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The Resource Curse and Fiscal Policy

Author

Listed:
  • Leonor Coutinho

    (Europrism Research & University of Cyprus)

Abstract

Recent discoveries of natural gas reserves, and continued exploration in the Eastern Mediterranean, have attracted the attention of investors to the region. Interestingly, many studies have highlighted that in general resource-rich countries grow more slowly than their resource-poor neighbours, rather than growing faster as would be expected. This literature has been labelled the “resource curse”, since it suggests that natural resources have been a curse more than a blessing for many countries, creating social tensions, governance problems, and economic distortions, that have hampered rather than facilitated growth. In this study, we analyse how natural-resource revenues should be managed, first by looking at the prescriptions of the theoretical literature, and then at what has been done in practice in a selected range of countries, including both failure stories, and success stories. These case studies help to highlight the pitfalls that should be avoided and the practices that have proved successdshould be of particular interest for countries like Israel and Cyprus, which have unveiled or may be in all likelihood about to unveil new stocks.

Suggested Citation

  • Leonor Coutinho, 2011. "The Resource Curse and Fiscal Policy," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 5(1), pages 43-70, June.
  • Handle: RePEc:erc:cypepr:v:5:y:2011:i:1:p:43-70
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    File URL: https://www.ucy.ac.cy/erc/documents/TheResourceCurseandFiscalPolicy.pdf
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    Citations

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    Cited by:

    1. Khatai Aliyev & Ilkin Gasimov, 2018. "Fiscal policy implementation in Azerbaijan before, during and after the oil boom," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 12(1), March.
    2. Carrington, Sarah J. & Herrero Olarte, Susana & Urbina, Gabriel, 2023. "Commodity cycle management in Latin America: The importance of resilience in face of vulnerability," Resources Policy, Elsevier, vol. 81(C).
    3. Albassam, Bassam A., 2015. "Economic diversification in Saudi Arabia: Myth or reality?," Resources Policy, Elsevier, vol. 44(C), pages 112-117.
    4. Taguchi, Hiroyuki, 2018. "Analysis of the “Dutch Disease” effect and public financial management: the case of Mongolia," MPRA Paper 86561, University Library of Munich, Germany.
    5. BĂLĂŞESCU, Răzvan, 2014. "Natural Resource Taxation From The Sustainable Economic Perspective," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 1(1), pages 223-227.
    6. Toptancı, Ali İskan, 2021. "RETRACTED PAPER: "A Macroeconomic Analysis of the Regional Economy of Kurdistan"," EconStor Research Reports 228721, ZBW - Leibniz Information Centre for Economics.
    7. Taguchi, Hiroyuki, 2023. "Premature deindustrialization: an empirical analysis in latecomer developing countries," MPRA Paper 118346, University Library of Munich, Germany.

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