Effects Of Resource Wealth Research Articles

Natural resource wealth and the informal economy

The ‘resource curse’ associated with natural resource abundance has long been a subject of study across multiple disciplines. Though much research has focused on possible effects of resource wealth on the formal economy, little is known about how such wealth affects the informal sector, a substantial portion of global economic activity. We posit that resource windfalls directly contribute to growth in the informal economy, as investment and spending patterns associated with such revenues limit opportunities within the formal sector and thus channel more labor and businesses into the informal sector. We test these claims across a panel of over 120 countries for the period 1985 to 2012. Across multiple model specifications, we find that resource wealth growth is associated with increased informal economic activity.

The Impact of Resource Rents on the Foreign Policymaking in West Asia

The effect of resource wealth on domestic politics has been widely discussed but its impact on foreign policy conduct is scarcely analysed. On the domestic front, rentier states not only have the repressive mechanisms to subdue discontent within its jurisdiction but they can also provide material benefits to its supporters in return for their loyalties. Hence, for resource-rich countries that have not already developed democratic institutions, authoritarianism seems to be a widely expected outcome. Yet, those rentier states may also develop a certain kind of foreign policy that increases the risk of conflict and political tensions in the international arena. Authoritarian regimes fuelled by the income generated by the sale of underground resources can pursue more aggressive policies as envisioned by democratic peace theory. This article attempts to draw a generalized framework on the effects of energy resources on the actions of exporting states while at the same time tries to draw lessons for Turkey, a country located in a troublesome but resource-rich geography.

Kazakhstan

This article reviews the effect of resource wealth on the character of Kazakhstan's economic development. Despite the active economic changes of the 2000s, resource abundance has negatively affected the quality of the country's current economic growth. The country exhibits considerable structural, territorial, and social disparities, and the international competitiveness of many of its products (even some primary products) is low.

Natural resources and institutional development

Recent work on the resource curse argues that the effect of resource wealth on development outcomes is a conditional one: resource-dependent countries with low-quality institutions are vulnerable to a resource curse, while resource-dependent countries with high-quality institutions are not. But extant models neglect the ways in which the inflow of resource revenue impacts the institutional environment itself. In this paper, I present a formal model to show that where domestic institutions do not limit state leaders’ discretion over policy prior to becoming fiscally reliant on resources, those leaders have little incentive in the wake of resource windfalls to establish institutional mechanisms that limit their discretion. Importantly, this shows that simple calls for domestic institutional reform are unlikely to be effective. Among other things, future prescriptions to mitigate the resource curse must focus on decreasing rulers’ fiscal reliance on resources.