Shifting Frontiers in Global Resource Wealth: The Role of Policies and Institutions

41 Pages Posted: 10 Oct 2016

See all articles by Rabah Arezki

Rabah Arezki

International Monetary Fund (IMF)

Frederik Toscani

International Monetary Fund

Rick van der Ploeg

University of Oxford

Date Written: October 2016

Abstract

This paper explores the impact of increased market orientation and improved institutions on global resource wealth using a novel dataset of major hydrocarbon and mineral discoveries. Guided by the predictions of a two-region model, we employ an instrumental variable strategy to test whether increased market orientation boosts discoveries. Our results indicate that if Latin America and sub-Saharan Africa were to adopt the same quality of institutions as the United States, discoveries worldwide would increase by 25 percent. Our results support the primacy of institutions by calling into question the commonly held view that resource endowments are exogenous.

Keywords: discoveries, endogenous reserves, institutions, liberalization, market orientation, Natural resources

JEL Classification: E00, F3, F4

Suggested Citation

Arezki, Rabah and Toscani, Frederik and van der Ploeg, Frederick, Shifting Frontiers in Global Resource Wealth: The Role of Policies and Institutions (October 2016). CEPR Discussion Paper No. DP11553, Available at SSRN: https://ssrn.com/abstract=2850395

Rabah Arezki (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Frederik Toscani

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Frederick Van der Ploeg

University of Oxford ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

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