Ivory Coast joins the African gold rush – but it's no quick fix for the economy

The Guardian: Mining companies are moving in after conflict left vast natural resources untapped, but will these benefit ordinary Ivorians?

Coal Mining and the Resource Curse in the Eastern United States

WP: We measure the effect of resource sector dependence on long run income growth using the natural experiment of variation in coal endowments in a set of 409 relatively U.S. counties selected for homogeneity. Using a panel data set that extends over two separate boom and bust cycles (1970-2010), we find that coal dependence significantly reduces growth of per capita county income over the long run. These estimates indicate that a one standard deviation increase in the measure of resource intensity results in an estimated 0.7 percentage point drop in average annual growth rates. We also measure the extent to which the Appalachian coal resource curse operates by providing disincentives to education, and find that the education channel explains only about 15% to 40% of the curse.

World Bank eyes $1 billion African resource mapping fund in July

Reuters: The World Bank wants to launch a $1 billion fund in July to map the mineral resources of Africa, using satellites and airborne surveys to fill geological gaps across the continent where a lack of adequate data hampers mining investments.

Production of Natural Gas From Shale in Local Economies: A Resource Blessing or Curse?

Kansas City Fed: This article investigates how the recent boom in the U.S. natural gas industry has affected local economies in the central United States. Labor market conditions at the county level in a nine-state region are analyzed using econometric model to determine how employment and wages have responded to the rapid expansion of natural gas production  from 2001 to 2011. The article fi nds a modest positive impact on local labor market outcomes in counties where natural gas production has increased, and little evidence of a natural resource curse.

Sovereign Wealth Funds and Domestic Investment in Resource-Rich Countries: Love Me, or Love Me Not?

World Bank: Sovereign wealth funds (SWFs) represent a large and growing pool of savings. An increasing number of these funds are owned by natural resource–exporting countries and have a variety of objectives, including intergenerational equity and macroeconomic stabilization. Traditionally, these funds have invested in external assets, especially securities traded in major markets. But the persistent infrastructure financing gap in developing countries has motivated some governments to encourage their SWFs to invest domestically. Is it appropriate to use SWFs to finance long-term development needs? Does it matter whether such investments are domestic or foreign-held assets? This note considers these issues, particularly the controversial question of using SWFs to finance domestic projects, motivated partly by SWFs’ perceived importance for development.

Equatorial Guinea: Squandered riches

FT: Standing nearly five storeys high, the granite headquarters of the Democratic Party of Equatorial Guinea epitomises the power of this small country’s ruling party. A pastiche of Middle East extravagance, false Greek columns and brutalist Soviet style, the building is the new home to the party run by Teodoro Obiang, who has ruled the nation for nearly 35 years with an iron first...

Natural resources and public spending on health

New WP: This paper extends the concept of the resource curse by studying whether and through which transmission channels natural resource wealth affects social spending. Even though the availability of vast natural capital reserves has commonly been linked to the neglect of human development, most of the literature has continued to focus on economic performance. This paper is the first to empirically explore the link between natural resource wealth and public health expenditures in light of the hypothesis that the availability of resource wealth as a source of unearned state income enhances state autonomy, which leads to policies that fail to prioritize human development. Using a large panel dataset of world countries covering the period from 1991 to 2010, we find a robust, significant inverse relationship between natural resource dependence, and even abundance, and public health spending over time. The effect remains significant after controlling for state autonomy, volatility, and other factors. These findings have implications for national authorities as well as the extractive industry. Governments should be made accountable for natural resource wealth and correct taxation could provide additional resources, earmarked for health. The extractive industry could increase their investments in sustainable Social Corporate Responsibility operations, specifically in the health sector.