Date of Award:

5-2018

Document Type:

Dissertation

Degree Name:

Doctor of Philosophy (PhD)

Department:

Applied Economics

Committee Chair(s)

Ryan Bosworth

Committee

Ryan Bosworth

Committee

Reza Oladi

Committee

Man-Keun Kim

Committee

Devon Gorry

Committee

Ryan Larsen

Abstract

This dissertation studies the political economy of natural resources and how these resources may pose an opportunity or a threat to a country and comprises three essays.

The first essay explores how economic development can impact the consumption behavior of natural resources, with focus on fossil fuels. It suggests the existence of an inverted U-shaped relationship between fossil fuel share in the energy mix and economic development. Particularly, the essay illustrates an evidence that fossil fuel's share in the energy mix increases as a country develops, however, after reaching a real income per capita of around US$16,000, the country reduces the share of fossil fuel in its energy mix. Perhaps this policy shift is due to concerns about air quality from its population.

The second essay analyzes the impact of foreign direct investment (FDI) inflows on the risk of violence both theoretically and empirically. The theoretical model suggests that FDI inflows into skilled-labor intensive resources sector reduce the risk of violence, while such inflows increase the likelihood of violence when these are channeled through the unskilled-labor intensive resources sector. The empirical analysis focusing Sub-Saharan African countries indeed supports the outcome of the theoretical model.

To understand the donor behavior in aid allocation, the third essay presents a theoretical model of aid allocation and political alignment. The equilibrium of this model suggests that geopolitical alignment with the donors increases the aid receipts. The model also suggests that donors allocate more aid to recipient countries with higher human capital levels. These propositions are empirically tested using a unique dataset of aid allocation by the resource-rich Arab donors. The results of empirical analysis support the predictions of the theoretical model.

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