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Doctoral Dissertation by Brown, David Walter. 

Introduction: The world’s tropical rain forests are important socially and environmentally as well as by virtue of their contributions to economic growth. As these forests are logged, their social values as generators of rural incomes and their environmental services as biodiversity reserves, carbon sinks, soil reserves, and watersheds tend to diminish. Despite these facts, most governments in the tropics are unable to resist logging these forests in favor of national economic objectives, including: creation of a forest industrial sector, higher employment, positive balance of payments, and increased government revenues. However, given the high economic stakes that can be obtained from their forests, it is seems counterintuitive that tropical governments rarely succeed in optimally harnessing government revenue from this valuable natural resource. This staggering lossof revenue to developing countries obviously has important implications for economic development. Timber revenue could be used, for example, to finance the kind of
strategic industrial policies that allow the high performing Asian economies to achieve high levels of economic growth. This dissertation argues that states with rain forests are often unable to collect optimal revenue from the massive profit earned by timber companies that harvest state forests because this profit already has a hidden destination. Heads of state and their political supporters are siphoning off these moneys to become phenomenally wealthy. This dissertation focuses on the institutional conditions that determine whether "economic rent" earned from harvesting tropical rain forests ends up in government treasuries or in the private bank accounts of political elites.