The Journal of Economic Studies and Policies

The Journal of Economic Studies and Policies

The Blight of Resources and Greed Effect Ja’far Khair Khahan

Document Type : Original Article

Author
Ja’far Khair Khahan
PhD student in Economics, Allameh Tabatabaei University
Abstract
The natural resource rich countries’ underdevelopment is one of unsolved mysteries and concerns for economic, social and political researchers. To answer this mystery, various solutions have been put forth so far. According to a most recent solution the root of the problem lies in the presence of powerful interest groups and the weakness of legal institutions which prepare the ground for rent seeking and results in an economic underdevelopment.
This paper looks at the abundance of resources from a political economic perspective and spells out the behavior of the saving rate variable in the framework of institutions and interest groups’ conflicts. Introducing the “greed effect” the author shows that the saving rate will behave anti-cyclical and the consumption will exceed the abundance of resources. At the end, a quantitative and qualitative investigation demonstrates the impact of greed on Iran’s oil boom in mid 1950s.
Keywords
Natural resources
political economy
interest groups
rent seeking
greed effect
منابع
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The Journal of Economic Studies and Policies
Volume 0, Issue 4 - Serial Number 38
Autumn 2003
Pages 121-158