Managing Resource Revenues in Developing Economies
Frederick (Rick) van der Ploeg (),
A. Spence and
Anthony Venables ()
No 15, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford
This paper addresses the efficient management of natural resource revenues in capital-scarce developing economies. We depart from usual prescriptions based on the permanent income hypothesis, since for capital-scarce countries it is preferable to invest domestically. Since revenue streams are highly volatile, governments should protect consumption from shocks by increasing it only cautiously. Volatility in domestic investment can to an extent be moderated by a buffer of international liquidity, but it is also important to structure investment processes to be able to cope efficiently with substantial fluctuations. To date, most of the resource-rich countries of Africa have not had investment rates commensurate with their rate of resource extraction.
Keywords: windfall revenue; permanent income; liquidity constraints; capital scarcity; buffer stocks; volatility; commodity prices (search for similar items in EconPapers)
JEL-codes: D60 E21 E62 F34 H00 Q33 (search for similar items in EconPapers)
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Journal Article: Managing Resource Revenues in Developing Economies (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:oxcrwp:015
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