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The Basilicata Wealth Fund: resource policy and long-run economic development in Southern Italy

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  • Iacono, Roberto

Abstract

This paper contributes to the growing political economy literature of within-country natural resources management, by proposing a new resource policy for the oil-rich southern Italian region of Basilicata. The policy proposal is to establish a (regional) wealth fund in which all the royalty revenues from non-renewable natural resource exploitation in Basilicata would be stored and fully converted into low-risk financial assets. The scope is to give priority to long-run investments as to better exploit revenues from large-scale extraction of natural capital. Establishing a wealth fund at the regional sub-national level is a novel approach that can be applied to other resource-rich regions in the world. I label the fund as the Basilicata Wealth Fund (BWF). The BWF would be a regionally owned investment fund, however independently administered from national authorities (for instance, as an independent legal entity under the jurisdiction of the Bank of Italy). In addition, the paper posits a transparent and clear-cut spending fiscal rule in order to let regional authorities use the resource revenues to finance economic policy. The clear advantage from the BWF would be the stronger focus on long-run economic development and the higher accountability, hence avoiding misuse of resource revenues for myopic fiscal spending.

Suggested Citation

  • Iacono, Roberto, 2015. "The Basilicata Wealth Fund: resource policy and long-run economic development in Southern Italy," MPRA Paper 66393, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:66393
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    References listed on IDEAS

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    1. Fernanda Brollo & Tommaso Nannicini & Roberto Perotti & Guido Tabellini, 2013. "The Political Resource Curse," American Economic Review, American Economic Association, vol. 103(5), pages 1759-1796, August.
    2. James Cust & Steven Poelhekke, 2015. "The Local Economic Impacts of Natural Resource Extraction," Annual Review of Resource Economics, Annual Reviews, vol. 7(1), pages 251-268, October.
    3. Holden, Steinar, 2013. "Avoiding the resource curse the case Norway," Energy Policy, Elsevier, vol. 63(C), pages 870-876.
    4. Torfinn Harding & Frederick Ploeg, 2013. "Official forecasts and management of oil windfalls," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(5), pages 827-866, October.
    5. Iacono, Roberto, 2016. "No blessing, no curse? On the benefits of being a resource-rich southern region of Italy," Research in Economics, Elsevier, vol. 70(2), pages 346-359.
    6. Benedetto Rocchi & Chiara Landi & Gianluca Stefani & Severino Romano & Mario Cozzi, 2015. "Escaping the resource curse in regional development: a case study on the allocation of oil royalties," International Journal of Sustainable Development, Inderscience Enterprises Ltd, vol. 18(1/2), pages 115-138.
    7. Iacono, Roberto, 2017. "A comparison of fiscal rules for resource-rich economies," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 179-193.
    8. Mehmet Caner & Thomas Grennes, 2010. "Sovereign Wealth Funds: The Norwegian Experience," The World Economy, Wiley Blackwell, vol. 33(4), pages 597-614, April.
    9. Mr. Christian B. Mulder & Mr. Amadou N Sy & Miss Yinqiu Lu & Mr. Udaibir S Das, 2009. "Setting Up a Sovereign Wealth Fund: Some Policy and Operational Considerations," IMF Working Papers 2009/179, International Monetary Fund.
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    More about this item

    Keywords

    Exhaustible natural resources; Sovereign Wealth Fund; Regional economy; Long-run economic development; Basilicata.;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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