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On the looting of nations

Sarr,M.
; 
Bulte,E.H.
; 
Meissner,C.
; 
Swanson,T.
Abstract
We develop a dynamic discrete choice model of an unchecked ruler making decisions regarding the development of a resource rich country. Resources serve as collateral and facilitate the acquisition of loans. The ruler chooses either to stay in power while facing the risk of being ousted, or loot the country’s riches by liquefying the resources through lending. We show that unstructured lending from international credit markets can create incentives to loot the country; and an enhanced likelihood of looting causes greater political instability, and diminishes growth. Using a treatment effects model, we find evidence that supports our predictions.
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Date
2011
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Tilburg University Research Output Collection
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Keywords
SDG 8 - Decent Work and Economic Growth
Citation
Sarr, M, Bulte, E H, Meissner, C & Swanson, T 2011, 'On the looting of nations', Public Choice, vol. 148, no. 3-4, pp. 353-380. https://doi.org/10.1007/s11127-010-9659-9
URI
https://hdl.handle.net/20.500.14602/53078
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