Journal
DEVELOPING ECONOMIES
Volume 48, Issue 4, Pages 473-495Publisher
WILEY-BLACKWELL
DOI: 10.1111/j.1746-1049.2010.00116.x
Keywords
Natural resources; Growth; Fractionalization; Polarization; Property rights; C31; O11; O13
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Countries rich in natural resources constitute both development failures and successes depending on their underlying socioeconomic fundamentals. Recent empirical evidence and theoretical work provide support for a resource-curse hypothesis based on ethnic fractionalization. There is also increasing empirical evidence suggesting that ethnic heterogeneity based on polarization is a strong deterrent of economic growth. In this paper, we explore the interlinkages between natural resource abundance and both measures of ethnic heterogeneity. In a two-simultaneous equation system, we assess the effects of fractionalization and polarization on property-rights protection, and thereby on growth, both directly as well as in interaction with our resource-abundance proxy. We find that ethnic polarization is more likely to have a direct negative impact on the effectiveness of property rights in a resource-rich context, which as we explain may suggest that different ethnic groups treat the contestable resource base as a semi-public good.
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