Our goal is to show that contrary to the claims made in several recent papers, the effect of a large endowment of oil and other mineral resources on long-term economic growth of countries has been on balance positive. Moreover, the claims of a negative effect of oil and mineral wealth on the countries' institutions are called into question. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
We analyze the relationship between product market competition and corruption. The existing theoretical literature produces ambiguous implications for the sign of this relationship, making it an empirical issue. Unlike the existing empirical studies that use cross-country data, we test the relationship between competition and corruption using firm-level information. This approach overcomes serious estimation difficulties that result from relying on cross-country data. Contrary to the existing work, we show that greater product market competition is typically associated with greater corruption.
This note argues that the most commonly used estimates of the size of the unofficial economies in the former Soviet republics are flawed. Most important, they are based on calculations that disregard the variation in unofficial economic activity across space in the pre-transition Soviet Union. In addition, these estimates appear to understate the size of the unofficial economies in these countries. We propose alternative estimates and find that they are more strongly related to the institutional factors commonly used to explain the size of the unofficial sector. Our estimates also show that the size of a country's pre-transition unofficial economy is an important predictor of its size during the transition. This suggests that the size of the unofficial economy is to a large extent a historical phenomenon only partly determined by contemporary institutional factors.JEL classification: O17, P2, P3.
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