Democracy and the curse of natural resources

We propose a theoretical model to explain empirical regularities related to the curse of natural resources. This is an explicitly political model which emphasizes the behavior and incentives of politicians. We extend the standard voting model to give voters political control beyond the elections. This gives rise to a new restriction into our political economy model: policies should not give rise to a revolution. Our model clarifies when resource discoveries might lead to revolutions, namely, in countries with weak institutions. Natural resources may be bad for democracy by harming political turnover. Our model also suggests a non-linear dependence of human capital on natural resources. For low levels of democracy human capital depends negatively on natural resources, while for high levels of democracy the dependence is reversed. This theoretical finding is corroborated in both cross section and panel data regressions.

The long run development of Chile and the Natural Resources curse. Linkages, policy and growth, 1850-1950

This chapter analyses the effects of Natural Resources on the Chilean economy in the long run -1850-1950-. Specifically, the authors focus their attention on the mining cycles -nitrates and copper- and their impact on the mining activity. We also compare it with the evolution of the industry and whole economy, and how this has affected the economic growth of the country. In that sense, the industrial performance in Chile at the end of the 19th century until the Great Depression is still under debate. The optimistic view of Kirsch -1977- forehead the pessimistic view of Lagos -1966- and Palma -1979-. The new data and its analyses shows a neutral effect of the Natural Resources in the industrial development.