Natural Resource Revenues Research Articles

Impact of natural resource rents on global trade dynamics in RCEP: Economic and geopolitical interdependencies

This research analyzes the impact of natural resource revenues on global economic trends in the RCEP countries, emphasizing the importance of resource exploitation in the financial development process. The work explores complex interdependencies between resource extraction, geopolitical risk, economic environment, and trade relationships. Energy efficiency, geopolitical risk, and GDP are the control variables. These findings highlight the importance of natural resource rents, GDP, geopolitical risk, and energy conservation on the trade structure of the RCEP trading partners. Quantile regression studies show the negative effect of oil revenues on world trade, thus providing evidence of the multifaceted link between natural resource earnings and trade outcomes. The findings underscore the significance of policymakers and businesses understanding these interrelated links and their implications for global trade relations. The report offers policy directions for RCEP countries to foster sustainable economic development and enhance export competitiveness. These recommendations aim to further the resource sector's growth, financial infrastructure, and managing geopolitical risks.

Map to prosperity: Natural resource revenue sharing and infrastructure development in Indonesia

The well-being of society can be realized through meeting basic needs, one of which is providing public infrastructure. This study examines the role of Natural Resource Revenue Sharing Funds (DBH SDA) on government investment in infrastructure in 491 regencies/cities in Indonesia. The testing in this research uses panel data regression analysis. The results show that per capita DBH SDA in Indonesia during the study period of 2010–2012 has a significant and positive influence on government investment in infrastructure. The selection of this period is based on the consideration that a resources boom has occurred, where there is an increased global demand for natural resource commodities followed by an increase in commodity prices, thereby positively impacting revenue for countries or regions abundant in natural resources. Despite DBH SDA having a significant and positive influence, regional spending on infrastructure tends to be more influenced by central government transfers such as General Allocation Fund (DAU), Special Allocation Fund (DAK), and Local Own-source Revenue (PAD). It was found that government investment in infrastructure tends to be influenced by transfer funds, indicating that the role of the central government remains significant in determining the infrastructure expenditure of regencies/cities in Indonesia.

Multifaceted natural resources and green energy transformation for sustainable industrial development

Climate change is the most phenomenal challenge to humanity, and its roots are intervened with unsustainable industrialization, exercising overexploitation of natural resources. Therefore, the departure from non-renewable to renewables has become inevitable, though thought-provoking. In this respect, we explore how green energy transformation moderates the impacts of multifaceted natural resources on sustainable industrial development in the presence of other covariates involving technological progress, financial development, and economic progress. We compiled data from Group of Seven (G-7) members over the 1995−2018 period and applied panel quantile regression (PQREG) to capture the effects across varying levels of quantiles of sustainable industrial development. Results revealed a positive role of natural gas rents, while coal, forest, and total natural resource rents contributed adverse implications for sustainable industrial development. However, the green energy transformation proved to be the game changer because it not only directly induced sustainable industrial development improvement but also turned the unfavorable effects of coal, forest, and total natural resources into favorable ones by interacting with those multifaceted natural resources. Technological, financial, and economic progress supported sustainable industrial development in G-7 nations, particularly in members with existing middle and upper scales of sustainable industrial development. These findings are robust enough when subjected to different estimation tools. In light of these outcomes, the interaction between green energy transformation and natural resource policy is inevitably critical to attaining natural resource efficiency for sustainable industrial development. Therefore, it is imperative to establish a close policy coordination between advancing green energy technology and allocating natural resource revenue to achieve sustainable development goals (SDGs), with a particular emphasis on SDG-7 and SDG-13.

Intellectual property protection in the oil, gold sectors and mineral resources rent on indigenous populations: Preserving innovation and value

This study investigates into the intricate relationship between intellectual property protection and the wellbeing of indigenous communities within the oil, gold, and mineral sectors. Covering the period from 1990 to 2020 and focusing on nations rich in natural resources such as Russia, China, India, Indonesia, Nigeria, South Africa, Brazil, Canada, Mexico, Argentina, and Australia, the research employs advanced econometric models to dissect the dynamics between intellectual property protection, innovation within these sectors, and the preservation of economic and cultural values. The dependent variable in our analysis encompasses a composite measure that reflects the overall socio-economic and cultural impact of these sectors on indigenous communities. Our findings reveal that stronger intellectual property protection measures potentially foster innovation and value generation in these sectors. However, it also emerges that these measures could lead to adverse consequences for indigenous communities, including restricted access to resources and potential displacement. This work significantly contributes to understanding the complex interplay among intellectual property protection, indigenous communities, and the economic benefits derived from natural resource revenues, offering insights into optimizing policy frameworks for sustainable and equitable resource management.

Dimensionality reduction analysis of the renewable energy sector in Azerbaijan: nonparametric analyses of large datasets

Although the number of econometric analyses related to the renewable energy sector in Azerbaijan is increasing, studies on nonparametric dimensionality reduction are rather sparse. Principal component analysis (PCA) and multiple correspondence analysis (MCA) were chosen to fill this apparent research gap. As a result, a large dataset including the renewable energy sector and selected key macroeconomic indicators was evaluated. The PCA procedure yielded four distinct principle components reflecting the main macroeconomic variables, renewable energy production, industry-energy relations and natural resource revenues. The PCA method offers the possibility to examine the precise correlations and the underlying patterns between the displayed clusters of variables. Meanwhile, the MCA-based cross-country assessment of Azerbaijan’s wind, solar and hydropower has struck somewhat pessimistic notes, as the country lags behind neighbouring and other post-Soviet countries (e.g. Estonia, Iran, Latvia, Russia) in developing its green energy sector. These findings are of great interest to policymakers, businesses and academics who wish to gain deep insight into the Azerbaijani economy in terms of renewable energy production. The practical value of the present work also lies in the fact that it analyses a multidimensional and relatively longitudinal dataset (1990–2022), which is an example of a methodological application of two nonparametric approaches.

Government infrastructure investment stimulation through booming natural resources: Evidence from a lower-middle-income country.

The dynamics of central government funding to regions depend on local investments. In regional autonomy, local governments are encouraged to be more self-reliant from the central government. For regions with high natural resource yields, they will not encounter difficulties in meeting their fiscal needs. Community welfare can be realized through fulfilling basic needs, one of which is infrastructure development. High-quality infrastructure will be able to contribute to further progress in trade, thus enhancing production efficiency. The objective of this research is to analyze the extent of the influence of central government transfer funds, especially the Natural Resource Revenue Sharing Funds (DBH SDA), on local government investments in infrastructure across 508 districts/cities in Indonesia. The method used is dynamic panel regression using the Generalized Method of Moment (GMM) Arellano-Bond approach. This study finds that the role of DBH SDA is still low in infrastructure spending. The role of the central government remains significant in determining infrastructure spending at the district/city level in Indonesia. This indicates that local governments rely more on other sectors in infrastructure investment. By enhancing the role of DBH SDA through technological advancements, it is hoped that the market value of natural resources can be higher through resource downstreaming. This strategy will have broader impacts, as labor needs can be absorbed not only in raw material production activities but also in the processing technology sector. Furthermore, the utilization of natural resources with modern technology can increase extraction efficiency, support sustainable development, and minimize environmental impacts.

Nicola Limodio discussion of: Natural resource revenues and municipal finance

Nicola Limodio discussion of: Natural resource revenues and municipal finance

Panel discussion of: Natural resource revenues and municipal finance

Panel discussion of: Natural resource revenues and municipal finance

Valeria Merlo discussion of: Natural resource revenues and municipal finance

Valeria Merlo discussion of: Natural resource revenues and municipal finance

Fiscal Fatigue, Public Debt Structure and Sustainability: A DSGE Model for West African Economic and Monetary Union

The present paper simulates several financing schemes for scaling-up public investment while stabilizing debt in WAEMU countries experiencing fiscal fatigue. We construct a DSGE model of a small open economy that incorporates the behaviour of four types of agents: firms, households, government, and the Central Bank. The analysis assumes that when the government faces fiscal fatigue, it can turn to debt to finance the scaling-up of public investment. To ensure long-term debt sustainability, fiscal adjustments are consistently implemented through transfers and/or taxes, subject to respective caps and floors. Simulations indicate that, in the presence of natural resource revenues, scaling up public investment is feasible using concessional borrowing only or by incorporating additional external commercial or domestic borrowing while maintaining debt sustainability. Otherwise, external commercial debt appears to carry more risk.

Resource abundance: Blessing or curse? Comparative analyses of point and diffuse resources

The objective of this study is to assess the short and long run effects of renewable and non-renewable resource rents on economic growth in Cameroon. Taking crude oil rents and forest resource rents as proxies for non-renewable and renewable resources respectively for the period 1977–2018, we employed the autoregressive and dynamic autoregressive distributive lag (ARDL/DynARDL) modelling frameworks to achieve the stated objective. Results from the ARDL model indicate that, in the short run, both the renewable and non-renewable resources have a positive and significant effect on economic growth but the point resource is more significant than the diffused. A clear disparity in results is however noticed in the long run. While the point resources show that natural resources are a curse to long run growth, the diffuse resources reveal that natural resources are a blessing to long run growth. From the DynARDL simulation, a negative shock of the point resources leads to a fall in economic growth whereas diffuse resource indicates an increase. This shows that point resources are more prone to the resource-curse thesis and diffuse resources to resource-bless thesis. Contingent on these findings, the Cameroon government should ensure a proper allocation of natural resource revenues especially point resource rents to growth-inducing investment or social overhead capital such as open new markets, transport infrastructures, and power sectors, so as to enhance growth and development.

Does the government finance its own spending by taxing the population or relying on newly created funds from the central bank?

In reality, a government funds its own expenditure mainly by taxation, borrowings, and fees and charges. Additional sources of government revenue include seigniorage, natural resource revenues, and foreign aid and grants. The specific mix of revenue sources and their relative importance varies from one government to another based on factors such as the country’s economic structure, tax policies, natural resources, and external financial assistance. Suppose a government ends taxing and funds its own expenditure purely by borrowings. In that case, it may lead to an inefficient market, a turbulent economy, social and economic inequality, and reduced social productivity and welfare.

Research on the Impact of Sources of Government Expenditure on Social Economy

In reality, a government funds its own expenditure mainly by taxation, borrowings, and fees and charges. Additional sources of government revenue include seigniorage, natural resource revenues, and foreign aid and grants. The specific mix of revenue sources and their relative importance varies from one government to another based on factors such as the country’s economic structure, tax policies, natural resources, and external financial assistance. Suppose a government ends taxing and funds its own expenditure purely by borrowings. In that case, it may lead to an inefficient market, a turbulent economy, social and economic inequality, and reduced social productivity and welfare.

Moving towards a sustainable environment in the BRICS Economies: What are the effects of financial development, renewable energy and natural resources within the LCC hypothesis?

This research delves into the impacts of different energy sources (renewable and nonrenewable), natural resource revenues, financial development, and economic growth on ecological well-being within the BRICS economies, spanning from 1990 to 2018. The collected data undergoes rigorous preliminary examinations, including tests for normality, descriptive statistics, Westerlund cointegration, and a cross-sectional dependence test (CSD). The empirical analyses apply the CS-ARDL method over the 1990–2018 period across BRICS nations. The empirical results uncover several key insights. Economic growth, financial development, and nonrenewable energy sources are found to have detrimental effects on ecological quality, while renewable energy sources exhibit a positive influence. Additionally, the significance of the load capacity factor curve is confirmed, shedding light on the relationship between economic indicators and ecological outcomes. This study, conducted within the BRICS framework, offers recommendations for policymakers in these nations. It suggests that prioritizing sustainable energy sources and enacting energy policy reforms should be at the forefront of their agenda to improve ecological quality.

Accountability and taxation: Experimental evidence

The Rentier State Hypothesis states that taxation promotes government accountability. The argument is that citizens demand more accountability for spending of tax revenue than for spending of windfall revenue (e.g., natural resource revenue and aid). This paper presents causal evidence from a between-subject experiment that tests the effect of taxation on demand for accountability. To investigate the underlying mechanisms of the effect, the design focuses on two main features that distinguish tax from windfall revenue: Tax revenue is produced by citizens' work and has been in their possession before it is collected as tax. The main finding is that taxation causes a higher demand for accountability when both features of taxation are present, consistent with the Rentier State Hypothesis. The paper sheds light on the political economy of government revenues, and contributes to our understanding of how features of the tax system shape behavior.

Urban theories and urbanization perspectives in cities across Nigeria

One of the emerging research trends from urbanization is the study of urban growth patterns. These growth patterns are primarily based on the growth of the local economy that directly affects agricultural lands. In Africa, the local economy has spurred the extinction of many agrarian sectors. Yet, few studies at the regional level have paid attention to these changes. Using diverse scientific literature on global urbanization, urban remote sensing, and economic geography, this study aimed to understand the theory behind urban developments in Nigeria. The primary data were collected in two study regions in the country’s eastern and southern parts, making it a large dataset to assess urban formation in these areas. We examined the evolution of urban development from the perspectives of infrastructural development, expansion, change in land use, and urban job migration opportunities that affect agrarian activities. White-collar job opportunities are limited in urban areas, substantially increasing the startup of small-scale businesses. We introduce the notion of natural resource urbanism, which implies urbanization that is triggered by the influx of natural resource revenue to strengthen the dwindling local economy. The infusion of a shared natural resource revenue creates a reform in the local economy and the advent of a consumption-based economy. A shared natural resource revenue drives massive infrastructural developments, but the dependence on the availability of those natural resources in the states raises concerns about its long-term sustainability for strengthening the local economy.

Unlocking the poverty and hunger puzzle: Toward democratizing the natural resource for accomplishing SDGs 1&2

The objective of this paper is to investigate the substantial effect of natural resource abundance on poverty and hunger of the UN 2030th agenda. For this purpose, we use the panel smooth transition regression model (PSTR) technique and a sample of 20 African economies for the period 2001 to 2017, to explore the relationship between natural resource abundance and poverty and between natural resources and hunger. Besides, the principal component analysis method was used to develop two composite indices to reflect the institutional quality and hunger. The empirical highlights confirm the nonlinearity for both models, and the thresholds of poverty and hunger take the values of 18.16 and 19.24 in each model, correspondingly. We confirm the significant impact of natural resource abundance and induced opportunities as remedies to the SDGs 1&2 looming challenge and the UN agendas. Due to the obvious significance of our findings and their repercussions for decision-makers, a state of emergency in the natural resources sector should be proclaimed to address SDGs 1&2. Indeed, fair natural resource revenue management could be a critical component in addressing Africa's endless tales of poverty and hunger.

Uranium and the Macro-Economy in Niger: An Empirical Investigation

Like many commodities, uranium price is notoriously volatile, and such volatility can have serious economic consequences for countries that export them. Niger, which is the fourth-largest producer of uranium in the world, has been dealing with uranium price fluctuations since the start of its production in 1972. Since 2011, Niger is also an oil-exporting country. However, Niger is still one of the poorest countries in the world, and policymakers are keen on learning the impact of natural resource revenue on the economy. Policymakers are particularly interested in knowing whether uranium export has been a curse instead of a blessing. As such, the present study seeks to analyze, empirically, the impact of uranium price fluctuations on key macroeconomic variables in Niger. More precisely, the objective of this article is to document the existence of Dutch "disease" or lack thereof in the economy. The study uses VAR and VECM methodologies and utilizes Granger causality tests, variance decomposition, and impulse response functions to guide the analysis. These approaches allow for an empirical deeper dive into the impact of the uranium sector on the economy. The article uses annual time series data covering the period from 1977 to 2015. The data comes from three main sources, including the World Development Indicators (WDI) database, the Central Bank of West African Countries dataset (EDEN), and Niger's National Institute of Statistics (INS) dataset. The results show that Niger's economy suffered from Dutch disease from uranium export. Indeed, the Granger causality tests show that uranium export revenue cannot be used to forecast real income in Niger. Furthermore, impulse response functions confirm the above result as a shock to uranium price and the resultant effects on money supply, inflation, and the real exchange rate is consistent with the Dutch "disease" theory. In general, uranium export revenue was the source of macroeconomic imbalances observed in the country during the period considered by the study. Now that Niger is also an exporter of oil in addition to uranium, policymakers should avoid the trap of Dutch "disease" by investing natural resources revenue strategically. Given Niger's development challenges, using natural resources revenue for public investment in infrastructure, health, and education should be a priority.

The effects of natural resource revenues on municipal finance

Abstract We investigate how revenues from taxing hydropower production affect local fiscal policy with data for municipalities in Switzerland in 1987–2015. Our instrumental variable approach uses exogenous variation in these revenues by combining the municipality-specific hydropower potential with the varying federally mandated ceiling on taxation of hydropower production. We find negative effects on tax rates and tax revenues, but insignificant spending effects. These results provide fresh evidence on how local authorities use exogenous revenues and on the flypaper effect for a setting with strong local fiscal autonomy and participatory institutions.

Revenues Sharing in Mineral Exploration: Local Authorities’ Incentives towards Economic Diversification in Romania

The proper management of exhaustible natural resources requires the responsible management of the revenues generated from the exploitation of these resources and addressing a broad set of political and economic challenges. This paper is intended to demonstrate that understanding the positive effects of natural resource revenues on economic diversification in extractive regions plays a significant role in economic development when considering the contribution of extractive industries. Using national and sectoral data, this paper, on the one hand, examines how mining revenues are managed and spent in relation to the Romanian tax structure and regime and, on the other hand, how the diversification of the local economy can be achieved. The case study presented herein X-rays the complex realities faced by those regions in Romania, where the predominant economic activity is the extractive industry. The results provided by this analysis led us to the conclusion that although the distribution systems related to the extractive revenues give precedence mostly to the producing territories and seek, in particular, to transfer the benefits to the impacted areas, in the case of Romania, we are witnessing a failure in determining local economic diversification.