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INTERNATIONAL POLICY CONFERENCE
“COMPETITIVENESS & DIVERSIFICATION:
STRATEGIC CHALLENGES IN A PETROLEUMRICH ECONOMY”
Managing Natural Resources for Development
Kamil Kamaluddeen
14 – 15 march 2011, Accra, Ghana
Structure
I.
II.
III.
Avoiding the Resource Curse
Investing for Human Development
Learning and Developing Capacity
The “resource curse?” Or a doubleedged sword?
Source: Pineda, J., & Rodriguez, F. (2010). Curse or Blessing? Natural Resources and Human
Development. HDRO background papers..
Largest growth “accelerations” in Africa.
Sierra Leone
Angola
DRC
Rwanda
Nigeria
Zambia
Ethiopia
Burundi
Chad
2000s
São Tomé and Príncipe
1990s
Tanzania
Niger
Republic of Congo
Cameroon
Kenya
South Africa
-10%
-5%
0%
5%
10%
Real Annual Average GDP Growth
Source: Own elaboration based on WEO data.
15%
Avoiding the resource curse- I



Break away from the “conflict trap"
Strengthen governance and institutions to
constrain patronage and to improve the
management of public spending
Mitigate the “Dutch Disease”


Promote and support tradable sectors affected by
appreciation of the real exchange rate. Especially
agriculture.
Invest to increase the productivity of the economy,
consistent with absorption capacity, and increase
the import content of public spending – spending
in infrastructure would do both.
Costs of volatility in Africa: collapses in
growth led to income stagnation.
800
700
600
500
400
GDP per capita (constant 2000 US$)
AFRICA
300
200
GDP per capita (constant 2000 US$)
without growth collapses (illustrative
simulation)
100
0
1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Source: Adapted from Jorge Arbache and John Page. 2007. “More Growth or Fewer Collapses?
A New Look at Long Run Growth in Sub-Saharan Africa.” Policy Research Working Paper 4384.
Avoiding the resource curse- II

Mitigate boom and bust cycles




Institutionalize “stabilization funds” (e.g. Chile);
Index prices in sales to foreign companies to the
international price
Consider indexing sovereign debt to the
international price
Use derivatives to hedge against commodity price
volatility (e.g. Mexico)
Hedging brought stability – and a
windfall gain – to Mexico’s oil revenues.
Source: Financial Times.
Investing for human development


General principle: ensure that total wealth
does not diminish – weak sustainability (e.g.
Botswana)
Distribute resources to “three pots”:



i) physical and human capital (infrastructure; basic
social services)
ii) social protection/transfers
iii) “future generations” fund
Different priorities for different levels
of development
i)
physical and human capital
(infrastructure; basic social services
ii) social protection/transfers
iii) “future generations” fund
Poorer countries: focus on spending consistent
with absorptive capacity: might require an
“investment fund” to park part of the money until
capacity exists
Richer countries: focus on savings to
enhance welfare of future generations (e.g.
Norway).
Learning from other countries




Shared goals of preserving social stability
and accelerating economic growth;
Credible and stable cadre of “technocrats”
that interact and influence political leaders;
Strong constituencies outside of the natural
resource sector that push for prudent and
effective spending;
Link investments to explicit objectives of
economic and social progress, helping
citizens to understand the allocation
decisions: the potential of the MDGs.
Source: Gelb, Alan and Sina Grasmann. 2010. “How Should Oil Exporters Spend their Rents?”
CGD Working Paper 221. Washington, D.C.: Center for Global Development..
UNDP’s contribution: developing
capacity and sharing information




Developing capacity to manage the technical
aspects of natural resource management
(regional program on negotiations already exists)
Developing capacity to plan and implement
effective spending plans (on health, education,
social protection) – augment “absorption capacity”
Enhance information of citizens in general and
especially those outside of the natural resource
sector
Establish links between spending and progress
towards the MDGs
Importance of natural resources in
Africa declining but still highest.
Source: Ploeg, Frederick van der (2008) Challenges And Opportunities For Resource Rich
Economies. Working Paper. OxCarre.
Investing for human development-II

Different priorities for different levels of
development:


Poorer countries: focus on spending to meet basic
needs (water, food, and basic education and
health services), basic infrastructure (roads,
power, communication networks), and social
protection – consistent with absorptive capacity:
might require an “investment fund” to park part of
the money until capacity exists.
Richer countries: focus on savings to enhance
welfare of future generations (e.g. Norway).