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

Author/Editor:

Carlos A Leite ; Jens Weidmann

Publication Date:

July 1, 1999

Electronic Access:

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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.

Series:

Working Paper No. 1999/085

Subject:

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

English

Publication Date:

July 1, 1999

ISBN/ISSN:

9781451850734/1018-5941

Stock No:

WPIEA0851999

Pages:

34

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