twitter

Saturday, 2 January 2016

1958 The British create the West Indies Federation with Lord Hailes as governor general.

Ecological Economics
Volume 108, December 2014, Pages 136–149
Analysis

Extending the concept of the resource curse: Natural resources and public spending on health


doi:10.1016/j.ecolecon.2014.10.013
Get rights and content

Highlights

•
We use a panel dataset of world countries covering the period from 1995 to 2009.
•
We examine the effect of natural resources on public health expenditures.
•
We find an inverse relationship between natural resources and health spending.
•
Results are valid for natural resource abundance and dependence.
•
Evidence of an indirect effect through a deterioration of state accountability and volatility.

Abstract

This paper extends the concept of the resource curse by studying whether and through which transmission channels natural resource wealth affects social spending. Even though the availability of vast natural capital reserves has commonly been linked to the neglect of human development, most of the literature has continued to focus on economic performance. This paper is the first to empirically investigate the link between natural resource wealth and public health expenditures in light of the hypothesis that resource wealth as a source of unearned state income enhances state autonomy and increases volatility, which leads to policies that fail to prioritize human development. Using a large panel dataset of world countries covering the period from 1995 to 2009, we find a robust, significant inverse relationship between natural resource dependence, and even abundance, and public health spending over time. The effect remains significant after controlling for state autonomy, volatility, and other factors. These findings have implications for national authorities as well as the extractive industry. Governments should be made accountable for natural resource wealth and correct taxation could provide additional resources, earmarked for health. The extractive industry could increase their investments in sustainable Corporate Social Responsibility operations, specifically in the health sector.

JEL classification

  • H750;
  • O13;
  • Q32;
  • Q33

Keywords

  • Natural resources;
  • Health;
  • Public spending;
  • Political economy

Corresponding author at: LICOS, Waaistraat 6, Bus 3511, 3000 Leuven, Belgium.
Copyright © 2014 Elsevier B.V. All rights reserved.
Posted by at