On the looting of nations

Mare Sarr; Erwin Bulte; Chris Meissner; Tim Swanson

doi:10.1007/s11127-010-9659-9

On the looting of nations

Mare Sarr
, Erwin Bulte
, Chris Meissner
, Tim Swanson

School of International Affairs

Research output: Contribution to journal › Article › peer-review

14 Scopus citations

Abstract

We develop a dynamic discrete choice model of an unchecked ruler making decisions regarding the development of a resource rich country. Resources serve as collateral and facilitate the acquisition of loans. The ruler chooses either to stay in power while facing the risk of being ousted, or loot the country's riches by liquefying the resources through lending. We show that unstructured lending from international credit markets can create incentives to loot the country; and an enhanced likelihood of looting causes greater political instability, and diminishes growth. Using a treatment effects model, we find evidence that supports our predictions.

Original language	English (US)
Pages (from-to)	353-380
Number of pages	28
Journal	Public Choice
Volume	148
Issue number	3-4
DOIs	https://doi.org/10.1007/s11127-010-9659-9
State	Published - Sep 2011

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 16 Peace, Justice and Strong Institutions

All Science Journal Classification (ASJC) codes

Sociology and Political Science
Economics and Econometrics

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10.1007/s11127-010-9659-9

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title = "On the looting of nations",

abstract = "We develop a dynamic discrete choice model of an unchecked ruler making decisions regarding the development of a resource rich country. Resources serve as collateral and facilitate the acquisition of loans. The ruler chooses either to stay in power while facing the risk of being ousted, or loot the country's riches by liquefying the resources through lending. We show that unstructured lending from international credit markets can create incentives to loot the country; and an enhanced likelihood of looting causes greater political instability, and diminishes growth. Using a treatment effects model, we find evidence that supports our predictions.",

author = "Mare Sarr and Erwin Bulte and Chris Meissner and Tim Swanson",

note = "Funding Information: Acknowledgements We would like to thank Chen Le-Yu, Toke Aidt, Imran Rasul, Simon Lee, Lars Nesheim, Nicola Pavoni, Ragnar Torvik, John Hartwick, Chris Knittel and seminar participants at the University of Birmingham, University College London, University of Oxford, University of Cape Town, University of Warwick, Cornell University, Venice University, UCLA, Stanford GSB, and the Indian Statistical Institute Delhi for their valuable comments. We also thank Kirk Hamilton and Giovanni Ruta for sharing their data on natural resources with us. We extend our appreciation to Public Choice Editor in Chief William Shughart and the reviewers for their helpful comments. Finally, Mare Sarr gratefully acknowledges financial support from Economic Research Southern Africa (ERSA) and Erwin Bulte would like to thank the Dutch Organization for Scientific Research (N.W.O.) for financial support (grant nr. 452-04-333). The usual disclaimer applies.",

year = "2011",

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doi = "10.1007/s11127-010-9659-9",

language = "English (US)",

volume = "148",

pages = "353--380",

journal = "Public Choice",

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TY - JOUR

T1 - On the looting of nations

AU - Sarr, Mare

AU - Bulte, Erwin

AU - Meissner, Chris

AU - Swanson, Tim

N1 - Funding Information: Acknowledgements We would like to thank Chen Le-Yu, Toke Aidt, Imran Rasul, Simon Lee, Lars Nesheim, Nicola Pavoni, Ragnar Torvik, John Hartwick, Chris Knittel and seminar participants at the University of Birmingham, University College London, University of Oxford, University of Cape Town, University of Warwick, Cornell University, Venice University, UCLA, Stanford GSB, and the Indian Statistical Institute Delhi for their valuable comments. We also thank Kirk Hamilton and Giovanni Ruta for sharing their data on natural resources with us. We extend our appreciation to Public Choice Editor in Chief William Shughart and the reviewers for their helpful comments. Finally, Mare Sarr gratefully acknowledges financial support from Economic Research Southern Africa (ERSA) and Erwin Bulte would like to thank the Dutch Organization for Scientific Research (N.W.O.) for financial support (grant nr. 452-04-333). The usual disclaimer applies.

PY - 2011/9

Y1 - 2011/9

N2 - We develop a dynamic discrete choice model of an unchecked ruler making decisions regarding the development of a resource rich country. Resources serve as collateral and facilitate the acquisition of loans. The ruler chooses either to stay in power while facing the risk of being ousted, or loot the country's riches by liquefying the resources through lending. We show that unstructured lending from international credit markets can create incentives to loot the country; and an enhanced likelihood of looting causes greater political instability, and diminishes growth. Using a treatment effects model, we find evidence that supports our predictions.

AB - We develop a dynamic discrete choice model of an unchecked ruler making decisions regarding the development of a resource rich country. Resources serve as collateral and facilitate the acquisition of loans. The ruler chooses either to stay in power while facing the risk of being ousted, or loot the country's riches by liquefying the resources through lending. We show that unstructured lending from international credit markets can create incentives to loot the country; and an enhanced likelihood of looting causes greater political instability, and diminishes growth. Using a treatment effects model, we find evidence that supports our predictions.

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JF - Public Choice

IS - 3-4

ER -

On the looting of nations

Abstract

UN SDGs

All Science Journal Classification (ASJC) codes

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