Working Paper: CEPR ID: DP8694
Authors: Frederick van der Ploeg; Anthony J. Venables
Abstract: Many countries have failed to use natural resource wealth to promote growth and development. They have been damaged by volatility of revenues, have failed to save a sufficiently high proportion of their resource revenues and failed to make high return investments to support diversification of their economies. This paper explores the reasons for these failures and discusses policies to improve performance.
Keywords: absorptive capacity; dutch disease; fiscal rules; managing windfalls; public investment; resource curse; volatility
JEL Codes: E60; F34; F35; F43; H21; H63; O11; Q33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| resource dependence (Q21) | economic growth (O49) |
| resource dependence + poor institutions (O17) | economic growth (O49) |
| effective management of resource wealth (Q33) | avoidance of resource curse (Q33) |
| high levels of saving from resource revenues (Q33) | transformation of resource wealth into productive assets (O49) |
| weak fiscal discipline (E62) | unproductive spending of resource revenues (H59) |
| unproductive spending of resource revenues (H59) | reduction in potential growth (O49) |
| establishing fiscal rules and stabilization funds (E63) | improvement in management of resource revenues (Q33) |
| improvement in management of resource revenues (Q33) | enhancement of economic performance (O57) |
| increase in resource exports to GDP by 10 percentage points (Q37) | decrease in average growth in GDP per capita (O49) |
| increase in resource exports to GDP by 10 percentage points + poor institutions (O17) | decrease in average growth in GDP per capita (O49) |