Undergraduate Honors Theses

Thesis Defended

Spring 2018

Document Type

Thesis

Type of Thesis

Departmental Honors

Department

Economics

First Advisor

Sergey Nigai

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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