The Impact of Easy Rents: Economic Growth under the Influence of Resources, Aid and Remittances

Diploma Thesis from the year 2007 in the subject Economics - Finance, grade: 1,7, Helmut Schmidt University - University of the Federal Armed Forces Hamburg (Professur f?r Volkswirtschaftslehre, insb. Finanzwissenschaft), language: English, abstract: This paper addresses a ma jor paradox of the economic world, the seemingly negative impact of wealth in form of natural resources and development aid on growth. In the last 50 years a striking discrepancy in the economic performance of countries blessed by massive windfall gains became obvious. Robust empirical evidence was produced showing an inverse relation of both natural resources and development aid on economic growth. Regressions involving migrant's remittances did also yield ambiguous results under certain conditions. I try to embrace all windfall gains under the notion of "Easy Rents", characterised by easy generation of, easy access to and easy control over the abundant monetary assets. The influence of the rents is proposed to work through biased price distortions, induced by sectoral competition, rent-seeking and ad" economic policy, creating unfavourable conditions for the growth-driving tradables sector. The conducted research and empirical testing indicates the appreciation of relative prices caused by political and economic disturbance. Following the results, a strong tendency of "Easy Rents" to exert deteriorating influence on a economy seems to be in place.

Author: Cornelius Frhr V. Lepel

Publisher: Grin Verlag

Publication Date: Jun 11, 2010

Number of Pages: 68 pages

Binding: Paperback or Softback

ISBN-10: 3640639081

ISBN-13: 9783640639083