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Education, Rent seeking and the Curse of Natural Resources
Author(s) -
Wadho Waqar Ahmed
Publication year - 2014
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/ecpo.12029
Subject(s) - endowment , natural resource , rent seeking , economics , language change , poverty trap , poverty , resource curse , incentive , politics , curse , inequality , human capital , public economics , development economics , affect (linguistics) , economic growth , microeconomics , political science , sociology , art , mathematical analysis , literature , mathematics , anthropology , law , communication
Empirical evidence suggests that natural resources breed corruption and reduce educational attainments, dampening economic growth. The theoretical literature has treated these two channels separately, with natural resources affecting growth either through human capital or corruption. In this article, we argue that education and corruption are jointly determined and depend on the endowment of natural resources. Natural resources affect the incentives to invest in education and rent seeking that in turn affect growth. Whether natural resources stimulate growth or induce a poverty‐trap crucially depends on inequality in access to education and political participation, as well as on the cost of political participation. For lower inequality and higher cost of political participation, a high‐growth and a poverty‐trap equilibrium coexist even with abundant natural resources.