IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v71y2014icp169-179.html
   My bibliography  Save this article

Resource rent taxes and sustainable development: A Mongolian case study

Author

Listed:
  • Thampapillai, Dodo J.
  • Hansen, Jan
  • Bolat, Aigerim

Abstract

Economies rich in mineral resources, need to evaluate the merits of investing rents earned from resource extraction in other income generating activities to sustain the flow of income. It is hence important to estimate and assess the potential uses of the resource rent tax (RRT). This paper illustrates how the reinvestment of the RRT and other government revenue from mining can reduce the depreciation of the mine. This illustration is made with reference to a coal deposit in the Tavan-Tolgoi region of Mongolia. The paper also illustrates impact of mining on the macroeconomic performance of Mongolia. Standard macroeconomic frameworks that ignore the depreciation of mineral assets overstate economic performance. The paper also reviews the political issues and constraints that surround the implementation of the RRT. One option canvassed here is the granting of qualified custodial rights of the RRT to the mining firm. Such qualified rights are pertinent given that the RRT is legally the income owed to the State and investments in ventures such as human capital development can yield returns as high as 10% per annum. This study illustrates that even an investment option yielding an annual 3% return can make a significant difference.

Suggested Citation

  • Thampapillai, Dodo J. & Hansen, Jan & Bolat, Aigerim, 2014. "Resource rent taxes and sustainable development: A Mongolian case study," Energy Policy, Elsevier, vol. 71(C), pages 169-179.
    • Handle: RePEc:eee:enepol:v:71:y:2014:i:c:p:169-179
    DOI: 10.1016/j.enpol.2014.04.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421514002225
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2014.04.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thampapillai, Dodo J & Uhlin, Hans-Erik, 1997. "Environmental Capital and Sustainable Income: Basic Concepts and Empirical Tests," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 21(3), pages 379-394, May.
    2. Kubiszewski, Ida & Costanza, Robert & Franco, Carol & Lawn, Philip & Talberth, John & Jackson, Tim & Aylmer, Camille, 2013. "Beyond GDP: Measuring and achieving global genuine progress," Ecological Economics, Elsevier, vol. 93(C), pages 57-68.
    3. John Hartwick, 1977. "Intergenerational Equity and the Investment of Rents from Exhaustible Resources in a Two Sector Model," Working Paper 281, Economics Department, Queen's University.
    4. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    5. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    6. Thampapillai, Dodo J., 2011. "Value of sensitive in-situ environmental assets in energy resource extraction," Energy Policy, Elsevier, vol. 39(12), pages 7695-7701.
    7. Thampapillai, Jesuthason (Dodo) & Sinden, Jack A., 2013. "Environmental Economics: Concepts, Methods and Policies," OUP Catalogue, Oxford University Press, edition 2, number 9780195519556.
    8. Romer, Paul M., 1990. "Human capital and growth: Theory and evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 32(1), pages 251-286, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lin, Boqiang & Jia, Zhijie, 2019. "How does tax system on energy industries affect energy demand, CO2 emissions, and economy in China?," Energy Economics, Elsevier, vol. 84(C).
    2. Leiva, Benjamin, 2020. "Natural resource rent allocation, government quality, and concession design: The case of copper in Chile," Resources Policy, Elsevier, vol. 68(C).
    3. Ge, Jianping & Lei, Yalin, 2018. "Resource tax on rare earths in China: Policy evolution and market responses," Resources Policy, Elsevier, vol. 59(C), pages 291-297.
    4. Ma, Qiang & Li, Sa & Aslam, Misbah & Ali, Naveed & Alamri, Ahmad Mohammed, 2023. "Extraction of natural resources and sustainable renewable energy: COP26 target in the context of financial inclusion," Resources Policy, Elsevier, vol. 82(C).
    5. Tii N. Nchofoung & Nathanael Ojong, 2023. "Natural resources, renewable energy, and governance: A path towards sustainable development," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1553-1569, June.
    6. Ahmadov, Anar Kamil & van der Borg, Charlotte, 2019. "Do natural resources impede renewable energy production in the EU? A mixed-methods analysis," Energy Policy, Elsevier, vol. 126(C), pages 361-369.
    7. Wang, Qiang & Cheng, Xinchen & Pata, Ugur Korkut & Li, Rongrong & Kartal, Mustafa Tevfik, 2024. "Intermediating effect of mineral resources on renewable energy amidst globalization, financial development, and technological progress: Evidence from globe based on income-groups," Resources Policy, Elsevier, vol. 90(C).
    8. Yang, Honglin & Wang, Lin & Tian, Lixin, 2015. "Evolution of competition in energy alternative pathway and the influence of energy policy on economic growth," Energy, Elsevier, vol. 88(C), pages 223-233.
    9. Dodo J. Thampapillai & Yvonne Jie Chen & Christopher Ivo Bacani & Omer Baris, 2016. "New Estimates of Factor Income Shares in Central Asian Economies," Economic Papers, The Economic Society of Australia, vol. 35(3), pages 282-291, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Issaka Dialga, 2017. "Changing the Africa's impoverishing economic model: Towards a rewarding sustainable specialization model with a new factor of production," Working Papers halshs-01500431, HAL.
    2. Ouoba, Youmanli, 2020. "Natural resources fund types and capital accumulation: A comparative analysis," Resources Policy, Elsevier, vol. 66(C).
    3. van Krevel, Charan, 2021. "Does natural capital depletion hamper sustainable development? Panel data evidence," Resources Policy, Elsevier, vol. 72(C).
    4. Elwasila Saeed Elamin Mohamed, 2020. "Resource Rents, Human Development and Economic Growth in Sudan," Economies, MDPI, vol. 8(4), pages 1-21, November.
    5. Ghamsi Deffo Salomon Leroy & Ajoumessi Houmpe Donal & Demgne Pouokam Véronique & Njoupouognigni Moussa Ledoux, 2021. "Effects of Natural Resource exploitation on CEMAC Countries Development: The Human Capital Channel," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 14(3), pages 60-71, December.
    6. Tobias Kronenberg, 2008. "Should We Worry About The Failure Of The Hotelling Rule?," Journal of Economic Surveys, Wiley Blackwell, vol. 22(4), pages 774-793, September.
    7. Zugravu-Soilita, Natalia & Kafrouni, Rajwane & Bouard, Séverine & Apithy, Leïla, 2021. "Do cultural capital and social capital matter for economic performance? An empirical investigation of tribal agriculture in New Caledonia," Ecological Economics, Elsevier, vol. 182(C).
    8. Degbedji, Dado Fabrice & Akpa, Armand Fréjuis & Chabossou, Augustin Foster & Osabohien, Romanus, 2024. "Institutional quality and green economic growth in West African economic and monetary union," Innovation and Green Development, Elsevier, vol. 3(1).
    9. Jeroen C.J.M. van den Bergh & Miklós Antal, 2014. "Evaluating Alternatives to GDP as Measures of Social Welfare and Progress. WWWforEurope Working Paper No. 56," WIFO Studies, WIFO, number 47188, March.
    10. Jason A. Hubbart & Hodjat Ghadimi, 2023. "Regional Wealth Data Acquisition and Modeling: Innovations Needed for Advancement in Sustainable Wealth in Energy-Rich Regions," Challenges, MDPI, vol. 14(4), pages 1-17, December.
    11. Khaoua, Nadji & Boumghar, Mohamed Yazid & Kerrouk, Mohamed Said, 2014. "L'ECODEVELOPPEMENT dans le cadre du Partenariat Euro-Méditerranéen : cas du territoire littoral d'ALGERIE et du MAROC [ECODEVELOPMENT in the light of Euro Mediterranean Partnership : Cases of coast," MPRA Paper 60128, University Library of Munich, Germany.
    12. Selim, Tarek, 2010. "Towards a New Energy and Environmental Policy for Egypt: Development of Clean Sources in an Emerging Economy," MPRA Paper 119500, University Library of Munich, Germany.
    13. Kwabena Asomanin Anaman & Felix Agyei-Sasu, 2014. "The Economic Value of Environmental Capital Inputs Used to Produce the Gross Domestic Product in Ghana, 1993 to 2012," Research in World Economy, Research in World Economy, Sciedu Press, vol. 5(2), pages 74-92, September.
    14. repec:zbw:rwidps:0030 is not listed on IDEAS
    15. Francisco Correa Restrepo, 2015. "Una revisión analítica sobre el papel de la tierra en la teoría económica de David Ricardo," Revista Facultad de Ciencias Económicas, Universidad Militar Nueva Granada, vol. 0(1), pages 103-114, June.
    16. Jeroen C. J. M. van den Bergh, 1999. "Materials, Capital, Direct/Indirect Substitution, and Mass Balance Production Functions," Land Economics, University of Wisconsin Press, vol. 75(4), pages 547-561.
    17. Seyhan, Demet & Weikard, Hans-Peter & van Ierland, Ekko, 2012. "An economic model of long-term phosphorus extraction and recycling," Resources, Conservation & Recycling, Elsevier, vol. 61(C), pages 103-108.
    18. Andrés, Antonio R. & Goel, Rajeev K., 2012. "Does software piracy affect economic growth? Evidence across countries," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 284-295.
    19. Burhan, Nik Ahmad Sufian & Mohamad, Mohd Rosli & Kurniawan, Yohan & Sidek, Abdul Halim, 2014. "National Intelligence, Basic Human Needs, and Their Effect on Economic Growth," MPRA Paper 77267, University Library of Munich, Germany.
    20. Åsa Johansson, 2016. "Public Finance, Economic Growth and Inequality: A Survey of the Evidence," OECD Economics Department Working Papers 1346, OECD Publishing.
    21. Mahsa Jahandideh, 2020. "Resource‐driven victory," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 877-898, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:71:y:2014:i:c:p:169-179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.