse of natural resources. After controlling for numerous other factors, there is still a strong negative correlation between natural resource abundance and economic growth. Among the transition economies the prime reasons for the curse of natural resources were corruption and a neglect of basic education. In order to overcome the curse of natural resources and move to a sustainable path of development, the resource abundant transition countries should fight corruption and ensure that their resource revenues are invested in human capital or the preservation of natural capital.