On the looting of nations

Mare Sarr, Erwin Bulte, Chris Meissner, Tim Swanson

Research output: Contribution to journalArticle

6 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)353-380
Number of pages28
JournalPublic Choice
Volume148
Issue number3-4
DOIs
Publication statusPublished - Sep 1 2011

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All Science Journal Classification (ASJC) codes

  • Sociology and Political Science
  • Economics and Econometrics

Cite this

Sarr, M., Bulte, E., Meissner, C., & Swanson, T. (2011). On the looting of nations. Public Choice, 148(3-4), 353-380. https://doi.org/10.1007/s11127-010-9659-9