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Fiscal dependence on extractive revenues: Measurement and concepts

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  • McNabb, Kyle

Abstract

This paper proposes a new measure of Fiscal Dependence on Extractive revenues: FDE. The FDE estimates, simply, the extent to which extractive-producing countries can fund day-to-day government spending with non-extractive revenues. By focusing specifically on the fiscal aspect of dependency, - and tying the earning of extractive revenues to government expenditure needs - the FDE allows us to better understand those contexts where countries are dependent on the revenue from extractive industries to fund the day-to-day spending of government, versus those where extractive revenues are more likely to represent a boon, or a stream that can be invested in the future wellbeing of a country's citizens. Whilst fairly strongly correlated with existing measures of extractive dependence, the FDE ultimately tells a different story regarding countries' fiscal positions and resulting vulnerability to shocks to revenue or government spending. Amongst extractive-producing countries, fiscal dependency is correlated with lower growth, human development and levels of democracy, on average.

Suggested Citation

  • McNabb, Kyle, 2023. "Fiscal dependence on extractive revenues: Measurement and concepts," Resources Policy, Elsevier, vol. 86(PA).
    • Handle: RePEc:eee:jrpoli:v:86:y:2023:i:pa:s0301420723008401
    DOI: 10.1016/j.resourpol.2023.104129
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    References listed on IDEAS

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    More about this item

    Keywords

    Extractives; Government revenues; Taxation; Resource curse;
    All these keywords.

    JEL classification:

    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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