Resources and Incentives to Reform: A Model and Some Evidence on Sub-Saharan African Countries
43 Pages Posted: 31 Jan 2006
Date Written: June 2001
Abstract
The paper models the incentives for a self-interested government to implement good policies. While good policies lead to investment and growth, they reduce the government's ability to increase supporters' consumption. The model predicts that resource abundance is conductive to poor policies and, consequently, to low investment. The implications of the model are broadly supported by evidence on sub-Saharan African countries. In particular, countries that are rich in natural resources tend to have lower institutional quality and worse macroeconomic and trade policies.
Keywords: Investment, autocracy, reforms
JEL Classification: D72, E22, Q33
Suggested Citation: Suggested Citation
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