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The book sets out to explore the economic motivations of imperial expansion under capitalism. This undoubtedly is related to two fundamental research questions in economic sciences. First, what factors explain the divergence in living standards across countries under the capitalist economic system? Second, what ensures internal and external stability of the capitalist economic system? The book adopts a unified approach to address these questions. Using the standard growth model it shows that improvements in living standards are dependent on access to raw materials, labour, capital, technology, and perhaps most importantly "economies of scale". Empires ensure scale economy through guaranteed access to markets and raw materials. The stability of the system depends on growth and distribution and it is not possible to have one without the other. However, the quest for growth and imperial expansion implies that one empire invariably comes into conflict with another. This is perhaps the most unstable and potentially dangerous characteristic of the capitalist system. Using extensive historical accounts the book shows that this inherent tension can be best managed by acknowledging mutual spheres of influence within the international system along the lines of the 1815 Vienna Congress. This timely publication addresses not only students and scholars of economics, geography, political science, and history, but also general readers interested in a better understanding of economic development, international relations, and the history of global capitalism.

AbstractThe Australian economy experienced very frequent and sizeable terms of trade shocks. These shocks at times were more pronounced than commodity exporting developing countries and disproportionately benefited the extreme top end of income distribution. Did they derail overall economic progress? Circumstantial evidence suggests that they did not, but hard econometric evidence appears to be rare. In this paper, I revisit the Australian resource curse question from a long‐run perspective. Using time series data on commodity prices, real GDP, real wages, non‐farm GDP, manufacturing share of GDP, and manufacturing share of employment covering the period 1900 to 2007, I find very little evidence of a resource curse. Commodity booms in general and positive agricultural price shocks in particular appear to have impacted the rest of the economy positively both in short‐ and long‐run. The positive effect is primarily led by expansion in manufacturing. This is perhaps reflective of trade protection, labour and credit market flexibility, and relatively open skilled migration in Australia especially during the post‐war period.

It is a widely accepted view in the literature that the majority of cross-sectional variation in institutions is related to history. The within variation however is somewhat less explored. We find that the within variation in economic institutions can be explained by trade liberalization. This relationship is robust with various indicators of economic institutions and liberalization, with different estimation techniques, in different sub-samples, and to the inclusion of additional covariates. Short-run trade liberalization appears to be more important than long-run trade liberalization. This may be indicative of a short-term trade liberalization induced shift in the long-run institutional equilibrium. We also find that the country fixed effects are highly correlated with settler mortality and other historical variables. Our results are consistent with recent theoretical developments in the political economy literature and with the �critical juncture� view of history.

It is a widely accepted view in the literature that the majority of cross-sectional variation in institutions is related to history. The within variation however is somewhat less explored. We find that the within variation in economic institutions can be explained by trade liberalization. This relationship is robust with various indicators of economic institutions and liberalization, with different estimation techniques, in different sub-samples, and to the inclusion of additional covariates. Short-run trade liberalization appears to be more important than long-run trade liberalization. This may be indicative of a short-term trade liberalization induced shift in the long-run institutional equilibrium. We also find that the country fixed effects are highly correlated with settler mortality and other historical variables. Our results are consistent with recent theoretical developments in the political economy literature and with the �critical juncture� view of history.

We investigate the causal effects ofgiantandfirstoil and mineral discoveries on the political fortunes of national leaders using a large dataset of 1255 leaders in 158 countries over the period 1950 to 2010 insingle‐riskandmultiple‐riskdiscrete time proportional hazard models. We find that mineral discoveries reduce risk for the incumbent in a single‐risk model especially in a non‐election year. In contrast, oil discoveries reduce risk disproportionately more in countries with weak political institutions. The effects appear to be induced by resource income rather than expectations. In a multiple‐risk model, oil discovery significantly reduces the risk of departure via military coup while resource discovery reduces the risk of resignation. Resource discovery does not seem to affect the risk of election loss. Non‐resource tax and military expenditure appear to be two potent mechanisms through which oil discovery affects political survival.

AbstractDiversification is touted as a desirable policy objective for oil‐rich nations because it reduces exposure to volatility. However, the empirical relationship between petroleum and diversification is not well understood. Here, we test the effect of giant oil discoveries on diversification using a panel dataset of 136 countries observed over the period from 1962 to 2012. We notice non‐oil sector export concentration 8 years after a discovery. However, we do not observe any effect on the structure of employment in non‐resource and manufacturing sectors. Democratic political institutions moderate the export and employment concentration effects of petroleum discovery.

We study how natural resources can feed corruption and how this effect depends on the quality of the democratic institutions. Our game-theoretic model predicts that resource rents lead to an increase in corruption if the quality of the democratic institutions is relatively poor, but not otherwise. We use panel data covering the period 1980-2004 and 124 countries to test this theoretical prediction. Our estimates confirm that the relationship between resource rents and corruption depends on the quality of the democratic institutions. Our main results hold when we control for the effects of income, time varying common shocks, regional fixed effects and various additional covariates. They are also robust across different samples, and to the use of various alternative measures of natural resources, democracy and corruption.

We study how natural resources can feed corruption and how this effect depends on the quality of the democratic institutions. Our game-theoretic model predicts that resource rents lead to an increase in corruption if the quality of the democratic institutions is relatively poor, but not otherwise. We use panel data covering the period 1980-2004 and 124 countries to test this theoretical prediction. Our estimates confirm that the relationship between resource rents and corruption depends on the quality of the democratic institutions. Our main results hold when we control for the effects of income, time varying common shocks, regional fixed effects and various additional covariates. They are also robust across different samples, and to the use of various alternative measures of natural resources, democracy and corruption.