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Harnessing Resource Wealth for Inclusive Growth in Fragile States

Author

Listed:
  • Ms. Corinne C Delechat
  • Mr. John W Clark JR
  • Pranav Gupta
  • Ms. Malangu Kabedi-Mbuyi
  • Mr. Mesmin Koulet-Vickot
  • Ms. Carla Macario
  • Mr. Toomas Orav
  • Mr. Manuel Rosales Torres
  • Rene Tapsoba
  • Dmitry Zhdankin
  • Ms. Susan S. Yang

Abstract

Like other fragile sub-Saharan African countries, Côte d’Ivoire, Guinea, Liberia, and Sierra Leone are seeking to harness their natural resource potential in the context of ambitious development strategies. This study investigates options for scaling up public investment and expanding social safety nets in a general equilibrium setting. First, it assesses the macro-fiscal implications of alternative fiscal rules for public investment, and, second, it explicitly accounts for redistribution through direct cash transfers. Results show that a sustainable non-resource deficit target is robust to the high uncertainty of resources output and prices, while delivering growth benefits through higher public investment. The scaling-up magnitudes, however, depend on the size of projected resource revenue and absorptive capacity. Adding a social transfer raises private consumption, suggesting that a fraction of the resource revenue could be used to expand safety nets.

Suggested Citation

  • Ms. Corinne C Delechat & Mr. John W Clark JR & Pranav Gupta & Ms. Malangu Kabedi-Mbuyi & Mr. Mesmin Koulet-Vickot & Ms. Carla Macario & Mr. Toomas Orav & Mr. Manuel Rosales Torres & Rene Tapsoba & Dmi, 2015. "Harnessing Resource Wealth for Inclusive Growth in Fragile States," IMF Working Papers 2015/025, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2015/025
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    References listed on IDEAS

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    1. Melina, Giovanni & Yang, Shu-Chun S. & Zanna, Luis-Felipe, 2016. "Debt sustainability, public investment, and natural resources in developing countries: The DIGNAR model," Economic Modelling, Elsevier, vol. 52(PB), pages 630-649.

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