New OxCARRE working papers on resource funds, deforestation, and infrastructure

New OxCARRE research available at the website [oxcarre.ox.ac.uk]:

Anthony J. Venables ([sites.google.com] OxCARRE) and Samuel E. Wills ([samuelwills.wordpress.com] OxCARRE) write on

Resource Funds: stabilizing, parking, and inter-generational transfer

The paper explores strategies for managing revenue from natural resources, focusing on the balance between domestic and foreign asset accumulation. It suggests that domestic asset accumulation is the priority in developing countries, while there are three motives for accumulating foreign assets; inter-generational transfer, temporary ‘parking’ of funds, and stabilisation. The paper argues that the first of these is inappropriate for low income countries. The second is required if it is difficult to absorb extra spending in the domestic economy and takes time to build up domestic investment. The third is important, and depends on the extent to which the economy has other ways of adjusting to shocks.

Available here [oxcarre.ox.ac.uk, pdf].


Liana O. Anderson ([liana-anderson.org] CEMADEN), Samantha De Martino (University of Sussex), Torfinn Harding ([sites.google.com, NHH Bergen), Karlygash Kuralbayeva ([lse.ac.uk], LSE) and Andre Lima (University of Maryland)

The Effects of Land Use Regulation on Deforestation: Evidence from the Brazilian Amazon

To reduce deforestation rates in the Amazon, Brazil established in the period 2004-2010 conservation zones covering an area 1.5 times the size of Germany. In the same period, Brazil experienced a large reduction in deforestation rates. By combining satellite data on deforestation with data on the location and timing of the conservation zones, we provide spatial regression discontinuity estimates and difference-in-difference estimates indicating that the policy cannot explain the large reduction in deforestation rates. The reason is that the zones are located in areas where agricultural production is likely to be unprofitable. We also provide evidence that zones reduce deforestation if the incentives for municipalities to reduce deforestation are high. We rationalize these finding with a spatial economics model of land use, with endogenous location of conservation zones and imperfect enforcement. Our findings point to the need for other explanations than the conservation zones to explain the sharp decline in deforestation rates in the Brazilian Amazon since 2004.

Available here [oxcarre.ox.ac.uk].


Rabah Arezki ([rabaharezki.com], IMF) and Amadou Sy ([brookings.edu] Brookings Institution)
Financing Africa’s Infrastructure Deficit: From Development Banking to Long-Term Investing

This paper studies the appropriate financing structure of infrastructure investment in Africa. It starts with a description of recent initiatives to scale up infrastructure investment in Africa. The paper then uses insights from the literature on informed vs. arm’s length debt to discuss the structure of infrastructure financing. Considering the differences in investors’ preferences that Africa faces, the paper argues that continent’s success to fill its greenfield and hence risky infrastructure gap hinges upon a delicate balancing act between development banking and institutional long-term investment. In a first phase, development banks which have both the flexibility and expertise should help finance the riskier phases of large greenfield infrastructure projects. In a second phase, development banks should disengage and offload their mature brownfield projects to pave the way for a viable engagement of long term institutional investors such as sovereign wealth funds. In order to promote an Africa wide infrastructure bond markets where the latter could play a critical role, the enhancement of Africa’s legal and regulatory framework should however start now. 

read on here [oxcarre.ox.ac.uk].

New OxCARRE Research Papers

Rabah Arezki [imf.org], Patrick Bolton [columbia.edu], Sanjay Peters [columbia.edu, Copenhagen Business School], Frederic Samama (Amundi Asset Management) & Joseph Stiglitz [columbia.edu, Columbia University] write on

From Global Savings Glut to Financing Infrastructure: The Advent of Investment Platforms

Abstract

This paper investigates the emerging global landscape for public-private coinvestments in infrastructure. The creation of the Asian Infrastructure Investment Bank and other so-called “infrastructure investment platforms” are an attempt to tap into the pool of both public and private long-term savings in order to channel the latter into much needed infrastructure projects. This paper puts these new initiatives into perspective by critically reviewing the literature and experience with public private partnerships in infrastructure. It concludes by identifying the main challenges policy makers and other actors will need to confront going forward and to turn infrastructure into an asset class of its own.

Full paper at OxCARRE website here [pdf, oxcarre.ox.ac.uk].


and


Rabah Arezki [imf.org] and Thiemo Fetzer [University of Warwick trfetzer.com] write on


On the Comparative Advantage of U.S. Manufacturing: Evidence from the Shale Gas Revolution

This paper provides the first empirical evidence of the newly found comparative advantage of the United States manufacturing sector following the so-called shale gas revolution. The revolution has led to (very) large and persistent differences in the price of natural gas between the United States and the rest of the world owing to the physics of natural gas. Results show that U.S. manufacturing exports have grown by about 6 percent on account of their energy intensity since the onset of the shale revolution. We also document that the U.S. shale revolution is operating both at the intensive and extensive margins.

Full paper at OxCARRE website here [pdf, oxcarre.ox.ac.uk].