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|Titre:||Impact of the endowment in natural resources and quality of institutions on the public spending: case of Algeria|
|Date de publication:||May-2017|
|Résumé:||we tried in this work to estimate the impact of the endowment in natural resources, particularly the oil rent, as well as the impact of the quality of institutions on the level of the components of the public spending in Algeria. Our purpose is to test, by the application of an econometric estimation (OLS and 2SLS), the significance of the variable oil rent and the significance of the variables indicating the institutional quality on the public expenditure management. Moreover, it was interesting to add the interaction term between rent and the variables indicating the quality of the institutions to see the indirect and common effect on the dependent variable. The results of the estimation show that the impact of the natural rent is greater than the impact of the oil rent on both components of the public spending; equipment expenses and operational expenses. Thus we are seeing that there is no proportional relationship between rent and public spending. As regards the institutional quality, the results show that the budgetary procedures are lacking transparency with the presence of rent, because the benefits related to the exercise of power are more important which encourages politicians to manipulate the composition of public expenditure to maximize their likelihood to make decisions. This result is argued by the positive relation between the spending and respectively the level of financial risk and the level of economic risk. What lets meditate that the increase of the expenses disadvantage the financial situation of the country especially when the performance on these expenses is extremely low. On the other hand, the positive relationship between public spending and the measure of political risk shows that the current government increases spending to avoid conflicts and manifestations of the population. However, the interaction effect between rent and institutional quality measures on spending is negative, indicating that the presence of rent in less democrat countries like Algeria increases expenditure, this indicates that the positive public spending effects diminish as institutional quality improves.|
|Appears in Collections:||Working Papers|
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