Resource Funds: Another Side of the Austerity Die

Salewa Olawoye

International Journal of Political Economy, 2018, vol. 47, issue 2, 112-129

Abstract: This article analyzes the trend of resource funds adoption among extraction economies. Using commodity-based sovereign wealth funds as a reference point, the article analyzes Norway’s success story in using its funds to foster development and its influence in Sub-Saharan Africa. The prevalent investment strategy of savings in financial assets abroad could be ideal, especially with respect to the intergenerational wealth transfer. However, this is not advisable for a country that still lacks basic needs. The austerity-like measures introduced to build these funds entail a reduction in current spending and/or an increase in natural resource taxes. The aim is to show that this system of hoarding, rather than reinvestments, poses several risks that a developing country cannot afford.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:mes:ijpoec:v:47:y:2018:i:2:p:112-129

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DOI: 10.1080/08911916.2018.1497469

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