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

34 Pages Posted: 14 Feb 2001  

Carlos A. Leite

International Monetary Fund (IMF)

Jens Weidmann

Federal Statistical Office

Date Written: June 1999

Abstract

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.

Keywords: Economic growth, neoclassical growth model, natural resources, corruption, anticorruption policies, cross-country study

JEL Classification: O11, O13, O40, O41, C31, E61, F43, N50

Suggested Citation

Leite, Carlos A. and Weidmann, Jens, Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth (June 1999). IMF Working Paper No. 99/85. Available at SSRN: https://ssrn.com/abstract=259928 or http://dx.doi.org/10.2139/ssrn.259928

Carlos Alberto Da Cunha Leite (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
African Department
Washington, DC 20431
United States

Jens Weidmann

Federal Statistical Office ( email )

Gustav - Stresemann - Ring 11
Wiesbaden, 65189
Germany

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