Do Resource-Rich Countries Suffer from a Lack of Fiscal Discipline?

37 Pages Posted: 20 Apr 2016

See all articles by Michael Bleaney

Michael Bleaney

University of Nottingham - School of Economics

Havard Halland

OECD Development Centre

Date Written: February 2, 2016

Abstract

Fiscal indicators for resource-rich and resource-poor low- and middle-income countries are compared using annual data from 1996 to 2012. Resource richness is defined by export composition: fuel greater than a 25 percent share and/or ores and metals greater than a 10 percent share. Fuel exporters have a significantly better general government fiscal balance than the rest of the sample, and higher revenues and expenditures, which are approximately evenly split between extra consumption expenditure and extra capital expenditure. Only about a quarter of their extra revenue goes into extra consumption expenditure, and this proportion has been lower since 2005. Fuel exporters' expenditure reacts with a lag to oil price fluctuations. There are no significant differences between ores and metals exporters and resource-poor countries, or between new and old resource exporters, in aggregate expenditures and revenues. Ores and metals exporters spend more on investment and less on government consumption. Some individual country cases are briefly discussed.

Keywords: Non Governmental Organizations, Energy and Environment, Economic Conditions and Volatility, Fiscal & Monetary Policy, Economic Growth, Energy and Mining, Consumption, Industrial Economics, Public Sector Management and Reform, Energy Demand, Economic Theory & Research, Economics and Institutions

Suggested Citation

Bleaney, Michael and Halland, Havard, Do Resource-Rich Countries Suffer from a Lack of Fiscal Discipline? (February 2, 2016). World Bank Policy Research Working Paper No. 7552, Available at SSRN: https://ssrn.com/abstract=2726975

Michael Bleaney (Contact Author)

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 0 115 951 5265 (Phone)
+44 0 115 951 5141 (Fax)

Havard Halland

OECD Development Centre ( email )

94, rue Chardon Lagache
Paris, 75775
France

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