This chapter examines the relationship between political economy and natural resource endowment using an extension of Lal’s (1995) typology of political states. The extended typology explains why the governments of resource-abundant countries are less likely to align their interests with those of the majority than the governments of resource-deficient countries. Natural resource rents feed conflicts so that the resource-abundant country has a factional or predatory government that relaxes market discipline in capturing and redistributing the rents. Thus, the economy is deflected from its comparative advantage and cumulates economic distortions that retard growth and/or cause the economy to depend on a weakening primary sector.
Keywords: political economy; natural resource endowment; resource-abundant countries
Chapter. 7704 words. Illustrated.
Subjects: Economic Development and Growth
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