IDEAS home Printed from https://ideas.repec.org/a/oup/jafrec/v26y2017i2p256-293.e14..html
   My bibliography  Save this article

Harnessing Resource Wealth for Inclusive Growth in Fragile Western African States

Author

Listed:
  • Corinne Deléchat
  • Shu-Chun S. Yang
  • Will Clark
  • Pranav Gupta
  • Malangu Kabedi-Mbuyi
  • Mesmin Koulet-Vickot
  • Carla Macario
  • Toomas Orav
  • Manuel Rosales
  • René Tapsoba
  • Dmitry Zhdankin

Abstract

Fragile countries face competing needs for allocating valuable natural resource potential, including for using the resource revenue to scale up public investment and close large infrastructure gaps. This paper uses the recently developed Debt, Investment, Growth and Natural Resources (DIGNAR) model to characterise optimal allocations of resource wealth, with a focus on the particular economic structures of fragile countries. This study adds to the existing literature by not only carefully applying the DIGNAR model to quantify key policy trade-offs facing resource-rich fragile Western African countries such as Côte d'Ivoire, Guinea, Liberia and Sierra Leone, but also by extending the model to account for the possibility of direct social transfers and of an endogeneous determination of the investment path based on fiscal rules. Key results, with far-reaching policy implications for accelerating inclusive growth stand out from the simulations. First, compared with a conservative approach based on the permanent income analysis, a sustainable non-resource deficit target is robust to the high uncertainty of resource revenues, while delivering growth benefits through higher productive public capital. Second, distributing part of resource revenues as transfers raises private consumption immediately, suggesting that a fraction of the resource revenue could be used to expand safety nets in fragile states.

Suggested Citation

  • Corinne Deléchat & Shu-Chun S. Yang & Will Clark & Pranav Gupta & Malangu Kabedi-Mbuyi & Mesmin Koulet-Vickot & Carla Macario & Toomas Orav & Manuel Rosales & René Tapsoba & Dmitry Zhdankin, 2017. "Harnessing Resource Wealth for Inclusive Growth in Fragile Western African States," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 26(2), pages 256-293.14.
  • Handle: RePEc:oup:jafrec:v:26:y:2017:i:2:p:256-293.e14.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/jae/ejw026
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anja Baum & Andrew Hodge & Aiko Mineshima & Marialuz Moreno Badia & Rene Tapsoba, 2017. "Can They Do It All? Fiscal Space in Low-Income Countries," IMF Working Papers 17/110, International Monetary Fund.

    More about this item

    Keywords

    natural resources; West Africa; fragile states; social safety nets; inclusive growth;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:jafrec:v:26:y:2017:i:2:p:256-293.e14.. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press). General contact details of provider: http://edirc.repec.org/data/csaoxuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.