Economics and Finance Faculty Publications and Presentations

Document Type

Article

Publication Date

11-29-2023

Abstract

The resource curse hypothesis supposes that rents generated by resource booms create opportunities for rent-seeking activities, which weaken innovation and economic development due to the potentially adverse effects in competitive markets. The quality of institutions is an important channel to transform society from a rent-seeking economy to an entrepreneurial economy. We address in this paper these channels by examining necessity, opportunity, productive and innovative measures of entrepreneurship. Using annual data from 2002 to 2017, we estimate the relationship between entrepreneurship and natural resource rents for 60 countries. Allowing for measures of institutions (corruption, government policies, and cultural and social norms) and real GDP growth, we find that natural resource rents have negative effects on productive and innovative entrepreneurship, especially in high-income countries. In threshold dynamic panels, entrepreneurial activities grow with higher levels of corruption (weaker institutions), with an interpretation provided based on the higher corruption in developing economies.

Comments

Original published version available at https://doi.org/10.1515/erj-2023-0028

Publication Title

Entrepreneurship Research Journal

DOI

10.1515/erj-2023-0028

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Available for download on Friday, November 29, 2024

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Finance Commons

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