Projects per year
Abstract
While it is recognised that the ability of states to raise revenues (i.e., fiscal capacity) is important for the provision of key public goods in less developed economies, it is less clear what its determinants are and what explains cross-country differences. We focus on the impact of natural resources. Standard arguments suggest that natural resource rents may harm fiscal capacity, as governments tend to substitute tax revenues with revenues from natural resources. We argue, instead, that a fiscal resource curse may materialise or not depending on whether political institutions can limit the power of the executive and on how easy it is to control or appropriate natural resources. We investigate this hypothesis using panel data methods covering the period 1995–2015 for 62 developing countries. The results suggest that: (i) point-source resources are negatively associated with fiscal capacity, while diffuse resources are not; (ii) developing economies with political institutions placing institutionalised constraints on the executive power are able to neutralise the negative effect of point-source resources on fiscal capacity. Our findings imply that it is possible to develop a natural resources sector without necessarily harming fiscal capacity.
Original language | English |
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Article number | 106532 |
Journal | World Development |
Volume | 177 |
Early online date | 16 Jan 2024 |
DOIs | |
Publication status | Published - 1 May 2024 |
Keywords
- Constraints on the executive
- Economic development
- Fiscal capacity
- Institutions
- Resource curse
- State capacity
Fingerprint
Dive into the research topics of 'Is There a Fiscal Resource Curse? Resource Rents, Fiscal Capacity and Political Institutions in Developing Economies'. Together they form a unique fingerprint.Projects
- 1 Finished
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Effective States and Inclusive Development Continuation Funding
Hulme, D. (PI), Hickey, S. (CoI) & Sen, K. (CoI)
31/12/16 → 31/12/20
Project: Research
Research output
- 1 Article
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The Political Economy of the Resource Curse: A Development Perspective
Savoia, A. & Sen, K., 5 Oct 2021, In: Annual Review of Resource Economics. 13, 4, p. 203-223 21 p.Research output: Contribution to journal › Article › peer-review
Open AccessFile348 Downloads (Pure)
Impacts
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Developing Fiscal States in Africa: a panel discussion - OECD/WIDER webinar
Savoia, A. (Collaborator)
Impact: Policy, Society and culture
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Paving the way for fiscal capacity - Think WIDER webinar series
Savoia, A. (Collaborator)
Impact: Policy
Activities
- 1 Visiting an external academic institution
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UN University World Institute for Development Economics Research
Savoia, A. (Secondee)
1 Jan 2020 → …Activity: External visiting positions or secondments › Visiting an external academic institution › Research
Press/Media
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WIDER Angle: Will a revenue boom support development in resource-rich economies?
5/09/23
1 Media contribution
Press/Media: Expert comment
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WIDER Angle: Fiscal states in developing economies: Why do they matter and where do they come from?
1/09/22
1 Media contribution
Press/Media: Research
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OECD Development Matters: Do resource rich economies have better or worse human development outcomes?
1/11/21
1 Media contribution
Press/Media: Research