File(s) under permanent embargo
Public capital in resource rich economies: is there a curse?
journal contribution
posted on 2023-06-08, 14:13 authored by Sambit BhattacharyyaSambit Bhattacharyya, Paul CollierAs 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 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 institutions. We also find that rents from the depletion of non-renewable (mineral) resources reduce the public capital stock whereas rents from sustainable (forestry and agriculture) sources do not.
History
Publication status
- Published
File Version
- Published version
Journal
Oxford Economic PapersISSN
1464-3812Publisher
Oxford University PressExternal DOI
Issue
1Volume
66Page range
1-24Department affiliated with
- Economics Publications
Full text available
- No
Peer reviewed?
- Yes