The Effects of Natural Resource Rents on FDI Inflows

Undergraduate Honors Thesis

Citations

Citeable URL: https://scholar.colorado.edu/concern/undergraduate_honors_theses/1v53jx397

Abstract

This paper examines the effects of natural resource rents on Foreign Direct Investment Inflows. I analyze the role that institutional quality has in mitigating or exacerbating these effects, depending on a country’s development status. For that, I run a panel data regression at the country level using a data set for 106 countries for the period between 1984 and 2015. I use specific categories of natural resource rents (oil, mineral, gas, coal, forest rents) instead of a composite measure to obtain more detailed results. I create interaction terms between different measures of institutional quality and natural resource rents to analyze whether a country’s institutional quality can weaken or accentuate effects caused by natural resource rents. The evidence suggests that the relationship between the natural resource rents and the inflow of FDI differ by a country’s development status. Further on, the role played by country’s institutional quality indicators in weakening or accentuating this effects depends on the type of rents studied and the country’s development status.

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