Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries

An abundance of natural resources is both an opportunity and a challenge for developing countries. Several resource-rich, low-income countries receive amounts of foreign aid that are similar to or larger than their actual or potential revenues from...

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Main Authors:	Dobronogov, Anton, Keutiben, Octave
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCOUNTING AID EFFECTIVENESS ALLOCATION AMOUNT OF CAPITAL BOOMBUST CYCLE BOOMBUST CYCLES BUDGET CONSTRAINT BUDGETING CAPITAL ACCUMULATION CAPITAL INVESTMENT CAPITAL MARKETS CAPITAL STOCK CASH FLOWS CIVIL WAR COMMODITY COMMODITY PRICE CONSUMPTION RATES CORRUPTION DEBT DEVELOPING COUNTRIES DEVELOPMENT ASSISTANCE DEVELOPMENT BANKS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISBURSEMENT DISBURSEMENTS DISPOSABLE INCOME DOMESTIC ECONOMY DONOR AGENCIES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC REFORMS EXPECTED UTILITY EXPECTED VALUE EXPENDITURE EXPENDITURES EXPORTERS FACTORS OF PRODUCTION FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL RESOURCES FISCAL RESOURCES FUNGIBLE GDP GOVERNMENT BUDGET GOVERNMENT EXPENDITURE GOVERNMENT FUNDS GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SAVING GOVERNMENT SPENDING GROWTH RATE GROWTH RATES HOUSEHOLDS HUMAN CAPITAL INCOME INCOME TAX INDEXATION INEQUALITY INFRASTRUCTURE PROJECTS INSTITUTIONAL REFORMS INSURANCE INTERNATIONAL BANK INTERNATIONAL BORROWING INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL ECONOMICS INTERNATIONAL MARKETS INVESTMENT PROJECTS INVESTMENT RATE LEVIES LOW-INCOME COUNTRIES LOW-INCOME COUNTRY LOW-INCOME ECONOMIES MACROECONOMIC INSTABILITY MACROECONOMIC STABILITY MACROECONOMIC VOLATILITY MACROECONOMICS MARGINAL COST MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MARKET ACCESS MONETARY FUND MONETARY POLICY MULTILATERAL DEVELOPMENT NATURAL RESOURCE NATURAL RESOURCES OIL PRICES OPEN ECONOMIES OUTPUT PHYSICAL CAPITAL POLITICAL ECONOMY POPULISM POSITIVE EXTERNALITIES PRICE VOLATILITY PRIVATE CAPITAL PRIVATE INVESTMENT PRIVATE SECTOR PUBLIC FINANCE PUBLIC FUNDS PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SECTOR PUBLIC SPENDING REAL EXCHANGE RATE RENT SEEKING REPUBLIC RESERVES STATE INTERVENTION TAX TAX RATE TAX RULE TAXATION TECHNICAL ASSISTANCE TRANSPARENCY UTILITY FUNCTION VARIABLE RATE WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19746806/containing-volatility-windfall-revenues-resource-rich-low-income-countries http://hdl.handle.net/10986/19370

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recordtype	oai_dc
spelling	okr-10986-193702021-04-23T14:03:51Z Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries Dobronogov, Anton Keutiben, Octave ACCOUNTING AID EFFECTIVENESS ALLOCATION AMOUNT OF CAPITAL BOOMBUST CYCLE BOOMBUST CYCLES BUDGET CONSTRAINT BUDGETING CAPITAL ACCUMULATION CAPITAL INVESTMENT CAPITAL MARKETS CAPITAL STOCK CASH FLOWS CIVIL WAR COMMODITY COMMODITY PRICE CONSUMPTION RATES CORRUPTION DEBT DEVELOPING COUNTRIES DEVELOPMENT ASSISTANCE DEVELOPMENT BANKS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISBURSEMENT DISBURSEMENTS DISPOSABLE INCOME DOMESTIC ECONOMY DONOR AGENCIES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC REFORMS EXPECTED UTILITY EXPECTED VALUE EXPENDITURE EXPENDITURES EXPORTERS FACTORS OF PRODUCTION FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL RESOURCES FISCAL RESOURCES FUNGIBLE GDP GOVERNMENT BUDGET GOVERNMENT EXPENDITURE GOVERNMENT FUNDS GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SAVING GOVERNMENT SPENDING GROWTH RATE GROWTH RATES HOUSEHOLDS HUMAN CAPITAL INCOME INCOME TAX INDEXATION INEQUALITY INFRASTRUCTURE PROJECTS INSTITUTIONAL REFORMS INSURANCE INTERNATIONAL BANK INTERNATIONAL BORROWING INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL ECONOMICS INTERNATIONAL MARKETS INVESTMENT PROJECTS INVESTMENT RATE LEVIES LOW-INCOME COUNTRIES LOW-INCOME COUNTRY LOW-INCOME ECONOMIES MACROECONOMIC INSTABILITY MACROECONOMIC STABILITY MACROECONOMIC VOLATILITY MACROECONOMICS MARGINAL COST MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MARKET ACCESS MONETARY FUND MONETARY POLICY MULTILATERAL DEVELOPMENT NATURAL RESOURCE NATURAL RESOURCES OIL PRICES OPEN ECONOMIES OUTPUT PHYSICAL CAPITAL POLITICAL ECONOMY POPULISM POSITIVE EXTERNALITIES PRICE VOLATILITY PRIVATE CAPITAL PRIVATE INVESTMENT PRIVATE SECTOR PUBLIC FINANCE PUBLIC FUNDS PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SECTOR PUBLIC SPENDING REAL EXCHANGE RATE RENT SEEKING REPUBLIC RESERVES STATE INTERVENTION TAX TAX RATE TAX RULE TAXATION TECHNICAL ASSISTANCE TRANSPARENCY UTILITY FUNCTION VARIABLE RATE WEALTH An abundance of natural resources is both an opportunity and a challenge for developing countries. Several resource-rich, low-income countries receive amounts of foreign aid that are similar to or larger than their actual or potential revenues from natural resources. In such countries, the donors may have an opportunity to help a government to use its resource revenues productively and minimize the magnitude of risks created by resource rents. Development of aid instruments tailored for such purposes might be helped by model-based analysis of the effects of foreign aid on resource-rich, low-income economies and its interactions with the flows of natural resource revenues. This paper develops a growth model a la Barro in which the government receives windfalls (from natural resources and foreign aid) and rent-seeking agents contest for public funds. The key conclusion is that making aid countercyclical helps to achieve higher economic growth, and so does conditioning disbursements on enhancement of public capital. Introducing elements of insurance in the design of both aid products financing investments in infrastructure and social services and supporting policy and institutional reforms may help to achieve both of these objectives. 2014-08-15T17:12:27Z 2014-08-15T17:12:27Z 2014-06 http://documents.worldbank.org/curated/en/2014/06/19746806/containing-volatility-windfall-revenues-resource-rich-low-income-countries http://hdl.handle.net/10986/19370 English en_US Policy Research Working Paper;No. 6956 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTING AID EFFECTIVENESS ALLOCATION AMOUNT OF CAPITAL BOOMBUST CYCLE BOOMBUST CYCLES BUDGET CONSTRAINT BUDGETING CAPITAL ACCUMULATION CAPITAL INVESTMENT CAPITAL MARKETS CAPITAL STOCK CASH FLOWS CIVIL WAR COMMODITY COMMODITY PRICE CONSUMPTION RATES CORRUPTION DEBT DEVELOPING COUNTRIES DEVELOPMENT ASSISTANCE DEVELOPMENT BANKS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISBURSEMENT DISBURSEMENTS DISPOSABLE INCOME DOMESTIC ECONOMY DONOR AGENCIES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC REFORMS EXPECTED UTILITY EXPECTED VALUE EXPENDITURE EXPENDITURES EXPORTERS FACTORS OF PRODUCTION FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL RESOURCES FISCAL RESOURCES FUNGIBLE GDP GOVERNMENT BUDGET GOVERNMENT EXPENDITURE GOVERNMENT FUNDS GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SAVING GOVERNMENT SPENDING GROWTH RATE GROWTH RATES HOUSEHOLDS HUMAN CAPITAL INCOME INCOME TAX INDEXATION INEQUALITY INFRASTRUCTURE PROJECTS INSTITUTIONAL REFORMS INSURANCE INTERNATIONAL BANK INTERNATIONAL BORROWING INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL ECONOMICS INTERNATIONAL MARKETS INVESTMENT PROJECTS INVESTMENT RATE LEVIES LOW-INCOME COUNTRIES LOW-INCOME COUNTRY LOW-INCOME ECONOMIES MACROECONOMIC INSTABILITY MACROECONOMIC STABILITY MACROECONOMIC VOLATILITY MACROECONOMICS MARGINAL COST MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MARKET ACCESS MONETARY FUND MONETARY POLICY MULTILATERAL DEVELOPMENT NATURAL RESOURCE NATURAL RESOURCES OIL PRICES OPEN ECONOMIES OUTPUT PHYSICAL CAPITAL POLITICAL ECONOMY POPULISM POSITIVE EXTERNALITIES PRICE VOLATILITY PRIVATE CAPITAL PRIVATE INVESTMENT PRIVATE SECTOR PUBLIC FINANCE PUBLIC FUNDS PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SECTOR PUBLIC SPENDING REAL EXCHANGE RATE RENT SEEKING REPUBLIC RESERVES STATE INTERVENTION TAX TAX RATE TAX RULE TAXATION TECHNICAL ASSISTANCE TRANSPARENCY UTILITY FUNCTION VARIABLE RATE WEALTH
spellingShingle	ACCOUNTING AID EFFECTIVENESS ALLOCATION AMOUNT OF CAPITAL BOOMBUST CYCLE BOOMBUST CYCLES BUDGET CONSTRAINT BUDGETING CAPITAL ACCUMULATION CAPITAL INVESTMENT CAPITAL MARKETS CAPITAL STOCK CASH FLOWS CIVIL WAR COMMODITY COMMODITY PRICE CONSUMPTION RATES CORRUPTION DEBT DEVELOPING COUNTRIES DEVELOPMENT ASSISTANCE DEVELOPMENT BANKS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISBURSEMENT DISBURSEMENTS DISPOSABLE INCOME DOMESTIC ECONOMY DONOR AGENCIES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC REFORMS EXPECTED UTILITY EXPECTED VALUE EXPENDITURE EXPENDITURES EXPORTERS FACTORS OF PRODUCTION FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL RESOURCES FISCAL RESOURCES FUNGIBLE GDP GOVERNMENT BUDGET GOVERNMENT EXPENDITURE GOVERNMENT FUNDS GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SAVING GOVERNMENT SPENDING GROWTH RATE GROWTH RATES HOUSEHOLDS HUMAN CAPITAL INCOME INCOME TAX INDEXATION INEQUALITY INFRASTRUCTURE PROJECTS INSTITUTIONAL REFORMS INSURANCE INTERNATIONAL BANK INTERNATIONAL BORROWING INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL ECONOMICS INTERNATIONAL MARKETS INVESTMENT PROJECTS INVESTMENT RATE LEVIES LOW-INCOME COUNTRIES LOW-INCOME COUNTRY LOW-INCOME ECONOMIES MACROECONOMIC INSTABILITY MACROECONOMIC STABILITY MACROECONOMIC VOLATILITY MACROECONOMICS MARGINAL COST MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MARKET ACCESS MONETARY FUND MONETARY POLICY MULTILATERAL DEVELOPMENT NATURAL RESOURCE NATURAL RESOURCES OIL PRICES OPEN ECONOMIES OUTPUT PHYSICAL CAPITAL POLITICAL ECONOMY POPULISM POSITIVE EXTERNALITIES PRICE VOLATILITY PRIVATE CAPITAL PRIVATE INVESTMENT PRIVATE SECTOR PUBLIC FINANCE PUBLIC FUNDS PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SECTOR PUBLIC SPENDING REAL EXCHANGE RATE RENT SEEKING REPUBLIC RESERVES STATE INTERVENTION TAX TAX RATE TAX RULE TAXATION TECHNICAL ASSISTANCE TRANSPARENCY UTILITY FUNCTION VARIABLE RATE WEALTH Dobronogov, Anton Keutiben, Octave Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries
relation	Policy Research Working Paper;No. 6956
description	An abundance of natural resources is both an opportunity and a challenge for developing countries. Several resource-rich, low-income countries receive amounts of foreign aid that are similar to or larger than their actual or potential revenues from natural resources. In such countries, the donors may have an opportunity to help a government to use its resource revenues productively and minimize the magnitude of risks created by resource rents. Development of aid instruments tailored for such purposes might be helped by model-based analysis of the effects of foreign aid on resource-rich, low-income economies and its interactions with the flows of natural resource revenues. This paper develops a growth model a la Barro in which the government receives windfalls (from natural resources and foreign aid) and rent-seeking agents contest for public funds. The key conclusion is that making aid countercyclical helps to achieve higher economic growth, and so does conditioning disbursements on enhancement of public capital. Introducing elements of insurance in the design of both aid products financing investments in infrastructure and social services and supporting policy and institutional reforms may help to achieve both of these objectives.
format	Publications & Research :: Policy Research Working Paper
author	Dobronogov, Anton Keutiben, Octave
author_facet	Dobronogov, Anton Keutiben, Octave
author_sort	Dobronogov, Anton
title	Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries
title_short	Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries
title_full	Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries
title_fullStr	Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries
title_full_unstemmed	Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries
title_sort	containing volatility : windfall revenues for resource-rich low-income countries
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/06/19746806/containing-volatility-windfall-revenues-resource-rich-low-income-countries http://hdl.handle.net/10986/19370
_version_	1764443740078866432

Containing Volatility : Windfall Revenues for Resource-Rich Low-Income Countries

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