Managing resource revenues in developing economies

Paul Collier*, Rick Van Der Ploeg, Michael Spence, Anthony J. Venables

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

This paper addresses the efficient management of natural resource revenues in capital-scarce developing economies. It departs from usual prescriptions based on the permanent income hypothesis and argues that capital-scarce countries should prioritize domestic investment. Because revenue streams are highly volatile, governments should protect consumption from shocks by increasing it only cautiously. Volatility in domestic investment can 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.

Original languageEnglish
Pages (from-to)84-118
Number of pages35
JournalIMF Staff Papers
Volume57
Issue number1
DOIs
Publication statusPublished - 2010

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