IDEAS home Printed from https://ideas.repec.org/p/zbw/hwwirp/171.html
   My bibliography  Save this paper

Green accounting, institutional quality and investment decisions: Macroeconomic implications from an analysis of the oil and mining sector

Author

Listed:
  • Stöver, Jana

Abstract

This paper investigates the effect of institutional quality on sustainable development.Institutional quality is assumed to determine the (perceived) risk in the face of which oil and mining firms determine their level of investment in physical and natural capital. Since these two types of capital are used jointly in the industry's production process, the firms face a dual investment decision, whereby they have to decide on the investment into both types of capital simultaneously. It is shown that this production structure implies that better institutional quality can increase as well as decrease the speed of resource extraction. However, due to the structure of national accounting data, this fact has so far not been adequately accounted for in preceding studies. By integrating the dual investment model into the green accounting approach it is then shown that the form of capital aggregation in national accounting can lead to an underestimation of the effect of institutional quality on sustainable development and potentially on economic growth. The results imply that it could be useful to investigate the macroeconomic effects of institutional quality on the oil and mining sector separately from those on the rest of the economy.

Suggested Citation

  • Stöver, Jana, 2016. "Green accounting, institutional quality and investment decisions: Macroeconomic implications from an analysis of the oil and mining sector," HWWI Research Papers 171, Hamburg Institute of International Economics (HWWI).
    • Handle: RePEc:zbw:hwwirp:171
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/127426/1/847109135.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chris Elbers & Jan Willem Gunning & Bill Kinsey, 2007. "Growth and Risk: Methodology and Micro Evidence," The World Bank Economic Review, World Bank, vol. 21(1), pages 1-20.
    2. David Y. Albouy, 2012. "The Colonial Origins of Comparative Development: An Empirical Investigation: Comment," American Economic Review, American Economic Association, vol. 102(6), pages 3059-3076, October.
    3. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012634, April.
    4. Philippe Aghion & Diego Comin & Peter Howitt & Isabel Tecu, 2016. "When Does Domestic Savings Matter for Economic Growth?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 381-407, August.
    5. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    6. Eeckhoudt, Louis & Gollier, Christian & Schlesinger, Harris, 1996. "Changes in Background Risk and Risk-Taking Behavior," Econometrica, Econometric Society, vol. 64(3), pages 683-689, May.
    7. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    8. Daron Acemoglu & Simon Johnson & James A. Robinson, 2012. "The Colonial Origins of Comparative Development: An Empirical Investigation: Reply," American Economic Review, American Economic Association, vol. 102(6), pages 3077-3110, October.
    9. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
    10. Atkinson, Giles & Hamilton, Kirk, 2003. "Savings, Growth and the Resource Curse Hypothesis," World Development, Elsevier, vol. 31(11), pages 1793-1807, November.
    11. Dietz, Simon & Neumayer, Eric & De Soysa, Indra, 2007. "Corruption, the resource curse and genuine saving," Environment and Development Economics, Cambridge University Press, vol. 12(1), pages 33-53, February.
    12. Robert T. Deacon & Henning Bohn, 2000. "Ownership Risk, Investment, and the Use of Natural Resources," American Economic Review, American Economic Association, vol. 90(3), pages 526-549, June.
    13. Laurent-Lucchetti, Jérémy & Santugini, Marc, 2012. "Ownership risk and the use of common-pool natural resources," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 242-259.
    14. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    15. Farzin, Y Hossein, 1984. "The Effect of the Discount Rate on Depletion of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 92(5), pages 841-851, October.
    16. Stoever, Jana, 2012. "On comprehensive wealth, institutional quality and sustainable development-quantifying the effect of institutional quality on sustainability," Journal of Economic Behavior & Organization, Elsevier, vol. 81(3), pages 794-801.
    17. Lasserre, P., 1982. "Exhaustible-Resource Extraction with Capital," Cahiers de recherche 8208, Universite de Montreal, Departement de sciences economiques.
    18. Clark, Colin W. & Munro, Gordon R., 1975. "The economics of fishing and modern capital theory: A simplified approach," Journal of Environmental Economics and Management, Elsevier, vol. 2(2), pages 92-106, December.
    19. Deacon, Robert T., 2011. "The Political Economy of the Natural Resource Curse: A Survey of Theory and Evidence," Foundations and Trends(R) in Microeconomics, now publishers, vol. 7(2), pages 111-208, December.
    20. Long, Ngo Van, 1975. "Resource extraction under the uncertainty about possible nationalization," Journal of Economic Theory, Elsevier, vol. 10(1), pages 42-53, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ho, Chi Pui, 2016. "GeoPopulation-Institution Hypothesis: Reconciling American Development Process and Reversal of Fortune within a Unified Growth Framework," MPRA Paper 73863, University Library of Munich, Germany.
    2. Adrian Boos & Karin Holm‐Müller, 2012. "A theoretical overview of the relationship between the resource curse and genuine savings as an indicator for “weak” sustainability," Natural Resources Forum, Blackwell Publishing, vol. 36(3), pages 145-159, August.
    3. Timur Natkhov & Leonid Polishchuk, 2019. "Quality of Institutions and the Allocation of Talent: Cross‐National Evidence," Kyklos, Wiley Blackwell, vol. 72(4), pages 527-569, November.
    4. van der Ploeg, Frederick, 2018. "Political economy of dynamic resource wars," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 765-782.
    5. Jue Yang & Shunsuke Managi & Masayuki Sato, 2015. "The effect of institutional quality on national wealth: an examination using multiple imputation method," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(3), pages 431-453, July.
    6. Trung V. Vu, 2022. "Does institutional quality foster economic complexity? The fundamental drivers of productive capabilities," Empirical Economics, Springer, vol. 63(3), pages 1571-1604, September.
    7. Clootens, Nicolas & Kirat, Djamel, 2020. "Threshold regressions for the resource curse," Environment and Development Economics, Cambridge University Press, vol. 25(6), pages 583-610, December.
    8. Mohammad Kemal & Ian Lange, 2016. "Changes in Institutional Design, Expropriation Risk and Extraction Path," Working Papers 2016-06, Colorado School of Mines, Division of Economics and Business.
    9. Fedderke, Johannes & Klitgaard, Robert, 2013. "How Much Do Rights Matter?," World Development, Elsevier, vol. 51(C), pages 187-206.
    10. Gvozdeva, Margarita (Гвоздева, Маргарита) & Kazakova, M.V. (Казакова, М.В.) & Kiblitskaya, T.R. (Киблицкая, Т.Р.) & Lyubimov, I.L. (Любимов, И.Л.) & Nesterova, K.V. (Нестерова, К.В.), 2016. "Various Aspects of Natural Resource Wealth Effect on Economic Growth [Различные Аспекты Влияния Богатства Природными Ресурсами На Экономический Рост]," Working Papers 2045, Russian Presidential Academy of National Economy and Public Administration.
    11. Chakraborty, Adrij, 2017. "Colonial Origins and Comparative Development: Institutions Matter," MPRA Paper 86320, University Library of Munich, Germany, revised Feb 2018.
    12. Braunfels, Elias, 2016. "Further Unbundling Institutions," Discussion Paper Series in Economics 13/2016, Norwegian School of Economics, Department of Economics.
    13. Bhattacharyya, Sambit & Hodler, Roland, 2014. "Do Natural Resource Revenues Hinder Financial Development? The Role of Political Institutions," World Development, Elsevier, vol. 57(C), pages 101-113.
    14. Dauvin, Magali & Guerreiro, David, 2017. "The Paradox of Plenty: A Meta-Analysis," World Development, Elsevier, vol. 94(C), pages 212-231.
    15. Smith, Brock, 2015. "The resource curse exorcised: Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 116(C), pages 57-73.
    16. Arezki, Rabah & van der Ploeg, Frederick & Toscani, Frederik, 2019. "The shifting natural wealth of nations: The role of market orientation," Journal of Development Economics, Elsevier, vol. 138(C), pages 228-245.
    17. Madsen, Jakob B. & Raschky, Paul A. & Skali, Ahmed, 2015. "Does democracy drive income in the world, 1500–2000?," European Economic Review, Elsevier, vol. 78(C), pages 175-195.
    18. Casey, Gregory & Klemp, Marc, 2021. "Historical instruments and contemporary endogenous regressors," Journal of Development Economics, Elsevier, vol. 149(C).
    19. Frankel, Jeffrey A., 2012. "The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions," Scholarly Articles 8694932, Harvard Kennedy School of Government.

    More about this item

    Keywords

    exhaustible resource extraction; institutions; ownership risk; resource curse; adjusted net saving / genuine saving; green accounting; sustainable development;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:hwwirp:171. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/hwwiide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.