international policy conference
DESCRIPTION
INTERNATIONAL POLICY CONFERENCE “COMPETITIVENESS & DIVERSIFICATION: STRATEGIC CHALLENGES IN A PETROLEUM-RICH ECONOMY”. Managing Natural Resources for Development. Kamil Kamaluddeen. 14 – 15 march 2011, Accra, Ghana. United Nations Development Programme. - PowerPoint PPT PresentationTRANSCRIPT
INTERNATIONAL POLICY CONFERENCE
“COMPETITIVENESS & DIVERSIFICATION: STRATEGIC CHALLENGES IN A PETROLEUM-
RICH ECONOMY”
Managing Natural Resources for Development
14 – 15 march 2011, Accra, Ghana
Kamil Kamaluddeen
Structure
I.I. Avoiding the Resource CurseAvoiding the Resource Curse
II.II. Investing for Human DevelopmentInvesting for Human Development
III.III. Learning and Developing CapacityLearning and Developing Capacity
The “resource curse?” Or a double-edged sword?
Source: Pineda, J., & Rodriguez, F. (2010). Curse or Blessing? Natural Resources and Human Development. HDRO background papers..
Source: Own elaboration based on WEO data.
Largest growth “accelerations” in Africa.
-10% -5% 0% 5% 10% 15%
South Africa
Kenya
Cameroon
Republic of Congo
Niger
Tanzania
São Tomé and Príncipe
Chad
Burundi
Ethiopia
Zambia
Nigeria
Rwanda
DRC
Angola
Sierra Leone
Real Annual Average GDP Growth
2000s
1990s
Avoiding the resource curse- I
Break away from the “conflict trap"Break away from the “conflict trap" Strengthen governance and institutions to Strengthen governance and institutions to
constrain patronage and to improve the constrain patronage and to improve the management of public spendingmanagement of public spending
Mitigate the “Dutch Disease”Mitigate the “Dutch Disease” Promote and support tradable sectors affected by Promote and support tradable sectors affected by
appreciation of the real exchange rate. Especially appreciation of the real exchange rate. Especially agriculture.agriculture.
Invest to increase the productivity of the economy, Invest to increase the productivity of the economy, consistent with absorption capacity, and increase consistent with absorption capacity, and increase the import content of public spending – spending in the import content of public spending – spending in infrastructure would do both.infrastructure would do both.
Costs of volatility in Africa: collapses in growth led to income stagnation.
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.
0
100
200
300
400
500
600
700
800
1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
GDP per capita (constant 2000 US$) AFRICA
GDP per capita (constant 2000 US$) without growth collapses (illustrative simulation)
Avoiding the resource curse- II
Mitigate boom and bust cyclesMitigate boom and bust cycles Institutionalize “stabilization funds” (e.g. Chile);Institutionalize “stabilization funds” (e.g. Chile); Index prices in sales to foreign companies to the Index prices in sales to foreign companies to the
international priceinternational price Consider indexing sovereign debt to the Consider indexing sovereign debt to the
international priceinternational price Use derivatives to hedge against commodity price Use derivatives to hedge against commodity price
volatility (e.g. Mexico)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 General principle: ensure that total wealth does not diminish – weak sustainability (e.g. does not diminish – weak sustainability (e.g. Botswana)Botswana)
Distribute resources to “three pots”:Distribute resources to “three pots”: i) physical and human capital (infrastructure; basic i) physical and human capital (infrastructure; basic
social services)social services) ii) social protection/transfersii) social protection/transfers iii) “future generations” fundiii) “future generations” fund
Different priorities for different levels of development
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).
i) physical and human capital(infrastructure; basic social services
ii) social protection/transfers
iii) “future generations” fund
Learning from other countries
Shared goals of preserving social stability Shared goals of preserving social stability and accelerating economic growth;and accelerating economic growth;
Credible and stable cadre of “technocrats” Credible and stable cadre of “technocrats” that interact and influence political leaders;that interact and influence political leaders;
Strong constituencies outside of the natural Strong constituencies outside of the natural resource sector that push for prudent and resource sector that push for prudent and effective spending;effective spending;
Link investments to explicit objectives of Link investments to explicit objectives of economic and social progress, helping economic and social progress, helping citizens to understand the allocation citizens to understand the allocation decisions: the potential of the MDGs.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 Developing capacity to manage the technical aspects of natural resource management aspects of natural resource management (regional program on negotiations already exists)(regional program on negotiations already exists)
Developing capacity to plan and implement Developing capacity to plan and implement effective spending plans (on health, education, effective spending plans (on health, education, social protection) – augment “absorption capacity”social protection) – augment “absorption capacity”
Enhance information of citizens in general and Enhance information of citizens in general and especially those outside of the natural resource especially those outside of the natural resource sectorsector
Establish links between spending and progress Establish links between spending and progress towards the MDGstowards 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 Different priorities for different levels of development:development: Poorer countries: focus on spending to meet basic Poorer countries: focus on spending to meet basic
needs (water, food, and basic education and needs (water, food, and basic education and health services), basic infrastructure (roads, health services), basic infrastructure (roads, power, communication networks), and social power, communication networks), and social protection – consistent with absorptive capacity: protection – consistent with absorptive capacity: might require an “investment fund” to park part of might require an “investment fund” to park part of the money until capacity exists. the money until capacity exists.
Richer countries: focus on savings to enhance Richer countries: focus on savings to enhance welfare of future generations (e.g. Norway).welfare of future generations (e.g. Norway).