Leader behavior and the natural resource curse

Caselli, Francesco ORCID: 0009-0001-5191-7156 and Cunningham, Tom (2009) Leader behavior and the natural resource curse. CEP discussion papers (913). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

Preview

PDF Download (226kB) | Preview

Abstract

We discuss political economy mechanisms which can explain the resource curse, in which an increase in the size of resource rents causes a decrease in the economy’s total value added. We identify a number of channels through which resource rents will alter the incentives of a political leader. Some of these induce greater investment by the leader in assets that favour growth (infrastructure, rule of law, etc.), others lead to a potentially catastrophic drop in such activities. As a result, the effect of resource abundance can be highly non-monotonic. We argue that it is critical to understand how resources affect the leader’s "survival function", i.e. the reduced-form probability of retaining power. We also briefly survey decentralised mechanisms, in which rents induce a reallocation of labour by private agents, crowding out productive activity more than proportionately. We argue that these mechanisms cannot be fully understood without simultaneously studying leader behaviour.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/_new/publications/year.asp
Additional Information:	© 2009 the authors
Divisions:	Centre for Economic Performance Economics
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P26 - Political Economy; Property Rights O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Date Deposited:	07 Oct 2009 16:28
Last Modified:	11 Dec 2024 18:56
URI:	http://eprints.lse.ac.uk/id/eprint/25430

Actions (login required)

View Item