Date of Graduation

2008

Document Type

Dissertation/Thesis

Abstract

This dissertation is a collection of papers examining the political, social and economic consequences of specialized economies. The first chapter introduces the concept and potential impacts of an economy choosing to focus on one specific industry, either out of desire or necessity, in their quest for development. The two industries considered in this study are the natural resource sector and the external sector, which includes such industries as tourism. Chapter two explores the connection between rent seeking and resource intensity in U.S. states. A theoretical model is developed relating the immobility of a state’s dominant industry to the tax rate imposed on producers in that industry and the level of rent seeking activities within the state. The empirical model shows that resource abundance is significantly related to increases in rent seeking at the state level for the period of 1986 to 2005. Chapter three examines the link between resource intensity and welfare in U.S. states. There is mixed evidence on how the negative growth effect of the resource curse impacts the welfare of a country’s population in international datasets. This chapter extends this literature by analyzing the relationship between natural resource abundance and human welfare in a sample of U.S. states. In addition, the relative importance of each transmission channel on the impact of resource intensity on welfare is examined. The results of this study show that natural resource intensity is associated with a reduction in the welfare of residents in U.S. states and the education and rent seeking transmission channels appear to be responsible for the greatest overall reductions in welfare. Chapter four examines the connection between political dependence and welfare and development of small island economies. Four principal advantages of political dependence cited are the access to foreign aid, foreign capital and external labor markets, and gains in the tourism industry. This study analyzes if political dependence is associated with inflows of foreign aid and foreign capital, the movement of labor and growth in the tourism industry and the relative importance of each of these advantages on the welfare and development in the island. The results of this paper show that politically dependent islands appear to have achieved significantly higher levels of welfare and development. The primary reason for this seems to be the large inflows from the external in the form of tourism, foreign direct investment and aid. Chapter five concludes and discusses areas of future research.

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