Resources and Incentives to Reform: A Model and Some Evidence on Sub-Saharan African Countries

June 1, 2001

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

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.

Subject: Environment, Expenditure, Foreign aid, Infrastructure, National accounts, Natural resources, Private investment, Public investment and public-private partnerships (PPP), Tax incentives

Keywords: autocracy, B. government benevolence, elitist government, governance quality, incumbent government, Infrastructure, Investment, mover accent, Natural resources, Private investment, Public investment and public-private partnerships (PPP), reforms, ruling elite, Sub-Saharan Africa, WP

Pages:
43
Volume:
2001
DOI:
https://doi.org/10.5089/9781451850888.001
Issue:
086
Series:
Working Paper No. 2001/086
Stock No:
WPIEA0862001
ISBN:
9781451850888
ISSN:
1018-5941

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