Work

Education, Rent seeking and the Curse of Natural Resources

Year: 2013

Type: article

Abstract: Empirical evidence suggests that natural resources breed corruption and reduce educational attainments, dampening economic growth. The theoretical literature has treated these two channels separately, with natural resources affecting growth either through human capital or corruption. In this article, we argue that education and corruption are jointly determined and depend on the endowment of natural resources. Natural resources affect the incentives to invest in education and rent seeking that in turn affect growth. Whether natural resources stimulate growth or induce a poverty‐trap crucially depends on inequality in access to education and political participation, as well as on the cost of political participation. For lower inequality and higher cost of political participation, a high‐growth and a poverty‐trap equilibrium coexist even with abundant natural resources.

Source: Economics and Politics

DOI: 10.1111/ecpo.12029

Author: Waqar Ahmed Wadho

Institution: Lahore School of Economics

Language: English

Topic: Natural Resources and Economic Development

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Quality education, Reduced inequalities

Open Access status: green

Funder: Javna Agencija za Raziskovalno Dejavnost RS