The Curse of Natural Resources in Fractionalized Countries

Hodler, Roland (March 2004). The Curse of Natural Resources in Fractionalized Countries (Discussion Papers 04-04). Bern: Department of Economics

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This paper develops a model that can explain why natural resources
are a curse for some countries, but not for others. In this model, natural resources cause fighting activities between rivalling groups. Fighting reduces productive activities and weakens property rights, making productive activities even less attractive. The aggregate production decrease exceeds the natural resources’ direct positive income effect if and only if the number of rivalling groups is sufficiently large. The model thus predicts that natural resources lower incomes in fractionalized countries, but increase incomes in homogenous countries. Empirical evidence that supports this hypothesis is provided.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Hodler, Roland

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

14 Sep 2020 15:00

Last Modified:

14 Sep 2020 15:00

JEL Classification:

Q32, D72

BORIS DOI:

10.7892/boris.145636

URI:

https://boris.unibe.ch/id/eprint/145636

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