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Political Economy of Oil-Revenue Sharing in a Developing Country

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Author Info

  • Ehtisham Ahmad
  • Raju Jan Singh

Abstract

Control over natural resource revenues is a contentious, politically divisive issue in most developing countries-especially for oil production. A typical policy response of the center in such cases has been to introduce revenue sharing arrangements. Such measures have generally not assuaged the aspirations of the oil-producing regions and have exposed them to volatility in their revenue flows that they are generally unable to cope with. An alternative is to assign more stable revenue bases to the regional administrations, together with a general-purpose transfer system that incorporates a floor. This acts as an insurance mechanism for the regional administrations and facilitates the stable provision of public services in the oil-production regions, as well as the possibility of redistribution. We use the recent history of oil-revenue sharing in Nigeria to illustrate the propositions.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/16.

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Length: 26
Date of creation: 01 Jan 2003
Date of revision:
Handle: RePEc:imf:imfwpa:03/16

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Related research

Keywords: Intergovernmental fiscal relations; local governments; oil revenues; oil prices; oil production; oil producing; local government; intergovernmental system; intergovernmental relations; natural resources; intergovernmental arrangements; regional tax; local authorities; environmental damage; intergovernmental transfers; petroleum company; local expenditure;

References

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  1. Michel Le Breton & Shlomo Weber, 2001. "The Art of Making Everybody Happy," IMF Working Papers 01/176, International Monetary Fund.
  2. LE BRETON, Michel & WEBER, Shlomo, 2001. "The art of making everybody happy: how to prevent a secession," CORE Discussion Papers 2001011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Casella, Alessandra & Feinstein, Jonathan, 1991. "Public Goods in Trade: On the Formation of Markets and Political Jurisdictions," CEPR Discussion Papers 511, C.E.P.R. Discussion Papers.
  4. repec:fth:louvco:0111 is not listed on IDEAS
  5. Casella, Alessandra, 1992. "On Markets and Clubs: Economic and Political Integration of Regions with Unequal Productivity," American Economic Review, American Economic Association, vol. 82(2), pages 115-21, May.
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Citations

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Cited by:
  1. Guichaoua, Yvan, 2010. "How Do Ethnic Militias Perpetuate in Nigeria? A Micro-level Perspective on the Oodua People's Congress," World Development, Elsevier, vol. 38(11), pages 1657-1666, November.
  2. Boris Najman & Richard Pomfret & Gael Raballand & Patricia Sourdin, 2005. "How are Oil Revenues Redistributed in an Oil Economy? The Case of Kazakhstan," School of Economics Working Papers 2005-18, University of Adelaide, School of Economics.
  3. Yvan Guichaoua, 2009. "How Do Ethnic Militias Perpetuate in Nigeria? A Micro-level Perspective on the Oodua People’s Congress," Research Working Papers 19, MICROCON - A Micro Level Analysis of Violent Conflict.
  4. Xavier Sala-i-Martin & Arvind Subramanian, 2013. "Addressing the Natural Resource Curse: An Illustration from Nigeria," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 22(4), pages 570-615, August.
  5. Tsani, Stella, 2013. "Natural resources, governance and institutional quality: The role of resource funds," Resources Policy, Elsevier, vol. 38(2), pages 181-195.
  6. Arvind Subramanian & Xavier Sala-i-Martin, 2003. "Addressing the Natural Resource Curse," IMF Working Papers 03/139, International Monetary Fund.
  7. Frances Stewart & Alex Cobham & Graham Brown, 2007. "Promoting Group Justice: Fiscal Policies in Post-Conflict Countries," Working Papers wp155, Political Economy Research Institute, University of Massachusetts at Amherst.
  8. Stela Cani, 2009. "Resource Abundance, Mineral Funds and Institutional Quality," Economics & Management Discussion Papers em-dp2009-04, Henley Business School, Reading University.
  9. Freinkman, Lev & Plekhanov, Alexander, 2009. "Fiscal Decentralization in Rentier Regions: Evidence from Russia," World Development, Elsevier, vol. 37(2), pages 503-512, February.

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