Tuesday, May 17, 2016

New OxCARRE research: Fossil fuel producers under threat

Rick van der Ploeg writes on

Fossil fuel producers under threat
Oil and gas producers face three threats: prolonged low oil and gas prices, tightening of climate policy and a tough budget on cumulative carbon emissions, and technological innovation producing cheap substitutes for oil and gas. These threats pose real risks of putting oil and gas producers out of business. They lead to the problem of stranded assets and a significant downward valuation of oil and gas producers. This calls for divesting from and shorting coal, oil, and gas. The economies of oil- and gas-rich countries are typically in a deplorable state, since they did not use their past windfalls to build up buffers and invest in a diversified economy. More rapacious depletion of their oil and gas reserves will not help. After the crash in oil and gas prices these countries are facing serious problems and it is difficult to see how they will cope with the outlined threats.
Published in Oxford Review of Economic Policy, available here [oxrep.oxfordjournals.org].

Monday, May 16, 2016

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].

Saturday, May 14, 2016

Journal of Development Studies special issue on natural resources

The Journal of Development Studies is brining out a special issue on Natural resources with the following papers:


Elissaios Papyrakis ([uea.ac.uk] University of East Anglia)

The Resource Curse - What Have We Learned from Two Decades of Intensive Research: Introduction to the Special Issue
There has been increasing interest in the so-called ‘resource curse’, that is the tendency of resource-rich countries to underperform in several development outcomes. This has generated a mountain of (often contradictory) evidence leaving many floundering in the flood of information. This special issue compiles eight papers from some of the most prominent contributors to this literature, combining original research with critical reflection on the current stock of knowledge. The studies collectively emphasise the complexities and conditionalities of the ‘curse’ – its presence/intensity is largely context-specific, depending on the type of resources, socio-political institutions and linkages with the rest of the economy.
read on here [tandfonline.com].


Frederick Van Der Ploeg ([oxcarre.ox.ac.uk] OxCARRE, University of Oxford) and Associate researcher Steven Poelhekke ([sites.google.com, Vrije Universiteit Amsterdam)

The Impact of Natural Resources: Survey of Recent Quantitative Evidence
The cross-country empirical evidence for the natural resource curse is ample, but unfortunately fraught with econometric difficulties. A recent wave of studies on measuring the impact of natural resource windfalls on the economy exploits novel datasets such as giant oil discoveries to identify effects of windfalls, uses natural experiments and within-country econometric analysis, and estimates local impacts. These studies offer more hope in the search of quantitative evidence.
Read on here [tandfonline.com].

Emma Gilberthorpe ([uea.ac.uk] University of East Anglia) & Dinah Rajak ([sussex.ac.uk] University of Sussex)

The Anthropology of Extraction: Critical Perspectives on the Resource Curse
Attempts to address the resource curse remain focussed on revenue management, seeking technical solutions to political problems over examinations of relations of power. In this paper, we provide a review of the contribution anthropological research has made over the past decade to understanding the dynamic interplay of social relations, economic interests and struggles over power at stake in the political economy of extraction. In doing so, we show how the constellation of subaltern and elite agency at work within processes of resource extraction is vital in order to confront the complexities, incompatibilities, and inequities in the exploitation of mineral resources.
read on here [tandfonline.com].


Elissaios Papyrakis ([uea.ac.uk] University of East Anglia), Matthias Rieger ([weebly.com] Erasmus University Rotterdam) & Emma Gilberthorpe ([uea.ac.uk] University of East Anglia)

Corruption and the Extractive Industries Transparency Initiative
The Extractive Industries Transparency Initiative (EITI) has received much attention as a scheme that can help reduce corruption in mineral-rich developing economies. To our knowledge, this paper provides the first empirical attempt (using panel data) to explore how EITI membership links to changes in corruption levels. We also examine whether the different stages in EITI implementation (initial commitment, candidature, full compliance) influence the pace of changes in corruption. We find that EITI membership offers, on the whole, a shielding mechanism against the general tendency of mineral-rich countries to experience increases in corruption over time.
read on here [tandfonline.com].


Doug Porter ([worldbank.org] Worldbank) & Michael Watts ([berkeley.edu] UC Berkeley Geography)

Righting the Resource Curse: Institutional Politics and State Capabilities in Edo State, Nigeria
The poor record of liberal reforms sponsored by the international community in postcolonial settings underscores the real politik of institutional change. What we call a ‘new normal’ in development policy and practice foregrounds the role of agency – leadership, networks of connectors and convenors, entrepreneurs and activists – but it has less to say about the political and economic conditions of possibility in which agents operate. The putative powers of agency seem most challenged in contexts of extreme resource dependency and the resource curse. The particular case of Edo, a state in the oil rich Niger delta region of Nigeria, illustrates the intersection of agency and structural conditions to show how ‘asymmetric capabilities’ can emerge to create, constrain and make possible particular reform options. 
Read on here [tandfonline.com].


R. M. Auty ([lancaster.ac.uk] University of Lancaster)

Natural Resources and Small Island Economies: Mauritius and Trinidad and Tobago
Historically, small economies, especially resource-rich ones, underperformed on average relative to their larger counterparts. Small island economies appear still more disadvantaged due to remoteness from both markets and agglomeration economies. Yet a comparison of two small island economies with similar initial conditions other than their mineral endowment suggests that policy outweighs size, isolation and resource endowment in determining economic performance. Resource-poor Mauritius adopted an unfashionable policy of export manufacturing that systematically eliminated surplus labour, which drove economic diversification that sustained rapid GDP growth and political maturation. Like most resource-rich economies, Trinidad and Tobago pursued policies that absorbed rent too rapidly, which impeded diversification and created an illusory prosperity vulnerable to collapse.
Read on here [tandfonline.com].


Gavin Hilson ([surrey.ac.uk] University of Surrey) & Tim Laing (University of the West Indies)

Guyana Gold: A Unique Resource Curse?
This article offers explanations for the underwhelming economic performance of Guyana, a country heavily dependent on the revenue generated from gold mining. Here, government intervention has spawned a gold mining sector which today is comprised exclusively of local small and medium-scale operators. But whilst this rather unique model appears to be the ideal blueprint for facilitating local development, the country seems to be experiencing many of the same setbacks that have beset scores of other resource-rich developing world economies. Unless these problems are anticipated, properly diagnosed and appropriately tackled, a resource curse-type outcome is inevitable, irrespective of the context.
Read on here [tandfonline.com].

Tuesday, April 19, 2016

OxCARRE Seminars this term

Trinity Term 2016
OxCarre Seminar Series
***Tuesdays at 14.30hrs***
Seminar Room C
Manor Road Building, Manor Road

3 May – 2.30pm Seminar Room C
Speaker: Paul Scott (University of Toulouse)
Title: Dynamic Discrete Choice Estimation of Agricultural Land Use

17 May  -2.30pm Seminar Room C
Speaker:  Pramila Krishnan (Cambridge)
Title:  The Natural Resource Curse Revisited: Theory and evidence from India

31 May – 2 seminars
**1.00pm  - Seminar Room D
Speaker:  Nicolas Merener (Universidad Torcuato Di Tella, Buenos Aires)
Title: Output Value Risk for Commodity Producers: the Uncertain Benefits of Diversification

**5.30pm – Seminar Room A
Speaker:  Joseph Aldy (Harvard)
Title: TBC

14 June – 2.30pm Seminar Room C
Speaker:  Martin Weitzman (Harvard)

Title: Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality?

See further at the OxCARRE website

Friday, April 8, 2016

New Research: Government size, misallocation and the resource curse

Radek Stefanski [weebly.com](University of St. Andrews and external research associate of OxCARRE) writes on

Government size, misallocation and the resource curse
I do two things in this paper: First, using a panel of macro cross-country data, I demonstrate that the share of public sector employment is greater in resource-rich countries than in resource-poor countries even controlling for the size of other non-traded sectors. Second, I construct and calibrate a small, open economy model with two production sectors and a government sector in which (optimally) higher government employment shares emerge as a consequence of windfall-induced labor reallocation. I then use a model to compare the optimal and observed size of government in order to obtain an estimate of the extent of government misallocation and the impact it has on welfare and productivity.
Chapter available here [bcentral.cl],

published in Commodity Prices and Macroeconomic Policy, edited by Rodrigo Caputo and Roberto Chang. Santiago, Chile. 2015. Central Bank of Chile. See here [bcentral.cl].


Thursday, April 7, 2016

NRGI launches site with project level payments data

The Natural Resource Governance Institute [resourcegovernance.org] (NRGI) has launches a new website resourceprojects.org, providing project level payment data with the aim to increase transparency in the natural resources sector across the world.
ResourceProjects.org is an open-source repository of data on oil, gas and mining projects across the world. It provides a platform to collect, display, download and search extractive project information using open data. It aims to harvest data on project-by-project payments to governments—based on recent mandatory disclosure legislation in the EU, U.S. and Canada as well as EITI reports—and link it to associated information about the project from a variety of sources. The platform will make it easier for journalists, CSOs, researchers and government officials to search, access and download relevant data.
Have a look here [resourceprojects.org] and further explanation here.

FT: Angola goes to IMF

The FT reports:
Angola becomes latest oil producer seeking IMF bailout
Angola has requested a bailout from the International Monetary Fund that could be worth more than $1.5bn, making the OPEC member the latest oil-producing country to seek international help to cope with the fallout from low crude prices.