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Managing manna from below: sovereign wealth funds and extractive industries in the Pacific

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  • Martin Gould

    (Treasury, Government of Australia)

Abstract

A key challenge for developing countries endowed with natural resources is to transform those resources into sustained improvements in living standards. A number of Pacific island countries have utilised sovereign wealth funds (SWFs) to manage government revenue from exhaustible natural resources with the aim of improving development outcomes. Experience in the region has been mixed — some SWFs have aided intergenerational equity and macroeconomic stability while others have struggled to bring about improvements in wellbeing. This paper examines the past and present SWFs of Kiribati, Nauru, Timor–Leste and Papua New Guinea. In doing so, it draws out some lessons for policymakers considering the use of SWFs in managing resource revenue in developing countries. Principles for successful SWFs are identified, including strong transparency, public support for the SWF, integration with the national budget and professional investment management.

Suggested Citation

  • Martin Gould, 2010. "Managing manna from below: sovereign wealth funds and extractive industries in the Pacific," Economic Roundup, The Treasury, Australian Government, issue 1, pages 63-86, April.
  • Handle: RePEc:tsy:journl:journl_tsy_er_2010_1_3
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    File URL: http://archive.treasury.gov.au/documents/1783/PDF/05_SWFs_in_the_Pacific.pdf
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    References listed on IDEAS

    as
    1. Thorvaldur Gylfason & Gylfi Zoega, 2006. "Natural Resources and Economic Growth: The Role of Investment," The World Economy, Wiley Blackwell, vol. 29(8), pages 1091-1115, August.
    2. Paul Collier & Rick Van Der Ploeg & Michael Spence & Anthony J Venables, 2010. "Managing Resource Revenues in Developing Economies," IMF Staff Papers, Palgrave Macmillan, vol. 57(1), pages 84-118, April.
    3. R.G. Gregory, 1976. "Some Implications Of The Growth Of The Mineral Sector," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, pages 71-91.
    4. Roland Hodler, 2004. "The Curse of Natural Resources in Fractionalized Countries," Diskussionsschriften dp0404, Universitaet Bern, Departement Volkswirtschaft.
    5. Hodler, Roland, 2006. "The curse of natural resources in fractionalized countries," European Economic Review, Elsevier, vol. 50(6), pages 1367-1386, August.
    6. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    foreign direct investment; Pacific Area; sovereign wealth funds;

    JEL classification:

    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

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