Three essays on resources, institutions, and development across U.S. states

Abstract

This dissertation is a collection of papers examining the relationship between resource intensity, institutional quality, and economic development across the United States. The first chapter introduces the empirical connection between high levels of resource abundance and low levels of economic development known as the resource curse. It then proceeds to briefly introduce the three papers that make up the next three chapters of the dissertation. Chapter two examines the formation of low-quality institutions in areas with a large amount of natural resources. It begins by providing a theoretical model to show that governments will execute more expropriative tax policies in areas with a high levelof immobile natural resources. The chapter then examines the state constitution of Wyoming, an incredibly resource intense state with prior knowledge of these resources before the formation of their state government, to find that this constitution is consistent with that of a low quality institution that could hinder economic development. This chapter also provides a simple econometric model to show that governments will form more quickly in high-resource areas where there is a greater level of wealth to expropriate. Chapter 3 examines the link between natural resource abundance and the size of governments. Large governments tend to be consistent with high levels of rentseeking and unproductive entrepreneurship that can hurt economic development. This chapter finds that resource intense states have larger and more economically intrusive governments across several specifications and measures for government size. Chapter four looks at the interaction between low quality institutions, resource abundance, and economic development. This study finds that natural resource endowment only hurts growth in those states with poor institutions, while it can actually enhance growth in those states with productive institutions. Chapter five concludes and discusses areas of future research.