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sharing in governance of extractive industries

Do resource-rich countries need different macroeconomic policies? The authors of the attached paper think so.

http://www.g24.org/Publications/PolicyBriefs/PB71_Resource-Rich%20C...

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Hi Degol,

 

thanks for posting. Of course the macroeconomic policies described in the paper make sense. However, I am afraid they are not rocket science. So why are they not implemented by resource rich/dependend developing countries? I am not sure it is ignorance. Could it be lack of political will?

 

All best,

Kristian

Hi Kristian,

You are right to draw attention to political economy aspects of this issue (although to be fair to the authors their paper explicitly focuses on policy). There are lots of papers/policy briefs/books emphasizing and describing similar policies for how macroeconomic policy for natural resources should be designed.

 

However, I have found less literature on your questions of why such policies aren't implemented (this may be due to my focus one fiscal-economic stuff). Clearly political will is a factor. However, even when decision makers have the political will, it doesn't mean there aren't huge obstacles in their path (think of the problems that Ngozi Okonjo-Iweala had making reforms in Nigeria).

 

An analysis of the obstacles to reformers would be very useful. Clearly, on the revenue side there is huge opposition from companies/investors to more progressive revenue policies. On the expenditure management side, I guess the existing civil service/government ministeries may be institutionally opposed to huge revenues being tucked away in savings funds instead of being given to them.

 

Finally, although some bits of advice may be incontroversial (i.e. putting aside some revenue, increasing taxes etc), there are important technocratic design issues. Also, even well-designed schemes such as Chad-Cameroon Oil Pipeline can fail.

 

Anyway, it is Christmas Eve and I really have better things to do.

 

See you in Salone soon,

 

Steve

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