Public Capital in Resource Rich Economies: Is there a Curse?

Sambit Bhattacharyya and Paul Collier

No 2011-14, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: As poor countries deplete their natural resources, for increased consumption to be sustainable some of the revenues should be invested in other public assets. Further, since such countries typically have acute shortages of public capital, the finance from resource depletion is an opportunity for needed public investment. Using a new global panel dataset on public capital and resource rents covering the period 1970 to 2005 we find that, contrary to these expectations, resource rents significantly and substantially reduce the public capital stock. This is more direct evidence for a policy-based ‘resource curse’ than the conventional, indirect evidence from the relationships between resource endowments, growth and income. The adverse effect on public capital is mitigated by good economic and political institutions and worsened by GDP volatility and ethnic fractionalization. Rents from depleting resources have more adverse effects than those that are sustainable. Our main results are robust to a variety of controls, and to instrumental variable estimation using commodity price and rainfall as instruments, Arellano-Bond GMM estimation, as well as across different samples and data frequencies.

Keywords: Natural resources; public capital (search for similar items in EconPapers)
JEL-codes: E0 O1 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:f63f2ed8-2b18-4078-925f-56ca24645f44 (application/pdf)

Related works:
Journal Article: Public capital in resource rich economies: is there a curse? (2014)
Working Paper: Public Capital in Resource Rich Economies: Is there a Curse? (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2011-14

Access Statistics for this paper

More papers in CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by Julia Coffey ().