On the Effects of Change in the Ownership of Natural Resource Revenues on Government Performance Enhancement and People Welfare

Mohsenzadeh Kermani, Amir Reza | 2007

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 39487 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Nili, Masoud
  7. Abstract:
  8. The poor economic performance of natural resource abundant countries has been studied for a long time and in order to alleviate this problem some different solutions are suggested by economists. One stream among these solutions are those focusing on the distribution mechanism of natural resource revenues and the ownership of these resources. In this study, it is intended to address the effect of change in the ownership of natural resources on politicians’ behavior and people welfare by using political economy approach. Also the optimal share of people from natural resources as a function of political and economic institutions is discussed. In this study, it is shown theoretically that under mature democracy and credible commitments with politicians during the election, natural resources results to reduction in tax rates and there is only a conflict of interests between different groups of people on having a bigger share from natural resource revenues. However natural resource abundance increase the temptation of politicians to renege their campaign policies which results to factional democracy. Under non-credible politicians, the main conflict of interest is between people and government. In this situation it is optimal for all people to only request for necessary public goods from the government and receive the rest of natural resources directly instead of through public goods. The effect of transparency on natural resource revenues is also discussed and the prediction of the model is that lack of transparency makes the government myopic and rentier
  9. Keywords:
  10. Political and Economic Institutions ; Natural Resource Curse ; Economic Development ; Political Development ; Information Transparency ; Politicians Commitments

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