Entrepreneurship and natural resource rent-seeking: the roles of institutional quality

Abstract

To examine the influence of institutional quality and entrepreneurship density on natural resource rents, we apply the two-step system GMM to a global sample of 60 economies over the period 2006-2016. Our results show that (i) an increase in entrepreneurship density increases total natural resource rents; (ii) an improvement in institutional quality reduces total natural resource rents; (iii) improvement in institutional quality reduces the rent-seeking activities by entrepreneurs. We can confirm these results by a series of robustness checks. Our study calls for concerted efforts toward institutional reforms to promote sustainable development of natural resources.