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  3. American Economic Review
  4. June 2000
  5. Ownership Risk, Investment, and the Use of Natural Resources

Ownership Risk, Investment, and the Use of Natural Resources

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Abstract

The effect of insecure ownership on ordinary investment and natural resource use is examined. Insecure ownership is postulated to depend on the type of government regime in power and the prevalence of political violence or instability. The political determinants of economy-wide investment are estimated from cross-country data, and the results are used to form an index of ownership security. When introduced into empirical models of natural resource use, this index has a significant and quantitatively important effect on the use of forests and petroleum. Contrary to conventional wisdom, ownership risk slows resource use in some circumstances.

Citation

Bohn, Henning, and Robert T. Deacon. 2000. "Ownership Risk, Investment, and the Use of Natural Resources." American Economic Review, 90 (3): 526-549. DOI: 10.1257/aer.90.3.526

JEL Classification

  • Q21 Renewable Resources and Conservation: Demand and Supply (the Commons
  • Q31 Nonrenewable Resources and Conservation: Demand and Supply
  • E22 Capital; Investment; Capacity