Essays on resources and institutions

This thesis consists of four essays covering two sets of issues linking resources to institutions. Chapter 1 provides a summary of the thesis. Chapter 2 provides a general overview of the resource curse literature, emphasising the role of institutions, the nature of the political regimes in resource-rich countries and the link with civil con�flicts. Chapter 3 examines the implications of liberal lending practices of international credit markets to dictators during resource booms. We show that the combination of institutional weaknesses such as unaccountable leadership and unsound lending may give autocrats perverse incentives to loot and destabilise their countries, which impedes economic growth. Chapter 4 investigates what motivates some dictators in resource-rich countries to invest in productivity enhancing public goods while others deliberately choose predatory or repressive policies. We fi�nd that the ruler is more likely invest in public goods when the productivity of the non-resource sector is high, and when he is relatively ineffective in controlling the country's resources. Chapter 5 presents an overview of the literature on intellectual property rights focusing on the problems raised by sequential innovations for the design of patents and the role of legal institutions in resolving disputes. Chapter 6 examines the nature of the North-South divide in the bioscience industries as a hold-up problem caused by the lack of coordination between North and South property rights systems. We develop a model of bargaining in a sequential R&D framework that demonstrates the mechanism by which underinvestment in maintaining biodiversity and ineffi�cient �flow of information occurs. Chapter 7 assumes that the coordination problem is resolved and investigates the number and placement of the property rights to provide incentives for efficient investment in information generation. We show that the existence of a property right in the genetic resources is necessary for the South to share in the rents from the R&D sector. When traditional knowledge is the South's private information, it is not necessary to establish a separate property right in it to appropriate its return