Political Economics of Resource Curese with Respect to State Owned Enterprises

Farhoodi, Abdollah | 2012

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 43023 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Nili, Masoud
  7. Abstract:
  8. The low performance of the natural resource economies in terms of economic growth has been considered in different fields of social sciences recently. Variety of policies suggested escaping from this phenomenon with respect to different standpoints. In this research, based on a theoretical approach, we tried to model the leader and people’s behavior in resource rich countries with political economics viewpoint and rational players. The contribution of this research is the introduction of state owned enterprises (SOE) as a basis to resource curse, which has not been considered precisely before. In our model, we have two players (leader, people), two alternatives for resource allocation (investement in infrastructures ans SOEs) and three different regimes (fully democratic, dictatorship, not fully dictatorship). This literature concludes that, if the leader ownes the resource revenues in a democratic regime, an increase in its revenues causes an expansion in leader’s investment in both infrastructure and SOEs. In a fully dictatorship regime, an increase in the resource revenues, has no effect on investments, private and SOEs’ production. In a not fully dictatorship model which is more consistant with the reality of resource rich countries, an increase of resource revenues leads to a reduction in private share of production to GDP. We then used our model to examine the impacts of people’s possession on natural resources. We show that,transmission of the natural resource reveniues to people, causes a reduction in both private and SOEs’ production in democratic regimes. This policy has no effect on players’ behavior and production, in a fully dictatorship regime. In a not fully dictatorship regime, people’s possession of natural resources causes a reduction in the share of SOE’s production to GDP
  9. Keywords:
  10. Political Economy ; Natural Resource Curse ; Rational Players ; State Owned Enterprises

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