The Natural Resource Curse, Fiscal Decentralization, and Agglomeration Economies
Fidel Perez Sebastian
Universidad de Alicante - Department of Economic Analysis
Hebrew University of Jerusalem
May 15, 2013
Natural resource abundance is a blessing for some countries, but a curse for others. We show that differences across countries in the degree of fiscal decentralization can contribute to this divergent outcome. First, the paper presents a unified theory that combines political and market mechanisms to illustrate why natural resource booms can create negative effects in fiscally decentralized nations. Thereafter, we employ Sachs and Warner’s cross-sectional data, and also construct a new panel-data sample to test the hypothesis. Results support the joint effect of the two variables.
Number of Pages in PDF File: 48
Keywords: Natural Resources, Economic Growth, Resource Curse, Fiscal Decentralization, Agglomeration Economies, Tax Competition
JEL Classification: C21, O13, O18, O57, Q33working papers series
Date posted: January 18, 2011 ; Last revised: May 17, 2013
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