Development Based on Commodity Revenues

European Bank for Reconstruction and Development Working Paper No. 108

44 Pages Posted: 8 Dec 2009

See all articles by Sergei M. Guriev

Sergei M. Guriev

Sciences Po; Centre for Economic Policy Research (CEPR); European Bank for Reconstruction and Development (EBRD)

Alexander Plekhanov

International Monetary Fund (IMF)

Konstantin Sonin

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies; Higher School of Economics; Centre for Economic Policy Research (CEPR)

Date Written: December 8, 2009

Abstract

Commodity resources offer vast opportunities for development. In the long run, however, the performance of commodity-rich countries tends to fall short of expectations, as commodity rents induce macroeconomic volatility and undermine incentives to improve institutions. The paper looks at the strategies that countries can adopt to avoid the “resource trap.” These strategies aim at diversifying the economy, promoting financial development, building up stabilisation buffers that lower macroeconomic volatility, and reducing inequality. The resource-rich EBRD countries of operations have embraced these strategies to varying degrees, and with varying success. Improving institutions remains the key challenge.

Keywords: natural resources, economic boom, institutions, financial development

JEL Classification: Q32, Q33, O10, O16

Suggested Citation

Guriev, Sergei M. and Plekhanov, Alexander and Sonin, Konstantin, Development Based on Commodity Revenues (December 8, 2009). European Bank for Reconstruction and Development Working Paper No. 108. Available at SSRN: https://ssrn.com/abstract=1520630 or http://dx.doi.org/10.2139/ssrn.1520630

Sergei M. Guriev

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

HOME PAGE: http://econ.sciences-po.fr/staff/sergei-guriev

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

Alexander Plekhanov

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Konstantin Sonin (Contact Author)

University of Chicago - Irving B. Harris Graduate School of Public Policy Studies ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Higher School of Economics ( email )

20 Myasnitskaya street
Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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