Resource Revenue Management Research Articles

The Right to Benefit: Using Videos to Encourage Citizen Involvement in Resource Revenue Management

The Right to Benefit: Using Videos to Encourage Citizen Involvement in Resource Revenue Management

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.

Natural Capital, Institutional Quality and SDG Progress in Emerging Market and Developing Economies

Whether environmental impacts, natural capital depreciation, and effective governance have impacted progress in emerging market and developing economies (EMDEs) to achieving the 17 Sustainable Development Goals (SDGs) of the UN Agenda 2030 has become a significant policy topic. We determine estimates of the changes in net welfare that indicate progress over 2000–2019 in terms of meeting the 17 SDGs for 99 EMDEs. We compare these estimates with the environmental impacts associated with SDGs 11–15, natural resource depletion as a share of national income, and average institutional quality. Net SDG welfare gains over 2000–2019 were often accompanied by adverse environmental impacts, natural capital depletion, and poor-quality institutions. This is especially the case for low- and lower-middle-income economies. Higher net SDG welfare gains are correlated with reduced losses associated with SDGS 11–15, and larger welfare gains from attaining SDG 1 No Poverty are associated with better governance. These results suggest that long-term progress towards the SDGs in EMDEs hinges on improved management of natural capital and the environment, as well as more effective governance. Three policies can be implemented to achieve these objectives without additional financing or imposing fiscal burdens: fossil fuel subsidy swaps, tropical carbon taxes, and improved management and distribution of resource revenues.

Resource rents, savings behavior, and scenarios of economic development

The paper revisits the nexus between natural resources and economic growth from the lens of development economics. It augments the traditional dual-sector economy model by the assumption that in addition to capitalists, also workers contribute to the capital accumulation through private savings out of their wage income. The proposed differential game theory model of the interaction between the public and the elites identifies two realistic open loop Nash and three Stackelberg scenarios for the management of the commodity driven budget surplus. Based on the conventional transversality conditions, the model detects a progressing decay of social cohesion and institutional quality. It shows that at the early stages of the exploitation of the natural resource riches, both the public and elites enable a rather modernization-friendly scenaros. At the rather advanced stages of the exploitation of natural resources both groups try to maximize their short-term private benefits and by doing so protract or even inhibit the process of economic modernization. The study finds that the savings behavior of the workers has a positive modernization effect. Nevertheless, workers’ savings cannot fully offset the negative modernization effects of the inferior management of natural resource revenues.

Natural Resource Governance and Conflicts in Nigeria

This study investigates the governance of natural resources to promote socio-economic and people-centred development in Nigeria. The paper relied on secondary sources of data, focusing on the three main variables: conflict, politics and power. Nigeria is endowed with abundant natural resources, which accounts for about 65% of total tax revenue, driven mostly by an increase in export earnings from the oil and gas sector. Most resource-related conflicts are implicated by the inequitable distribution of benefits accruing to resources. The State and elite, in alliance with foreign corporations, enjoy the benefits of the exploited resource. Host-communities face the debilitating negative environmental impacts and the discrepancy between indigenous traditional laws and state laws that define ownership of natural resources in a federal but unitary state has led to controversial relations among states in Nigeria. The paper took an extensive look at the politics of natural resource extraction and governance in Nigeria and explored the themes through which the causative relationship between natural resources and conflicts can be differentiated. It noticed the political economy of natural resources as embedded within the broader global power relations. The paper concludes that regulation must be anchored to elements of good governance, especially democracy, rule of law, transparency and accountability, as well as efficient and equitable management of resource revenues.

Natural Resource Governance and Conflict in Nigeria

<i>Background</i>:<i> </i>Nigeria is blessed with abundant natural resources, which accounts for over 65% of her total tax revenue, motivated mostly by an upsurge in export earnings from the oil and gas sector. Most of the resource- based conflicts are caught up by the unfair and inequitable distribution of benefits accruing to resources. The government and some acclaimed elite, in alliance with foreign corporations, enjoy the gains and benefits of the exploited resource. Meanwhile, the host-communities face the devastating and undesirable environmental impacts with discrepancy between indigenous traditional laws and state laws that define ownership of natural resources in a federal structure has led to controversial relations among states in Nigeria. <i>Objectives:</i> The paper took an extensive look at the politics of natural resource governance in Nigeria and explored broadly the themes through which the causative link between natural resources and conflicts can be distinguished. The study further explores the role of good governance of natural resources in promoting socio-economic and people-centred development in Nigeria. <i>Methods: </i>The paper relied solely on secondary sources of data, focusing on the three main variables: conflict, politics and power. <i>Results:</i> The study revealed among others that the political economy of natural resources as embedded within the broader global power relations has not been properly explored by the Nigerian government. <i>Conclusion:</i> The paper therefore concludes that regulation must be attached to reflect on the principles of good governance, especially democracy, rule of law, transparency and accountability, as well as efficient and equitable management and distribution of resource revenues.

Natural Resource Revenue Management: Which Institutional Factors Matter?

Abstract The paper deals with the topic of natural resource revenue management and the institutional background, it researches the impact of the institutional environment on a particular part of resource governance, the revenue governance. The Resource Governance Index is used as the crucial concept for the whole analysis. Using qualitative comparative analysis, it aims to find out which conditions, and their combinations, concerning the institutional background, lead to higher levels of revenue management. Firstly, it was found that individual institutional aspects impact the revenue management differently. The second finding is that voice and accountability is a sufficient condition for reaching higher levels of revenue management. On the contrary, the dimension of political stability and the absence of violence is an irrelevant condition. All the institutional aspects excluding political stability and the absence of violence create a consistent pathway to better achievements in revenue management, namely national budgeting, and subnational resource revenue sharing.

Opinions of Ghanaians on the management of petroleum revenue in Ghana

ABSTRACT Scholars of natural resource governance argue that national and local governments must engage ordinary community members. When ordinary community members access information about the utilization of natural resource revenue and get an opportunity to provide feedback, the revenue management improves. In this article, the authors engaged Ghanaians through a spatial crowdsourcing platform for their opinion about petroleum management revenue in Ghana. The participants accessed the platform via their mobile phones and completed a survey on their opinions about petroleum revenue management, the Free Senior High School program, and their priority areas for petroleum revenue funding in Ghana. The results suggest that ordinary community members, and particularly women, seemed less informed about the management of petroleum revenue in Ghana. Furthermore, Ghanaians’ opinions regarding their prioritized projects for petroleum revenue funding vary geographically. The authors conclude that decision-makers can use spatial crowdsourcing to engage ordinary community members in natural resource revenue management.

Community based participatory governance platforms and sharing of mining benefits: evidence from Ghana

Abstract Participatory governance at the community level natural resource revenue management is thought to promote local stakeholders’ interests in how benefits from extraction are shared, strengthen the legitimacy of decisions, and enhance the quality of development projects financed by resource revenues. This article develops a framework to study the potential of localized participatory governance platforms in natural resource revenue management from the viewpoint of the intended beneficiaries, the local community members living in communities hosting large-scale extraction. The study focuses on local benefit-sharing trust funds that receive substantial amounts of funding to finance community development projects. Analysing in-depth two trust funds in Ghana, the article finds that the studied trust funds face three key challenges related to their participatory governance platforms: inadequate inclusion of community members in the processes that established the platforms, lack of relevant knowledge among the platform participants, and power asymmetries. The findings suggest that there is a need to include all intended platform stakeholders already in the processes leading to the platform establishment; ensure the platform’s legitimacy and independence in the eyes of the weaker stakeholders; and build capacity among the platform participants to ensure knowledge-based decisions.

Effect of Oil Revenues on Certain Macroeconomic Variables in Selected Oil-Exporting Countries: A Panel Data Approach

Purpose: This article examines the effect of oil revenues on four macroeconomic variables, including GDP per capita, inflation rate, real exchange rate, and liquidity in selected oil-exporting countries over the period 1980-2015. Design/Methodology/Approach: For this purpose, models are developed in the form of four scenarios and are estimated using panel data. Findings: The results show that oil revenues have a significant positive effect on the GDP per capita and volume of money, a significant negative effect on the real exchange rate and no significant impact on the inflation rate. Practical Implications: These findings provide a better understanding of how oil revenues affect the economy of oil-exporting countries and its channels. Originality/Value: This would help governments improve the quality of resource revenue management, targeting higher economic performance.

Spatial crowdsourcing in natural resource revenue management

In many resource-rich developing countries, policymakers, academics, and practitioners alike seek to promote citizen engagement and monitoring in the management of natural resource revenues. However, many of the approaches to improve citizen engagement have not been effective as citizens often lack access to relevant information and opportunities to voice their concerns, and governments have faced financial challenges in engaging citizens. In this article, the authors propose spatial crowdsourcing as an alternative to the traditional ways of encouraging citizen engagement. The proposed approach is illustrated using a simple, intuitive multimedia-based spatial crowdsourcing platform that was tested among farmers who were benefiting from a petroleum-funded project in Ghana. The farmers accessed the platform via their mobile phones and completed a survey relating to the project and petroleum revenue management in Ghana. The findings suggest that spatial crowdsourcing is a promising approach to promote informed citizen engagement in the context of natural resource revenue management. In particular, the farmers indicated that an opportunity to give feedback on the project through a user-friendly platform was very important for them. Furthermore, the representatives of both the government and an oversight body for petroleum revenue management regarded spatial crowdsourcing as a useful tool for collecting feedback on petroleum-funded projects and to increase citizen engagement in natural resource management in general. The authors conclude that although spatial crowdsourcing can help in citizen engagement, its effectiveness in the management of natural resource revenues depends on behavioural changes in governments and citizens.

Natural resources revenue management from global perspective: Critically important institutional factors

Research background: Globally, many countries are dependent on natural resources, for this reason, their revenue management becomes an important aspect for their economies. It is necessary to understand the relations between institutional factors and natural resource revenue management from the global point of view. It means to identify which institutional aspects impact both positively and negatively the revenue management. Purpose of the article: The purpose of the article is to find out which conditions, or their combinations, regarding the institutional environment, lead to a certain level of revenue management. It means to comprehend which conditions, respectively their combinations, result in both higher and lower levels of revenue management and consequently influence its sustainability. Methods: Basically, the fuzzy-set qualitative comparative analysis is used to empirically examine the relations between institutional background and the revenue management in natural resource rich economies. The Resource Governance Index, as the global index measuring the quality of governance in individual countries is used as the input for the analysis. Findings &amp; Value added: It was found that the individual institutional aspects have diverse effects on revenue management and its resilience. A few sufficient conditions were revealed, accountability, respectively absence of open data, rule of law, government effectiveness, in terms of higher, respectively lower level of revenue management. Political stability and absence of violence were identified as irrelevant conditions in terms of higher level of revenue management. Consistent pathways to reach higher and lower levels of revenue management were found.

Does information matter? Transparency and demand for accountability in Ghana's natural resource revenue management

Transparency in resource revenue management is seen as an important strategy to avoid misuse and misappropriation. Theory predicts that transparency will allow citizens to gain information on revenue management; better informed citizens in turn will enter the debate on resource governance issues, voice concerns, and demand improved accountability if necessary. However, there is little micro-level evidence on how transparency policies relate to better citizen knowledge, or to differences in attitudes towards revenue management and in demand for accountability. We analyze data from a unique survey of over 3500 Ghanaian citizens to understand how Ghana's extractive sector transparency measures are linked to citizens' knowledge, rights perception, satisfaction levels, and behavior regarding resource revenue management. Our results suggest that information levels among citizens are quite poor; however, there is a strong sense of citizens' right to benefit from resource revenues. Satisfaction with the status quo is very low; yet, few respondents have sought more information, or even discussed resource revenue management with friends or family. The results also hold for elected representatives, who should be best placed to influence resource governance. The findings imply that the transparency discourse hinges on false assumptions of the effects of information in resource revenue management.

Natural resources, technological progress, and economic modernization

AbstractThe present inquiry focuses on the modernization perspectives of the commodity‐exporting countries through the lens of development economics. To this end, the study adopts the Kaldorian framework to address the modernization effects, epitomized in the absorption of surplus labor. To trace the process of economic modernization, the study augments Lewis’s dualistic economy model by the extractive sector. Three different scenarios for the management of resource revenues are scrutinized. An altruistic mode, which implies a pure redistribution of the revenues among the poor swaths of the population, protracts the process of economic modernization, requires a greater amount of capital stock, and harbors a greater risk of a poverty trap. This effect is less pronounced if the modern sector is more capital‐intensive. A productive mode, which elicits full reinvestment of the commodity revenues, in contrast, accelerates the pace of economic modernization. Further, predicated on the scrutiny of a more realistic scenario, a bargaining mode, the study derives the condition for a net positive (or negative) modernization effect. The study identifies technical progress alongside capital accumulation as a further important source of economic modernization.

Transparent for Whom? Dissemination of Information on Ghana’s Petroleum and Mining Revenue Management

Greater transparency has been proposed as an antidote to mismanagement of natural resource revenues in resource-rich, developing countries. The dominant transparency narrative in policymaking attributes a key role to the public: once citizens gain information, they are predicted to use it to demand better resource governance. Whether the public receives the available information in the first place, however, has not been scrutinised in a large-N analysis. This article examines Ghanaians’ information sources and information-seeking behaviour using a unique survey with over 3500 respondents. Although Ghana has actively pursued transparency in its natural resource revenue management, most Ghanaians have poor access to understandable information as information is disseminated through channels that the intended receivers normally do not use. Non-elite citizens and those with limited English skills were least likely to have heard about natural resource revenue management, compared with elected duty bearers, traditional authorities, other opinion leaders, and those with an interest in the issue through working in mining or living near an extraction site. The results suggest that the conceptualisation of transparency may be too simplistic, and that the expectations linked to transparency in enhancing natural resource governance may not materialise through the mechanisms hypothesised in the literature.

Kenya

This report updates the Fiscal Transparency Evaluation (FTE) of Kenya that was prepared in 2014 and published in 2016. The report is the first full update to be carried out in any country, a recent update of the Russian FTE having a more selective focus. Kenya has experienced a lot of structural and economic changes since 2014. At that time, the 2010 Constitution and the associated Public Financial Management (PFM) Act of 2012 were relatively new, and a radical reform of local government was in the process of transition. The Constitution and the PFM Act placed a strong emphasis on economic and fiscal transparency and accountability, for example, through the establishment of the National Treasury (NT), fiscal responsibility principles, the Parliamentary Budget Office, and enhanced powers of the Auditor General. The present report, like the 2014 assessment, focuses on the first three pillars of the Code. The authorities did not request the Fund to make an evaluation of Pillar IV (Resource Revenue Management) since the development of the oil sector in Kenya is at an early stage, with the volume of reserves uncertain and first oil not expected before 2022 at the earliest.

Natural resources governance and tax revenue mobilization in sub saharan Africa: The role of EITI

The resource curse literature suggests that windfall revenues from the exploitation of natural resources have a negative impact on non-resource tax revenues. Consequently, improving governance and transparency in the management of natural resource revenues is considered critical in mitigating the negative outcomes that typify resource-rich countries. This paper investigates whether EITI membership helps countries to offset the negative impact of natural resource dependence on tax revenues in a panel of 31 Sub Saharan African countries with significant natural resource endowments. Using panel fixed effects and dynamic panel GMM econometric methods, results confirm the existence of a negative relationship between revenues from natural resource sectors and tax revenues. Membership to the EITI has had a weak positive effect on non-oil revenue mobilization and only partially offsets the negative impact of natural resources dependence on non-resource tax revenues. These results suggest that while the EITI has had some positive contributions, it is not a panacea for eliminating the tax revenue curse in natural resource rich African countries.

Fiscal Transparency Initiative

This paper integrates into the Fiscal Transparency Code (FTC) a new fourth pillar (Pillar IV) on natural resource revenue management. This completes the pending update to the IMF's FTC, as set out by staff in 2014 (see IMF 2014a).

There is no one amongst us with them! Transparency and participation in local natural resource revenue management

To redistribute natural resource revenues back to local communities and to promote equitable benefit-sharing and inclusive decision-making, companies and governments increasingly use local benefit-sharing trust funds (LBSTFs) in resource-rich developing countries. Many LBSTFs manage substantial amounts of money, often in regions far from the central government and amongst politically and economically marginalized groups. Focusing on two LBSTFs in Ghana, this article examines the challenges for meaningful participation by local residents. The findings indicate that local residents lack access to relevant information, that the representation mechanisms in place restrict their opportunities to voice their opinions, and that they have no real influence on decision-making. In general, local residents feel a low sense of ownership towards the funds and the funded projects. The results suggest that to enhance meaningful participation, an LBSTF should be independent from the mining company and the intended beneficiaries themselves should be able to choose their representatives for the fund.

Revenue Management Under the Markov Chain Choice Model

We consider revenue management problems when customers choose among the offered products according to the Markov chain choice model. In this choice model, a customer arrives into the system to purchase a particular product. If this product is available for purchase, then the customer purchases it. Otherwise, the customer transitions to another product or to the no purchase option, until she reaches an available product or the no purchase option. We consider three classes of problems. First, we study assortment problems, where the goal is to find a set of products to offer to maximize the expected revenue obtained from each customer. We give a linear program to obtain the optimal solution. Second, we study single resource revenue management problems, where the goal is to adjust the set of offered products over a selling horizon when the sale of each product consumes the resource. We show how the optimal set of products to offer changes with the remaining resource inventory. Third, we study network revenue management problems, where the goal is to adjust the set of offered products over a selling horizon when the sale of each product consumes a combination of resources. A standard linear programming approximation of this problem includes one decision variable for each subset of products. We show that this linear program can be reduced to an equivalent one with a substantially smaller size. We give an algorithm to recover the optimal solution to the original linear program from the reduced linear program. The reduced linear program can dramatically improve the solution times for the original linear program. The online appendix, data files, and source code are available at https://doi.org/10.1287/opre.2017.1628 .