Natural Resources, Democracy and Corruption

Bhattacharyya, Sambit and Hodler, Roland (2010) Natural Resources, Democracy and Corruption. European Economic Review, 54 (4). pp. 608-621. ISSN 0014-2921

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Abstract

We study how natural resources can feed corruption and how this effect depends on the quality of the democratic institutions. Our game-theoretic model predicts that resource rents lead to an increase in corruption if the quality of the democratic institutions is relatively poor, but not otherwise. We use panel data covering the period 1980 to 2004 and 124 countries to test this theoretical prediction. Our estimates confirm that the relationship between resource rents and corruption depends on the quality of the democratic institutions. Our main results hold when we control for the effects of income, time varying common shocks, regional fixed effects and various additional covariates. They are also robust across different samples, and to the use of various alternative measures of natural resources, democracy and corruption.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Depositing User: Sambit Bhattacharyya
Date Deposited: 06 Feb 2012 18:25
Last Modified: 27 Mar 2012 08:54
URI: http://sro.sussex.ac.uk/id/eprint/16205
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