We survey the performance of Sub-Saharan Africa's resource-dependent economies from 1999 to 2019, a period covering the commodity price supercycle, which generated enormous rents for natural resource producers. We show that despite high overall growth rates, these states failed to convert their windfalls into broader forms of development: their economies diversified more slowly than resource-poor countries in Sub-Saharan Africa; their economies became less complex; their low institutional quality regressed further; and they achieved slower progress on human development than their resource-poor counterparts. Case studies of the top three diversifiers—Botswana, Zambia, and Nigeria—underscore the challenges of diversification. We suggest two broad reasons for these patterns. First, economic diversification, especially export diversification, is intrinsically difficult for low-and-middle income resource-dependent countries, due to both Dutch Disease effects and the isolated product spaces of the oil, gas, and minerals sectors. Second, diversification in resource-dependent states is sensitive to institutional quality, yet institutional quality is sticky and typically constrained by political interests that are hostile to reforms. This implies that the development challenges of oil, gas, and mineral dependent states over the coming decades will be significant and difficult to surmount. We suggest a more modest set of goals focused on diversifying into related activities in the extractives value chain and unrelated sectors in the domestic economy, as well as narrowly-focused efforts to boost non-resource export industries.

Benefit-sharing agreements (BSAs) determine how resource extraction companies and stakeholder communities share the economic value created by extractive activities. Besides direct financial compensation, BSAs can include preferential access to contracting opportunities for local firms and promises of direct employment for local individuals. Quantifying potential BSA benefits can have practical value for communities entering into BSA negotiations and or monitoring the implementation of agreements. This paper seeks to demonstrate that BSAs can be quantitatively modeled by estimating the expected size of net benefits from two BSAs: the Ahafo gold mine in Ghana, and the Mary River iron ore mine in Nunavut, Canada. We calculate net benefits at the time of the BSA's negotiation by estimating the gains in financial transfers, jobs, and contracting opportunities that accrue to members of the affected communities, relative to a counterfactual of the mining project occurring in the absence of the BSA, and report the relative contribution from each category of benefits. Adding up the net benefits across the three categories, we find that in the Ahafo case the impacted community's discounted benefits from the BSA amount to 1.08% of the estimated life-of-mine revenue and 2.10% in the Mary River case, with the primary contributions coming from jobs and financial transfers respectively.

This framework utilizes business interests and the distribution of political power to understand the episodic nature of economic growth in fragile and conflict-affected states. Conflict, state capacity, and legitimacy are analysed alongside the business environment and structural transformation to explain when growth episodes arise and when those growth episodes have positive, or negative, feedback on the country’s political economy and state fragility. The guidebook is designed to help advisers working with development agencies to analyse country context and design interventions with the goal of enabling positive growth episodes that reduce fragility.

This article examines the role of power, influence, and participation in driving the formation and operation of project-level multi-stakeholder institutions (MSIs), matching political economy theory with case study evidence from the Ahafo gold mine in Ghana. In Ahafo, MSIs were created through benefit-sharing agreements between the mining company and local communities in order to set and manage the distribution of benefits from the mining rents. Drawing on field interviews and other data, we find that the MSIs reflected existing power structures and struggled to enable broad-based participation in decision-making concerning benefit sharing and beyond. Despite having new institutions, and partly because of them, the ability of many stakeholders to influence the distribution of rents from the mine did not increase. The findings point to the role that complex political dynamics play in shaping the formation and implementation of project-level MSIs.

Community benefit agreements have emerged as a popular tool for mitigating conflicts over natural resource development and generating benefits for local communities. While CBAs hold considerable promise as a means of improving resource development, there remains a wide variation in CBA outcomes and considerable uncertainty over their effectiveness. This collection of research papers seeks to reduce this uncertainty by summarizing the current state of knowledge on CBAs and advancing our understanding of the role of CBAs. The findings suggest that while CBAs have potential for improving outcomes from resource development, many CBAs fall short of expectations and improvements are required. The findings identify reforms and best practices for improving CBAs to achieve more sustainable development and methodological guidance for future research on CBAs and resource-led development.

Following a rise in the price of oil in the 1970s, a number of developing countries received a significant boost in foreign transfers as oil producers could not absorb all of their new rents domestically. When those transfers ended, some recipients of these transfers eventually democratized as part of the ”Third Wave” while others languished as violent autocracies. This raises a puzzle: how can declines in external transfers foster democratization in some cases, but heighten political violence in others? We develop a formal model to reconcile this tension and demonstrate that autocratic incumbents can become more repressive with higher levels of transfers and either experience civil conflict or democratize at lower levels of transfers. We characterize these dynamics as a ”political transfer problem” and then use case studies and econometric evidence to argue that the largest windfall of the 20th century, the period from 1973–85 during which oil prices were at all-time highs, and its aftermath, produced political dynamics consistent with our model.

Interest in developing liquefied natural gas (LNG) has recently increased with global demand rising at a higher rate than any other fossil fuel in the last ten years. While the increase in demand for LNG has created an opportunity for countries with natural gas stocks, there is a significant amount of competition among these producing countries. As a result, jurisdictions have been implementing policies and subsidies to enhance their competitiveness in the global LNG market. We investigate the impact of this phenomenon in one gas-rich region, British Columbia, Canada, where the provincial government has promoted the development of a large-scale LNG industry. Drawing from staple theory, we explore how government policy has been shaped by the needs of the resource sector to provide incentives for expansion without undertaking comprehensive evaluation of the costs and benefits. As a result, the benefits of the expansion are overestimated, while the costs are underestimated. Our analysis shows that a more comprehensive and transparent evaluation of resource development policies is necessary to avoid suboptimal policies and ensure that development is in the public interest.

This paper theoretically and empirically investigates the factors that determine the government "take" in gold mining projects around the world. We develop a theoretical model to predict the government take, which we define as the ratio of total payments to the government from a mining project (including taxes, fees, and royalties) relative to the mining company's pre-tax net revenue from the same project. In line with investment decision theory, our model predicts that governments should decrease their take on mining operations to compensate multinational corporate investors for increased local development costs and political and macroeconomic risk. However, our empirical investigation shows that higher country risk is actually associated with greater government take. Extending the model, we find that polit-ical economy variables have as much predictive power in explaining the government take as the basic investment theory model. (c) 2021 The Author(s). Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

The resource curse literature presents conflicting evidence on the relationship between natural resources and development. We evaluate the direct effect of resources on developmental outcomes vis-à-vis their indirect effect through the weakening of political institutions using a 3SLS instrumental variable setup that simultaneously estimates development outcomes and institutions. We find that resource abundance and resource dependence affect development outcomes through different channels. While resource abundance generally has a direct positive effect on developmental outcomes, resource dependence has a stronger negative indirect effect that operates through its negative impact on institutional quality. The results also depend on the type of development outcome considered, with more consistent positive direct effects found for physical capital measures and stronger negative indirect effects for human capital development. The use of a simultaneous framework and dual measures of resources reconciles seemingly contradictory findings in earlier work.

The ‘resource curse’ is often understood to imply poor growth in the non-resource sectors of the economy, but research into the diversification performance of resource-rich countries is limited. This paper surveys recent evidence and identifies empirical patterns in the economic diversification of resource-rich countries. Diversification is measured using the growth of per capita non-resource (manufacturing and services) sectors in domestic and export markets, which has a cleaner interpretation than competing measures. This measure is used to evaluate the long-term diversification of countries that started off as resource-dependent, and to rank countries according to their performance. We then identify policy-relevant correlates of diversification at the national level, including the acquisition of human capital, public and intellectual capital, and firm dynamism. More resource-dependent countries appear to perform worse on measures of human capital and intellectual capital, but more resource-abundant countries perform better on public capital and human capital accumulation. We examine the mechanisms behind diversification performance through in-depth case studies of Oman, Laos and Indonesia, and conclude by identifying policy lessons and future research directions.

National governments frequently pull strings to get their citizens appointed to senior positions in international institutions. We examine, over a 60-year period, the nationalities of the most senior positions in the United Nations Secretariat, ostensibly the world's most representative international institution. The results indicate which states are successful in this zero-sum game, and what national characteristics correlate with power in international institutions. The most overrepresented countries are small, rich democracies like the Nordic countries. Democracy, investment in diplomacy, foreign aid, and economic/military power are predictors of senior positions-even after controlling for the U.N. staffing mandate of competence and integrity. National control over the United Nations is remarkably sticky; however the influence of the United States has diminished as U.S. ideology has shifted away from its early allies. In spite of the decline in U.S. influence, the Secretariat remains pro-American relative to the world at large.

Transparency and accountability initiatives have emerged as a potential solution to combat corruption and increase public benefits from the extractive sector in resource-abundant countries. The Extractive Industries Transparency Initiative (EITI) is one such initiative, through which 49 resource-rich countries have disclosed a cumulative 282 fiscal years of government revenues amounting to US$1.9 trillion since 2003. This paper explores the potential for promised benefits of increased disclosure to be realized, in the form of improved resource governance. Building on the social accountability literature, a framework is proposed and then applied to the Mongolian context to examine which stages of the framework work well, and which fail to perform. Two types of contracts are analyzed, water usage agreements and community benefit-sharing agreements. Although Mongolia is recognized as a leading performer by international EITI standards, the analysis concludes that the framework’s latter stages from disclosure to improved resource governance are incomplete. The policy implication is that greater attention to mobilization and citizen empowerment is needed to ensure that contract transparency can meaningfully contribute towards improved governance.

In 2009, the Liberian government removed a wide-reaching set of price controls. Compared with goods never subject to price ceilings, goods whose prices were liberalized showed increased prices and decreased quantity supplied. This effect was larger for products with smaller permitted markup and disproportionately affected goods in the rural consumption basket. The results do not support the hypotheses that the price controls caused queuing, allowed retailers to collude around higher price points, or were simply an instrument for corruption. Rather, they suggest that the controls effectively suppressed monopoly pricing. This provides insight into state functionality and business policy in a country with extreme poverty and weak institutions.

Are rents, or excess profits, good for development? Rents could induce firms to lobby or bribe governments to preserve the status quo; on the other hand, rents may promote growth by giving firms the needed funds to make investments in fixed capital or research and development. To test this question empirically, we use a panel of manufacturing data at the industry-country-year level, and measure rents by the mark-up ratio. We find that the relationship between rents and growth is strongly negative, with the results being primarily driven by the poorer countries (or those with worse institutions) in the sample. This result holds when we instrument for mark-up using the average mark-up in other industries in the country. Even in industries with high external financing needs and countries with less developed financial sectors, precisely the places where excess profits could be used to drive growth, we find that rents are especially harmful. Consistent with the rent-seeking mechanism we highlight, we find that high rents are associated with a slower reduction in tariffs. We also test for the most likely alternative mechanism, that higher rents cause slower growth through the channel of allowing managerial slack. We find that controlling for management has little impact on our estimate of the impact of mark-up on productivity growth. (C) 2018 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

In 2008, ten communities in the Brong Ahafo region of Ghana entered into agreements with Newmont Ghana to govern company-community relations, ensure local job creation, and share the benefits of the company’s mining operations. Ten years later, this report, co-authored by Canadian International Resources and Development Institute (CIRDI), African Center for Energy Policy (ACEP), CCSI, and ISP, looks at the communities’ experience of those agreements and suggests how the agreements might be improved. Though the agreements were celebrated for their attempts to include all stakeholders in decision-making, challenges remain around representation, consultation, and participation. New entities established to facilitate multi-stakeholder decision-making have led to the replication of existing power imbalances. And despite many improvements, the agreements have not fully stabilized company-community relations; tensions and grievances remain concerning employment, compensation, and resettlement, among other issues. The report makes research-informed recommendations for the communities, Newmont Ghana, and other stakeholders in the lead-up to the renegotiation of the agreements. While the negotiation of benefit agreements (sometimes called “Community Development Agreements”) have been the subject of wide-ranging research, academic literature on agreement implementation is still relatively sparse, and tends to focus on cases in Australia and Canada, with little information available from cases in low- or middle-income countries. This report therefore seeks to contribute to filling this gap, alongside other studies mentioned in the report. The report was published on July 25, 2018. On that day, ACEP presented the report and a Twi-translation of the executive summary to representatives and opinion leaders from the communities. ACEP also led a workshop both on the report and on benefit agreements more generally.

This chapter sets out the deals and development framework, a conceptual framework which offers a new way to analyse growth. The framework focuses on analysing the political settlement within a country and the rent space, i.e. which individuals receive the returns to assets and how. The processes of how deals are made between economic and political elites are discussed, and open or closed and ordered or disordered deals distinguished. The framework highlights the interconnectedness of these three ‘variables’ and shows how changes in either the political settlement, rent space or deals space affect growth rates and the structural transformation within a country.

This chapter finds five growth episodes in Liberia’s history. From 1960 to 1971, a period of miracle growth during the presidency of William Tubman. Stagnation and decline followed during the period of 1971–9 when Tubman’s successor, William Tolbert, faced a series of negative trade shocks and a crumbling coalition of support causing negative feedback loops within the economy. Tolbert was overthrown in 1979 by Samuel Doe who oversaw Liberia’s political and economic collapse in 1980–9, and whose political settlement and exclusion of certain factions sowed the seeds for the civil war between 1990 and 2005. The fifth and final period of rapid growth from 2005 to the present day follows the election of Ellen Sirleaf Johnson, and the political stability she brought to the country, which allowed growth to return to the country. However, structural transformation remains elusive due to continued corruption, fragility, and reliance on personal relationships to keep the ruling coalition in power.