IDEAS home Printed from https://ideas.repec.org/p/ris/adbrei/0051.html
   My bibliography  Save this paper

Poverty Impacts of Government Expenditure from Natural Resource Revenues

Author

Listed:
  • Warr, Peter

    (Arndt-Corden Division of Economics, Australian National University)

  • Menon, Jayant

    (Asian Development Bank)

  • Yusuf, Arief Anshory

    (Padjadjaran University)

Abstract

This study analyzes the effects on poverty incidence and other economic variables resulting from government expenditures associated with natural resource revenues, using the Nam Theun II hydroelectric power project in the Lao People’s Democratic Republic (Lao PDR) as a case study. The analysis uses a multi-sector/multi-household general equilibrium model of the economy of Lao PDR. The conceptual framework distinguishes between official and marginal expenditures financed by project revenues, recognizing that some of the former still might have been undertaken without the new revenues generated by the project. A range of assumptions is considered regarding the direct distributional impact of the marginal expenditures. The analysis also incorporates the project’s indirect distributional effects, operating through the "Dutch disease" mechanism. We find that poverty incidence declines under the entire range of distributional assumptions considered. Nevertheless, the most important determinant of poverty impact is the degree of rural bias. Even the most regressive of the pro-rural distributions reduces poverty incidence by seven times as much as the most progressive of the pro-urban distributions.

Suggested Citation

  • Warr, Peter & Menon, Jayant & Yusuf, Arief Anshory, 2010. "Poverty Impacts of Government Expenditure from Natural Resource Revenues," Working Papers on Regional Economic Integration 51, Asian Development Bank.
    • Handle: RePEc:ris:adbrei:0051
    as

    Download full text from publisher

    File URL: http://aric.adb.org/pdf/workingpaper/WP51_Impacts_of_Government_Expenditure.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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, vol. 20(2), pages 71-91, August.
    2. Devarajan, Shantayanan & Lewis, Jeffrey D & Robinson, Sherman, 1993. "External Shocks, Purchasing Power Parity, and the Equilibrium Real Exchange Rate," The World Bank Economic Review, World Bank, vol. 7(1), pages 45-63, January.
    3. International Monetary Fund, 2007. "Democratic Republic of Timor-Leste: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2007/086, International Monetary Fund.
    4. W. E. G. Salter, 1959. "Internal And External Balance: The Role Op Price And Expenditure Effects," The Economic Record, The Economic Society of Australia, vol. 35(71), pages 226-238, August.
    5. Cassing, James H. & Warr, Peter G., 1985. "The distributional impact of a resource boom," Journal of International Economics, Elsevier, vol. 18(3-4), pages 301-319, May.
    6. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Warr, 2006. "The Gregory Thesis Visits the Tropics," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 177-194, June.
    2. Rod Tyers & Aaron Walker, 2016. "Quantifying Australia's ‘Three-Speed’ Boom," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(1), pages 20-43, March.
    3. Mr. Eun K Choi, 2005. "Infrastructure Aid, Deindustrialization, and Welfare," IMF Working Papers 2005/150, International Monetary Fund.
    4. Phillip Edmund Metaxas & Ernst Juerg Weber, 2016. "An Australian Contribution to International Trade Theory: The Dependent Economy Model," The Economic Record, The Economic Society of Australia, vol. 92(298), pages 464-497, September.
    5. Rod Tyers, 2014. "Asymmetry in Boom-Bust Shocks: Australian Performance with Oligopoly," Economics Discussion / Working Papers 14-23, The University of Western Australia, Department of Economics.
    6. K.H. Choi, 1988. "The Economics of Booming Sectors," Economics Discussion / Working Papers 88-04, The University of Western Australia, Department of Economics.
    7. Neil Dias Karunaratne, 2013. "The mining boom, productivity conundrum and monetary policy design to combat resource curse effects in Australia," Discussion Papers Series 504, School of Economics, University of Queensland, Australia.
    8. Laplagne, Patrick & Treadgold, Malcolm & Baldry, Jonathan, 2001. "A Model of Aid Impact in Some South Pacific Microstates," World Development, Elsevier, vol. 29(2), pages 365-383, February.
    9. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    10. Edouard Mien & Michaël Goujon, 2022. "40 Years of Dutch Disease Literature: Lessons for Developing Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(3), pages 351-383, September.
    11. Clements, Kenneth W. & Fry, Renée, 2008. "Commodity currencies and currency commodities," Resources Policy, Elsevier, vol. 33(2), pages 55-73, June.
    12. Omar H. M. N. Bashar, 2015. "The Trickle‐down Effect of the Mining Boom in Australia: Fact or Myth?," The Economic Record, The Economic Society of Australia, vol. 91(S1), pages 94-108, June.
    13. Rodrigo Suescún M., 1997. "Commodity booms,dutch disease,and real business cycles in a small open economy: The case of coffee in Colombia," Borradores de Economia 2164, Banco de la Republica.
    14. W. Max Corden, 2012. "Dutch Disease in Australia: Policy Options for a Three-Speed Economy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 45(3), pages 290-304, September.
    15. Hoarau, Jean-François, 2009. "L’approche microéconomique du taux de change réel d’équilibre : une revue de la littérature théorique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 85(4), pages 403-436, décembre.
    16. Tim Robinson & Tim Atkin & Mark Caputo & Hao Wang, 2017. "Macroeconomic Consequences of Terms of Trade Episodes, Past and Present," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 57(3), pages 291-315, November.
    17. Gregory, Robert G., 2012. "Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 1-30.
    18. K K Tang, 1998. "Property Markets and Policies in an Intertemporal General Equilibrium Model," Departmental Working Papers 1999-01, The Australian National University, Arndt-Corden Department of Economics, revised Jan 1999.
    19. Ian Coxhead & Sisira Jayasuriya, 1994. "Technical Change in Agriculture and Land Degradation in Developing Countries: A General Equilibrium Analysis," Land Economics, University of Wisconsin Press, vol. 70(1), pages 20-37.
    20. Jinzhao Chen, 2015. "Interprovincial Competitiveness and Economic Growth: Evidence from Chinese Provincial Data (1992–2008)," Pacific Economic Review, Wiley Blackwell, vol. 20(3), pages 388-414, August.

    More about this item

    Keywords

    Poverty incidence; general equilibrium; natural resource revenues; Dutch disease; Lao PDR;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ris:adbrei:0051. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ivan B. de Leon (email available below). General contact details of provider: https://edirc.repec.org/data/oradbph.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.