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Territorial inequality, equalization transfers and asymmetric sharing of non-renewable natural resources in Latin America

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  • Brosio, Giorgio
  • Jiménez, Juan Pablo
  • Ruelas, Ignacio

Abstract

Non-renewable natural resources (NRNR) contribute a large share of tax revenue in Latin American countries; and the fact that these resources are concentrated in just a few regions generates a high level of territorial inequality. This paper aims to analyse how NRNR revenues could be included in equalization grants, and how countries are implementing adequate equalization grant systems, or could do so. Based on fiscal equalization theory, vertical and horizontal systems are evaluated with reference to mid-level governments in Argentina and Peru. The study identifies a variety of political and economic costs for different NRNR revenue systems, where: (i) the provinces own the resources in question (Argentina); and (ii) NRNR revenues are collected and distributed by central government to a large number of subnational governments under a fully asymmetrical scheme (Peru).

Suggested Citation

  • Brosio, Giorgio & Jiménez, Juan Pablo & Ruelas, Ignacio, 2018. "Territorial inequality, equalization transfers and asymmetric sharing of non-renewable natural resources in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    • Handle: RePEc:ecr:col070:44558
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    1. -, 2012. "Decentralization and reform in Latin America: improving intergovernmental relations," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2028 edited by Edward Elgar, September.
    2. Mariano Tommasi & Sebastian Saiegh & Pablo Sanguinetti, 2001. "Fiscal Federalism in Argentina: Policies, Politics, and Institutional Reform," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 157-212, January.
    3. W. D. Gainer & T. L. Powrie, 1975. "Public Revenue from Canadian Crude Petroleum Production," Canadian Public Policy, University of Toronto Press, vol. 1(1), pages 1-12, Winter.
    4. Bob Searle, 2004. "Revenue Sharing, Natural Resources and Fiscal Equalization," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0416, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. -, 2018. "CEPAL Review no. 126," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
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    1. Juan Pablo Jiménez & Leonardo Letelier & Ignacio Ruelas & Jaime Bonet-Morón, 2021. "Reglas fiscales subnacionales: Revisión empírica, experiencias internacionales y sus desafíos en la nueva institucionalidad fiscal post COVID," Documentos de trabajo sobre Economía Regional y Urbana 300, Banco de la Republica de Colombia.

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