Some resource-rich countries have succeeded in converting resource wealth into longterm and equitable economic development, while many others have not. Natural resources have played a fundamental role in the growth of several industrialized economies, including Germany and the United Kingdom, where coal and iron ore deposits were a precondition for the Industrial Revolution. The United States was the world’s leading mineral economy from the mid-nineteenth to the mid-twentieth century and in the same period became the world’s leader in manufacturing (van der Ploeg 2011). More recently, countries such as Botswana, Chile, and Norway have used abundant oil and mineral resources as the foundation for economic growth. However, in many other countries, resource extraction appears to have undermined governance, fed corruption and capital flight, and increased inequality. Required: (a) Discuss the main challenges posed by resource revenues; and (b) Discuss the special fiscal institutions and mechanisms that some resource rich countries should put in place as part of their fiscal frameworks to help fiscal management
Some resource-rich countries have succeeded in converting resource wealth into longterm and equitable economic development, while many others have not. Natural
resources have played a fundamental role in the growth of several industrialized
economies, including Germany and the United Kingdom, where coal and iron ore deposits
were a precondition for the Industrial Revolution. The United States was the world’s
leading mineral economy from the mid-nineteenth to the mid-twentieth century and in the
same period became the world’s leader in manufacturing (van der Ploeg 2011). More
recently, countries such as Botswana, Chile, and Norway have used abundant oil and
mineral resources as the foundation for
countries, resource extraction appears to have undermined governance, fed corruption
and capital flight, and increased inequality.
Required:
(a) Discuss the main challenges posed by resource revenues; and
(b) Discuss the special fiscal institutions and mechanisms that some resource rich
countries should put in place as part of their fiscal frameworks to help fiscal
management
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