TY - JOUR
T1 - Natural resources and fiscal performance
T2 - Does good governance matter?
AU - El Anshasy, Amany A.
AU - Katsaiti, Marina Selini
N1 - Funding Information:
We are extremely grateful to the United Arab Emirates University for the research grant the first author received to produce this research. We are also grateful to anonymous referees, Abdulnasser Hatemi-J, Ahmed Ismail, Timo Boppart, Jorge Madeira Noqueira, Raimundo Soto, and the participants of the Economics and Finance seminar series at the College of Business and Economics, UAEU, and the 4th Annual Research Symposium in Business and Economics for their many useful comments. We also would like to thank Manar Hamid and Eman Abdulla for valuable research assistance. All errors remain ours.
PY - 2013/9
Y1 - 2013/9
N2 - Weighing the current world affairs, there seems to be strong association between natural resources, corruption, and bad economic performance. We empirically investigate the interplay between different institutional qualities and fiscal policy, and their effect on resource-abundant economies' growth. In particular, the study contributes to the existing literature by disentangling the indirect effect of institutions on growth through the "quality of fiscal performance" transmission channel. Using yearly panel data on 79 resource and non-resource countries for the period 1984-2008, we find that the quality of fiscal policy - and not the quantity (government size) - matters to growth in the group of resource-rich countries. We also find that not all types of socio-economic and political institutions impact growth in the same manner. Better governance, stronger democratic institutions, and transparent budgets improve fiscal performance, leading to higher growth rates. Democratic and budget institutions seem to be in effect only through the fiscal channel but not independently.
AB - Weighing the current world affairs, there seems to be strong association between natural resources, corruption, and bad economic performance. We empirically investigate the interplay between different institutional qualities and fiscal policy, and their effect on resource-abundant economies' growth. In particular, the study contributes to the existing literature by disentangling the indirect effect of institutions on growth through the "quality of fiscal performance" transmission channel. Using yearly panel data on 79 resource and non-resource countries for the period 1984-2008, we find that the quality of fiscal policy - and not the quantity (government size) - matters to growth in the group of resource-rich countries. We also find that not all types of socio-economic and political institutions impact growth in the same manner. Better governance, stronger democratic institutions, and transparent budgets improve fiscal performance, leading to higher growth rates. Democratic and budget institutions seem to be in effect only through the fiscal channel but not independently.
KW - Fiscal policy
KW - Growth
KW - Institutions
KW - Resource abundance
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U2 - 10.1016/j.jmacro.2013.05.006
DO - 10.1016/j.jmacro.2013.05.006
M3 - Article
AN - SCOPUS:84880938866
SN - 0164-0704
VL - 37
SP - 285
EP - 298
JO - Journal of Macroeconomics
JF - Journal of Macroeconomics
ER -