Category Archives: Natural Resources

Economic Determinants of Multilateral Environmental Agreements

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By Tibor Besedeš (Georgia Institute of Technology), Erik P. Johnson (Carthage College), and Xinping Tian (Hunan University)

Multilateral environmental agreements come in many flavors. Between 1950 and 2012 over 1100 such agreements have been negotiated between countries. These agreements cover a variety of issues including newer concerns such as global warming and climate change as well as older ones such as acid rain, degradation of habitats, and overfishing. The large number of agreements points to a telling difference between environmental agreements and another type of agreement countries often negotiate, namely the one dealing with international trade. A pair of countries tends to negotiate a single trade agreement that is either comprehensive and covers the entirety of trade between the two (such as NAFTA) or excludes some goods from coverage (many agreements Japan negotiates do not cover agriculture). In the environmental arena, agreements tend to be more issue-specific resulting in the same pair of countries signing many more agreements. For example, prior to 1990 France had ratified 213 multilateral agreements. Among these 179 are between France and Germany, its EU partner, with the agreement underpinning the EU being the sole agreement covering international trade between the two. France and Mexico are both parties to 69 agreements, while prior to Slovakia’s entry into the EU, France had no environmental agreements with Slovakia despite their close proximity to each other. The reasons for the different number of agreements are varied. Some have to do with proximity. France and Germany are neighboring countries and have entered into agreements to deal with transboundary environmental issues such as management of resources spanning the common border or pollution that straddles the border. Given Mexico and France are separated by the Atlantic Ocean, there are significantly fewer environmental issues the two have in common and hence fewer agreements that both are parties to.

The distance between France and Germany on one hand and France and Mexico on the other plays an important role in determining what kinds of environmental agreements they enter. The common border shared by France and Germany generates transboundary issues that need to be managed, be they resource management or habitat preservation. Mexico and France have no such issues. Rather, Mexico and France are much more likely to be signatories of large multilateral agreements that many or all countries in the world sign on to, such as the Montreal Protocol (negotiated to phase out production of substances that deplete the ozone) or the Kyoto Protocol (negotiated to reduce greenhouse gases). France and Germany are also party to such agreements, but also are parties to more agreements that are small in nature, in terms of the number of signatories. These small agreements are between fewer countries as they are designed to deal with specific issues affecting a small set of countries near each other that share common pool resources that need to be managed.

The number of signatories to an agreement is also an important variable, as it may determine how effective and stable agreements are. Several theoretical papers have shown that self-enforcing environmental agreements between many countries will arise when the difference in net benefits between the non-cooperative and fully cooperative outcomes is very small.[1] In other words, large agreements will be formed only when commitments that countries must agree to are small or non-existent. On the flip side, small agreements, between few signatories can be much more effective at dealing with a variety of environmental issues.[2] In other words, large agreements may be an expression of a desire to do something about an issue at some point but entail no immediate commitment to act. Small agreements are more likely to contain binding commitments. Large agreements may be examples of what Scott Barrett characterizes as consensus agreements, which are “broad but shallow”, rather than “narrow but deep,” which tends to be a more apt description of small agreements.[3]

The main thrust of our recently published paper in this area is to understand the economic determinants of environmental agreements.[4] A common concern attributed to many environmental agreements is that they will usually result in additional regulation and new limits on economic activity resulting in economic losses. As such, it is important to understand the extent to which economic factors play a role in countries agreeing to sign an environmental agreement. Given the above discussion, we hypothesize that economic determinants play an important role in determining two countries becoming parties to a small agreement with few other countries. However, when it comes to large, globe-spanning agreements, we hypothesize that economic factors play no role in determining whether two countries sign it.

We use data on multilateral environmental agreements from Ronal Mitchell’s International Environmental Agreement Database Project (2002-2015) on agreements signed between 1950 and 2012.[5] We use these data to examine two aspects: the likelihood that a pair of countries signs a (new) environmental agreement and the number of agreements the pair is currently a party to. We use three groups of explanatory variables. The first are variables used in the international trade gravity literature: sum of GDPs, difference in GDPs, distance, and common language. The second are economic integration variables: sum of imports and existence of a trade agreement between the two countries. The last group of variables are proxies for common pool resources: the length of border between the two countries, whether they are in the same geographic region, or whether they are in neighboring regions. We separately analyze agreement with less than 26 signatories, the median number of signatories of all agreements in our sample, and agreements with more than 68 signatories, which is the 75th percentile in the distribution of the number of signatories across all agreements.

The first step in our analysis is to show that proxies for common pool resources are good proxies. We do so by collecting data on two types of common pool resources we could find that span across countries, namely aquifers and transboundary waters. In both cases, countries that have a longer border, and/or are in the same or neighboring regions, are more likely to either share aquifers or transboundary waters.

In the second step we examine the determinants of the likelihood that countries enter into an environmental agreement. A pair of countries with larger joint GDP but with smaller differences between them (i.e., countries more similar in economic size), that trade more, that are closer in distance, that have a longer border, that share a common language, that are in the same or neighboring regions, and that have a trade agreement are more likely to sign an environmental agreement that has a small number of signatories in virtually any year of our sample. These same factors also cause a pair of countries to be parties to more agreements, except for common language and being in neighboring regions which do not have significant effects. When it comes to large agreements, these same factors either do not have significant effects, or their effect decreases over time.

The conclusion we reach based on our results is that economic factors play a role in determining whether a pair of countries signs a small agreement. In these cases, economic factors matter as small agreements have bite: they usually come with binding commitments that often manifest themselves in costs. On the other hand, when it comes to agreements with many signatories, economic factors play a minor role at best because such agreements entail no costs making it easier for countries to join. The lack of costs associated with the agreement implies that there are few economic considerations countries have to worry about when joining such agreements.

References

Asheim, Geir B., Camilla Bretteville Froyn, Jon Hovi, and Frederic C. Menz (2006), “Regional versus Global Cooperation for Climate Control,” Journal of Environmental Economics and Management, 51 93-109.

Barrett, Scott (1994), “Self-Enforcing International Environmental Agreements,” Oxford Economic Papers 46, 878–894.

Barrett, Scott (2002), “Consensus Treaties.” Journal of Institutional and Theoretical Economics 158 (4), 529-547.

Besedeš, Tibor, Erik P. Johnson, and Xinping Tian (forthcoming), “Economic Determinants of Multilateral Environmental Agreements.” International Tax and Public Finance, doi: 10.1007/s10797-019-09588-z

Gelves, Alejandro, and Matthew McGinty (2016), “International Environmental Agreements with Consistent Conjectures.” Journal of Environmental Economics and Management 78, 67-84.

Hovi, Jon, Hugh Ward, and Frank Grundig (2015), “Hope or Despair? Formal Models of Climate Cooperation.” Environmental and Resource Economics 62(4), 665-688.

Endnotes

[1] See Barrett (1994) and the references therein.

[2]  See Asheim et al. (2006), Gelves and McGinty (2016), and Hovi et. al. (2015).

[3] See Barrett (2002).

[4] Besedeš, Johnson and Tian (forthcoming).

[5] http://iea.uoregon.edu/

Growth, Import Dependence, and War

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By Roberto Bonfatti (University of Nottingham) and Kevin Hjortshøj O’Rourke  (University of Oxford)

World trade has increased tremendously in recent decades, driven by the rise of China and other emerging economies. The reliance of world trade on choke points (such as the Strait of Hormuz, the Malacca Strait and the South China Sea) creates the need for someone to guarantee the freedom of navigation. Traditionally, this role has been upheld by the naval hegemon of the day: Britain during the 19th century’s Pax Britannica, and the United States today. While the naval hegemon may in fact be providing a global public good by behaving in this manner, its activities may not always reassure everyone, especially if strategic tensions are gradually building up between itself and rising powers such as China.

Rising tension between the US and China is often analyzed in the context of the broader challenge that the rise of China poses to US military hegemony. Political scientists have long cautioned against the risks posed by shifts in relative power. In fact, in the eyes of some theorists, such shifts are the main reason why war can occur. Robert Powell shows, in the context of a two-country world, that if one of the two countries is catching up militarily on the other, it may be impossible to dissuade the established power from launching a pre-emptive war against the rising power.[1]

This is because from the perspective of the established power, not going to war carries a future cost: in the future, the rising power, having become more powerful, will be better able to impose its will on the established hegemon when it comes to disputes between the two. The follower has an incentive to forestall a pre-emptive war by the leader, by promising the leader a sufficiently big slice of the pie in the future. Since it cannot pre-commit to this, and has an incentive to use its greater power in the future to secure a greater share of the pie, the leader may choose to launch a pre-emptive war in order to lock in a higher share of the spoils while it still has the chance.

Applied to the case of industrial catching up, this model seems to have clear implications. Military power goes hand in hand with growth and industrial development; thus, an established industrial leader should be the one to consider launching a pre-emptive war against a catching-up, late industrializing, follower.

In our recent work, we show that, if international trade is taken into account, the implications of the model can be quite different.[2] Central to our analysis are the assumptions that the follower needs to import increasing amounts of raw materials from the rest of the world, as it undergoes structural change, and that the leader may be able to blockade the follower’s trade.

An industrial leader may well be losing out to a catching-up follower in terms of potential military power; however, this does not necessarily imply that it is actually becoming militarily weaker over time. Industrial catching up is a double-edged sword for the follower: while it makes its military apparatus potentially more powerful, rapid growth and structural change also makes it more dependent on imported raw materials. If the leader has the capacity to blockade these imports in case of war, the follower may actually become militarily weaker, rather than stronger, over time. In this case, it may be the follower who launches a pre-emptive war on the leader, and not the other way around.

By generalizing the model in this manner, we open up a rich menu of theoretical possibilities. For example, the follower may decide to attack resource-rich peripheral areas in an attempt to become more self-sufficient, or entirely self-sufficient, in raw materials. It may do so instead of, or prior to, launching an attack on the leader. The follower may even attack the resource-rich region in circumstances when it knows that this will provoke an attack upon it by the leader, when otherwise the two countries would not have gone to war.

We argue that our model can shed light on why it was Japan who attacked the United States in 1941, and not the other way around.[3] This was unambiguously a case of an industrial follower catching up on the leader. And yet Japan was also becoming rapidly more dependent on imported raw materials. Japan’s invasions of resource-rich Manchuria, China, and Southeast Asia were attempts to break free from this pattern of increased dependence: they correspond to attacks on the resource-rich region in our model, prior to an eventual attack on the leader.

Like Japan, late 19th and early 20th century Germany had been rapidly catching up on the Britain and the United States. However, Germany had also become more dependent on imports of food and raw materials. While we do not argue that this strategic dependence explains the origins of either world war in Europe, Avner Offer has argued that it was a key factor explaining the Anglo-German naval rivalry which preceded World War I.[4] After World War I, Hitler was obsessed with German dependence on imports of food and strategic raw materials. The importance of securing the resources needed to fight his wars is a constant theme of Adam Tooze’s classic book on the Nazi economy.[5] One obvious solution was to attack Eastern Europe, which corresponded to the resource-rich peripheral region in our model, even though attacking Poland risked war with the UK and France. And in the long run, conquering Russia was seen as the only way to achieve complete self-sufficiency in raw materials.

Such theoretical and historical considerations suggest that it is Chinese vulnerability, rather than American, that we should be worried about. As long as the United States retains control over maritime choke points, it may be China, rather than the United States, that fears becoming more vulnerable over time. In that context, Chinese expansionism in the South China Sea, while potentially dangerous, may not be so surprising.

References

Barnhart, M.A. (1987). Japan Prepares for Total War: The Search for Economic Security, 1919-1941. Cornell University Press.

Bonfatti, R. and K.H. O’Rourke (forthcoming). “Growth, Import Dependence and War.” Economic Journal. An earlier version is available as CEPR Discussion Paper 10073.

Offer, A. (1989). The First World War: An Agrarian Interpretation. Clarendon Press.

Powell, R. (2006). “War as a Commitment Problem.” International Organization, vol. 60(1), pp. 169-203.

Tooze, A. (2006). The Wages of Destruction: The Making and Breaking of the Nazi Economy, Allen Lane.

Endnotes

[1] See Powell (2006).

[2] See Bonfatti and O’Rourke (forthcoming).

[3] See Barnhart (1987).

[4] See Offer (1989).

[5] See Tooze (2006).

Weather Shocks, Natural Disasters, and Economic Outcomes

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The ‘new weather-economy literature’ applies panel methods to examine how weather-related events such as temperature, precipitation and windstorms affect economic outcomes such as output, labor productivity and conflict.  By capturing exogenous variation in weather related events over time within a given spatial unit, the literature helps inform classic issues of economic development and especially the role of geographic features in influencing development paths.  This in turn contributes to the debate over the competing explanations of institutions and geography in explaining economic development.  Overall, this literature establishes that temperature, precipitation and extreme weather events exert economically meaningful and statistically significant influences on a variety of economic outcomes.  A key finding is that panel estimates tend to predict economically and statistically significant negative impacts of hotter temperatures on per-capita income but only for poor countries.

A branch of this literature examines the effects of natural disasters on economic growth.  In a technical sense, natural disasters have the same appeal as other weather related shocks in that they are exogenous.  Natural disasters are distinguished from other weather related shocks in that they are more destructive.  This feature provides a reasonably straightforward connection to the predictions of growth theory in that the destruction of capital leads initially to an inward shift of the production possibility frontier and so a sharp contraction of growth, but then a recovery process during which the growth rate may be higher than that in the steady state.  Yet there are many subtleties that are amenable to econometric testing.  For example, models based on Schumpeter’s creative destruction process may even ascribe higher growth as a result of negative shocks, as these shocks can be catalysts for reinvesting and upgrading of capital goods.  On the other hand, endogenous growth models that exploit increasing returns to scale in production generally predict that a destruction of part of the physical or human capital stock result in a lower growth path and, consequently, a permanent deviation from the previous growth trajectory.  Also, economic openness that allows for an inflow of capital from abroad and good institutions that can be used effectively to defend property rights should all speed up the recovery process.  Here a consensus appears to be emerging that the initial impact of a shock on growth is indeed negative and that this is followed by a recovery phase during which growth accelerates.  Moreover, better institutional quality, greater openness to trade, and greater financial openness all help support faster recovery.  In future research, the new datasets on weather related shocks and natural disasters could be fruitfully applied to many other questions, including the relation between disasters and trade patterns, migration patterns, poverty and inequality.

Albala-Bertrand, J.-M., (1993); Political Economy of Large Natural Disasters. Oxford, Clarendon Press.

Caballero, R.J., and M.L. Hammour, (1994); “The Cleansing Effect of Recessions.” American Economic Review 84: 1350–1368. [Working paper version]

Cavallo, E., S. Galiani, I. Noy, and J. Pantano, (2013); “Catastrophic Natural Disasters and Economic Growth.” Review of Economics and Statistics, 95(5): 1549–1561. [Working paper version]

Cavallo, E.A., and I. Noy, (2011); “Natural Disasters and the Economy – A Survey.” International Review of Environmental and Resource Economics 5: 63–102. [Working paper version]

Dell, M., B.F. Jones, and B.A. Olken, (2012); “Temperature Shocks and Economic Growth: Evidence from the Last Half Century.” American Economic Journal: Macroeconomics, 4(3): 66-95. [Working paper version]

Dell, M., B. Jones, and B. Olken, (2014); “What Do We Learn from the Weather? The New Climate-Economy Literature.” Journal of Economic Literature, 52(3): 740-798. [Working paper version]

Felbermayr, G., and J. Gröschl, (2014); “Naturally Negative: The Growth Effects of Natural Disasters.” Journal of Development Economics, 111: 92-106. [Working paper version]

Miguel, E., S. Satyanath, and E. Sergenti, (2004); “Economic Shocks and Civil Conflict: An Instrumental Variables Approach.” Journal of Political Economy 112(4): 725-753. [Working paper version]

Political Economy of Agricultural Policy

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The 2008 world food price spikes lead to conflict between the World Bank and food exporters.  Motivated by the prospect of food shortages, food exporting countries responded to the food price spikes by restricting their exports just at the time when countries already experiencing a shortage were looking to the world market for relief.  In a bid to further encourage exports, food importing countries in some cases even responded by implicitly subsidising imports.  These interventions amplified the price spikes and harmed consumers in the intervening countries and beyond.  Seeing export restrictions as the root of the problem, the World Bank asked the countries concerned to desist from such practices.  But with violence erupting on the streets, some governments felt that their hands were tied to the export restrictive measures.  There is an active debate in the literature seeking to understand the policy responses that accompanied and exacerbated the food price spikes.

Over the longer term, supply side policies have depressed farmers’ incentives for some time.  The governments of many developing countries have taxed agriculture at significantly higher rates than other sectors or have taxed agriculture indirectly by overvaluing their currencies to pursue import-substitution industrialization strategies.  These policies clearly introduce price distortions.  It is an open questions as to whether these policies have a negative impact on growth and the income distribution.  If government interventions do have adverse effects, the question is why they are so prevalent in developing countries.  The political economy literature offers two main explanations.  One is that policymakers protect consumers in order to indirectly protect their positions in power.  The other is that governments are captured by vested interests in industry.

Anderson, Kym, Gordon Rausser, and Johan Swinnen (2013) “Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets.” Journal of Economic Literature, 51(2): 423-77. [Working paper version]

Findlay, Ronald, and Kevin H. O’Rourke (2007) “Power and Plenty: Trade, War, and the World Economy in the Second Millennium.” Princeton and Oxford: Princeton University Press.

Hillman, Arye L (1982) “Declining Industries and Political-Support Protectionist Motives.” American Economic Review,72 (5): 1180–87.

Krueger, Anne O., Maurice Schiff, and Alberto Valdes (1991) “The Political Economy of Agricultural Pricing Policy“, Volume 1: Latin America; Volume 2: Asia; and Volume 3: Africa and the Mediterranean. Baltimore and London: Johns Hopkins University Press.

Martin, Will and Kym Anderson (2011) “Export Restrictions and Price Insulation During Commodity Price Booms” American Journal of Agricultural Economics, 94 (2): 422-427. [Working paper version]

Schonhardt-Bailey, Cheryl (2006) “From the Corn Laws to Free Trade: Interests, Ideas, and Institutions in Historical Perspective” Cambridge and London: MIT Press.

Swinnen, Johan F. M. (1994) “A Positive Theory of Agricultural Protection.” American Journal of Agricultural Economics, 76 (1): 1–14

World Bank (2007) “World Development Report 2008: Agriculture for Development” Washington, DC :World Bank.

Natural Resources and Political Stability

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There is increasing interest in how natural resources influence political stability. Under a dictatorial regime, political stability is determined by the ability of a ruling group to stay in power. If political power is the route to personal riches by the appropriation of natural resource income, remaining in power is that much more attractive. As well as facilitating personal enrichment, a dictator can use part of the income from natural resources to suppress opposition through various mechanisms. These include direct repression and undermining the formation of rival groups (“divide and rule”). In democracies, incumbent politicians can use natural resources to finance popular projects in order to increase their chances of remaining in power via reelection.

On the other hand, natural resources can also be a source of political instability. They create an incentive for the opposition to take over power, yielding access to natural resource rents.  Another possibility is for the opposition to seize a natural resource and use it to fund rebel activity. In both cases the survival of the political incumbent is less likely in the presence of natural resources. These sources of instability tend to be pervasive in non-democratic regimes.

Acemoglu, D., J.A. Robinson, and T. Verdier (2004); “Kleptocracy And Divide And Rule: A Theory of Personal Rule”, Journal of the European Economic Association, 2 (2-3): 162-192. [Working paper version]

Alexeev, M., and R. Conrad (2009); “The Elusive Curse of Oil” Review of Economics and Statistics, 91(3): 586-598.

Andersen, J. J., and S. Aslaksen (2013); “Oil and Political Survival.” Journal of Development Economics, 100(1): 89-106. [Working paper version]

Arezki, R., and T. Gylfason, (2013); “Resource rents, democracy and corruption: evidence from Sub-Saharan Africa” Journal of African Economies,  ejs036. [Working paper version]

Bhattacharyya, S., and R. Hodler, (2010); “Natural Resources, Democracy and Corruption” European Economic Review, 54 (4): 608-621. [Working paper version]

Bjorvatn, K., and M. R. Farzanegan, (2014); “Resource Rents, Power, and Political Stability” CESIFO Working Paper No. 4727.

Collier, P., and A. Hoeffler, (2004); “Greed and Grievance in Civil War” Oxford Economic Papers, 56: 563-95. [Working paper version]

Frankel, J. A., (2010); “The Natural Resource Curse: A Survey”, NBER Working Paper No.15836. Cambridge, MA: National Bureau of Economic Research.

Gallego, M., and P. Pitchik, (2004); “An Economic Theory of Leadership Turnover.” Journal of Public Economics, 88 (12): 2361-2382.

Lipset, S.M., (1960); Political Man: The Social Bases of Politics. Anchor Books, New York.

Mahdavy, H., (1970); “The Patterns and Problems of Economic Development.” Published in in M. A. Cook, (ed.); Rentier States: The Case of Iran, Studies in the Economic History of the Middle East, Oxford University Press, London, pp. 428-67.

Robinson, J.A., and R. Torvik, (2005); “White Elephants.” Journal of Public Economics, 89 (2-3): 197-210. [Working paper version]

Robinson, J.A., and R. Torvik, (2008); “Endogenous Presidentialism.” NBER Working Paper No. 14603, Cambridge, MA: National Bureau of Economic Research.

Robinson, J.A., R. Torvik and T. Verdier, (2006); “Political Foundations of the Resource Curse.” Journal of Development Economics, 79 (2): 447-468.

Sachs, J.D., and A. M. Warner, (1995); “Natural Resource Abundance and Economic Growth.” NBER Working Paper No. 5398. Cambridge, MA: National Bureau of Economic Research.

Renewable Resources

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Greater use of renewable energy is considered a key component to fight climate change and is now a policy priority for the governments of developed countries in particular.  The new agenda on renewable energy is also of interest to developing countries since they are more likely to experience the adverse consequences of climate change.

Bryce, R. (2010) Power Hungry: The Myth of “Green” Energy and the Real Fuels of the Future. New York: Public Affairs.

Cruz, Juan M. and, M. Scott Taylor (2012); “Back to the Future of Green Powered Economies” NBER Working Paper No. 18236.

Dasgupta, Partha and Geoffrey Heal (1973); “The optimal depletion of exhaustible resources“, Review of Economic Studies, Special Issue on the Economics of Exhaustible Resources, 1973: 3-28. [Earlier version]

Droege, P., ed. (2009); 100% Renewable: Energy Autonomy in Action. London: Earthscan

Heal, Geoffrey (2010); “Reflections: The Economics of Renewable Energy in the United States” Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 4(1): 139-154. [Earlier version]

International Trade and Conflict

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The availability of natural resources can directly affect the prospects of growth of a nation and their geographic distribution is uneven across and within countries. On one hand this can create opportunities for international trade between resource scarce and resource rich countries or, at the national level, generate revenues to be invested in development projects. On the other hand natural resources can feed international conflicts that can escalate to costly wars. Moreover, in countries where property rights are weakly enforced disputes over their control can lead to prolonged civil wars.

Acemoglu D., M. Golosov, A. Tsyvinski, and P. Yared, (2012); “A Dynamic Theory of Resource Wars.” The Quarterly Journal of Economics, 127 (1): 283-331. [earlier version]

Anderson J. E. and D. Marcouiller, (2005); “Anarchy and Autarky: Endogenous Predation as a Barrier to Trade.” International Economic Review, 46 (1): 189–213. [earlier version]

Findlay R. and  K. H. O’Rourke, (2007); Power and Plenty: Trade, War, and the World Economy in the Second Millennium. Princeton University Press, New Jersey

Garfinkel M. R., S. Skaperdas and C. Syropoulos (2008); “Globalization and Domestic Conflict.” Journal of International Economics, 76(2): 296-308. [earlier version]

Garfinkel M. R., S. Skaperdas and C. Syropoulos (2009); “International Trade and Transnational Insecurity: How Comparative Advantage and Power are Jointly Determined.” Working Paper.

Powell R., (1993); “Guns, Butter, and Anarchy.” American Political Science Review, 87: 115–132.

Syropoulos C. and T. Zylkin (2013); “The Problem of Peace: A Story of Corruption, Destruction and Rebellion.” Working Paper.

Are Natural Resources a Curse for Developing Countries?

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Paradoxically, for developing countries the abundance of natural resources can be a curse. With the lack of property rights protection and rule of law, natural resource abundance contributes to political instability, conflict, and corruption. From the perspective of international trade they can cause the so called ‘Dutch disease,’ whereby a natural resource discovery triggers exchange rate appreciation, and its adverse consequences for industrialization and growth. In addition, price volatility in world markets creates macroeconomic instability for resource exporters. Currently international institutions, the WTO in particular, do not have the adequate apparatus to foster trade agreements that cover natural resources; such agreements could potentially lead to more efficient outcomes.

Collier P. and A. J. Venables, (2011); “Illusory Revenues: Import tariffs in Resource-Rich and Aid-Rich Economies.” Journal of Development Economics, 94(2): 202-206. [Earlier version]

Giordanni P. E., N. Rocha and M. Ruta, (2012); “Food Prices and the Multiplier Effect of Export Policy.” World Trade Organization Working Paper no. ERSD-2012-08.

Ruta M. and A. J. Venables, (2012); “International Trade in Natural Resources.” Annual Review of Resource Economics, 4: 331-352. [Earlier version]

Van der Ploeg F., (2011); “Natural Resources:Curse or Blessing?” Journal of Economic Literature, 49(2): 366-420. [Earlier version]