Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth

July 1, 1999

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Carlos A Leite, and Jens Weidmann. Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth, (USA: International Monetary Fund, 1999) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper argues that natural resource abundance creates opportunities for rent-seeking behavior and is an important factor in determining a country’s level of corruption. In a simple growth model, we illustrate the interrelationships between natural resources, corruption, and economic growth, and discuss potential anti-corruption policies. We show that the extent of corruption depends on natural resource abundance, government policies, and the concentration of bureaucratic power. Furthermore, the growth effects of natural resource discoveries and anticorruption policies crucially depend on the economy’s state of development. We empirically corroborate the model’s implications in a cross-country framework with both corruption and growth endogenized.

Subject: Commodity prices, Corruption, Crime, Environment, International trade, National accounts, Natural resources, Personal income, Prices, Trade policy

Keywords: Africa, Anti-corruption policies, Commodity prices, Corruption, Cross-country study, Economic growth, Economic system, Extraction activity, Goods sector, Natural resource, Natural resources, Neoclassical growth model, Open economy, Personal income, Resource boom, Shadow price, Terms of trade, Trade policy, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/085
Stock No:

WPIEA0851999
ISBN:

9781451850734
ISSN:

1018-5941

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