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The Political Economy of Government Revenues in Post-Conflict Resource-Rich Africa: Liberia and Sierra Leone

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  • Victor A.B. Davies
  • Sylvain Dessy

Abstract

This paper examines the post-war strategies of Liberia and Sierra Leone to generate revenues from their natural resources. We document the challenges faced by the government of the two countries, contrasting measures taken to address these challenges as well as the outcomes. We complement the analysis with an analytical model which explores the implications of exploiting natural resources in the aftermath of a civil conflict before public management institutions are developed, as observed in Liberia and Sierra Leone. The key lesson is that resource-rich countries emerging from conflict face a difficult trade-off between relatively large longer-term gains which accrue when institutional capacity is developed prior to exploiting the resources, and smaller short-term revenues that come with immediate exploitation of the resources. The findings call attention to the potential role of the international community in developing post-conflict countries’ natural resource and revenue institutional capacity, as well as transparent corporate and government institutions for resource management.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18539.

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Date of creation: Nov 2012
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Publication status: Forthcoming: The Political Economy of Government Revenues in Post-Conflict Resource-Rich Africa: Liberia and Sierra Leone , Victor A. B. Davies, Sylvain Dessy. in African Successes: Government and Institutions , Edwards, Johnson, and Weil. 2014
Handle: RePEc:nbr:nberwo:18539

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  1. Morris, Stephen, 1995. "Inflation dynamics and the parallel market for foreign exchange," Journal of Development Economics, Elsevier, vol. 46(2), pages 295-316, April.
  2. Giovannini, Alberto & de Melo, Martha, 1993. "Government Revenue from Financial Repression," American Economic Review, American Economic Association, vol. 83(4), pages 953-63, September.
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