Development based on commodity revenues
AbstractCommodity 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.
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Bibliographic InfoPaper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 108.
Length: 44 pages
Date of creation: Dec 2009
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More information through EDIRC
natural resources; economic boom; institutions; financial development;
Find related papers by JEL classification:
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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