Natural resources and 'gradual' reform in Uzbekistan and Turkmenistan

Among low‐income transition reformers, natural resource rents are an important initial condition that helps explain choice of reform strategy. Resource‐rich Uzbekistan and Turkmenistan and resource‐poor China and Vietnam all claim to pursue gradual reform, but their strategies differ. In China and Vietnam, low resource rents have nurtured developmental political conditions and encouraged efficient resource use, which initially promoted agriculture as a dynamic market sector, capable of absorbing labour from the lagging state sector. In contrast, the scale and ease of natural resource rent extraction in the Central Asian countries has consolidated authoritarian governments that postpone reform. Despite high energy rents, Uzbekistan and Turkmenistan still extract agricultural rents in ways that repress farm incentives, perpetuate environmental degradation and liquidate irrigation assets. Uzbekistan uses its rents to subsidize a manufacturing sector, that is neither dynamic nor competitive. As its dynamic sector, Turkmenistan promotes natural gas exports that depend on volatile markets. Resource‐driven development models suggest that reform is required in both countries to avert a growth collapse. Turkmenistan's large energy rent‐stream may postpone a collapse for some years, but Uzbekistan's position is already precarious: it has run down its rural infrastructure and accumulated sizeable foreign debts and will require external assistance to recover from a growth collapse. Such assistance should be made conditional on accelerated economic and political reform.     

Resource windfalls,investment, and long-term income

We develop a simple mechanism to explain why resource windfalls are likely to lower income levels in the long run. Most mineral-producing countries, in particular, fail to maintain incentives for savings and investment after positive resource shocks. Our analysis focuses on this savings–investment transmission channel through which resource rents affect welfare, and develops an OverLapping-Generations (OLG) model with features from endogenous growth theory to study the mechanism. In this model, savings adjust downwards to income from natural resources, investments adjust to savings, and subsequently the level of overall productivity falls. Resource affluence has two counteracting effects on income. In the short term, resource wealth augments income, but in the long-term, it decreases income through a crowding-out effect on knowledge creation.     

Corruption in natural resource management: Implications for policy makers

Corruption is the main reason why resource-rich countries perform badly in economic terms. Corruption in resource-rich countries takes two main forms, rent-seeking and patronage. Resource rents induce rent-seeking as individuals compete for a share of the rents rather than use their time and skills more productively. And resource revenues induce patronage as governments pay off supporters to stay in power, resulting in reduced accountability and an inferior allocation of public funds. This paper systematically reviews the literature on natural resources and corruption, and outlines the main policy implications for donors and domestic policy makers. A main conclusion is that priority should be given to policies that address rent-seeking and patronage. In other words, policy in resource-rich countries should be less about macro-economic management and more about institutions to prevent rent-seeking and patronage, and about giving the right incentives to players in the resource sector. Moreover, all policies need to take into account their impact on rent-seeking and patronage, and some current policies may actually be harmful in this respect.     

How does economic complexity influence environmental degradation? New insights from African countries

This paper seeks to investigate the effect of economic complexity on environmental degradation in 20 selected African countries over the period 1991–2014. The Feasible Generalized Least Square (FGLS), and Driscoll-Kraay estimators (DK) are used to capture the objectives of the study. The results suggest that economic complexity and economic growth enhance environmental degradation. Also, natural resources rents and globalization improve environmental quality. Furthermore, the findings reject the U-shaped relationship between economic complexity and environmental degradation. In addition, the Dumitrescu-Hurlin panel causality test shows a bidirectional causal relation between economic complexity and environmental degradation. Taking into account the ecological deficit or ecological reserve status of country, it is shown that while the natural resource rents reduce environmental degradation in ecological reserve countries, they increase environmental degradation in ecological deficit countries. The results are robust when an alternative measure of economic complexity is used. Based on these findings, the paper suggests that the governments of African countries should take into account economic complexity when designing their environmental protection policies.     

Natural resource dependence and the accumulation of physical and human capital in Latin America

In a simultaneous model of human and physical capital accumulation for 17 Latin American countries from 1975 to 2004, we show that overall resource dependence has no significant direct effect on physical and human capital. When disaggregating the natural resource variable into sub-categories, we find that petroleum export dependence has a significant positive direct effect on physical capital, but a significant negative direct effect on human capital. Agricultural export dependence shows a significant negative direct effect on physical capital. Petroleum exports have a long run positive effect on physical capital but a negative long run effect on human capital. Agricultural exports have a negative long run effect on physical and human capital.     

Toward sustainable use of natural resources: Nexus between resource rents,affluence, energy intensity and carbon emissions in developing and transition economies

Sustainable use of natural resources would entail ensuring that derived economic benefits today do not undermine the welfare of generations to come. On this basis, this study examines the nexus between natural resource rents and carbon dioxide (CO₂) emissions disaggregated into production and consumption-based (i.e., trade-adjusted) CO₂ emissions for a selected panel of 45 developing and transition economies over the period 1995–2017. The empirical model also incorporates the impacts of population, affluence, and energy intensity. The results show that affluence increases production-based CO₂ emissions by 1.407%, with the EKC's predicted inverted U-shaped curve only explaining consumption-based CO₂ emissions. Economic reliance on natural resource rents and energy intensification contribute 0.022% and 0.766%, respectively, to CO₂ emissions embedded in territorial production inventories and 0.035% and 0.583%, respectively, to CO₂ emissions embedded in consumption inventories. The bootstrap non-causality test shows that historical data on each variable has significant predictive power for future CO₂ emissions from both sources. The historical information about natural resource rents has significant predictive power over the future levels of affluence and energy intensity. Clearly, the results show that the environmental impact of natural resource rents is stronger when CO₂ emissions are adjusted for trade and varies among the countries, with Bangladesh, Guinea, India, Malaysia, Mexico, Nigeria, Pakistan, Saudi Arabia, Vietnam, and Zimbabwe among the most affected countries. Overall, this study provides motivation for policies to keep the use of natural resources within sustainable limits.     

Transparency,consultation and conflict: Assessing the micro‐level risks surrounding the drive to develop Peru's Amazonian oil and gas resources

Since the 1990s, successive Governments in Peru have sought to expand the exploration and production of the country's oil and gas resources. This economic agenda poses significant opportunities and risks which are usually considered at the macro‐level and framed by debates regarding the so‐called “natural resource curse”. While risks such as “Dutch disease” are important to consider, a worrying set of short‐term issues surrounds the impacts of rapid changes brought on by oil and gas industrial development at the micro‐level, namely, those that affect local communities and the environment. In the case of Peru, this is especially relevant to the vast areas of ecologically sensitive and previously under‐developed Amazonia that are now under concession to oil and gas companies. Low levels of industry transparency combined with a lack of uniform free, prior and informed consent are exacerbating community‐level grievances, and the conflicts to which they can lead. As the oil and gas industry expands in the Peruvian Amazon, the risk of conflict is likely to prove far harder to minimize or ameliorate than are the challenges of managing industry revenues and the risk of currency appreciation most often associated with the natural resource curse.     

The resource curse

Countries that possess rich mineral deposits, it is widely assumed, are fortunate. Such deposits are assets, part of a country's natural capital. Mining is the key that converts dormant mineral wealth into schools, homes, ports, and other forms of capital that directly contribute to economic development. Over the past two decades, however, a more negative view of mining has emerged that questions the positive relationship between mineral extraction and economic development. The impetus for the alternative view came from empirical studies suggesting that countries where mining is important have not grown as rapidly as other countries. More recent studies have explored the possible reasons behind the disappointing performance of many mineral producing countries. While the central point of contention between the conventional and alternative views — namely, whether or not mining usually promotes economic development — remains unresolved, there is widespread agreement that rich mineral deposits provide developing countries with opportunities, which in some instances have been used wisely to promote development, and in other instances have been misused, hurting development. The consensus on this issue is important, for it means that one uniform policy toward all mining in the developing world is not desirable, despite the recent suggestions by some to the contrary. The appropriate public policy question is not should we or should we not promote mining in the developing countries, but rather where should we encourage it and how can we ensure that it contributes as much as possible to economic development and poverty alleviation.     

Green accounting and sustainability of the Peruvian metal mining sector

This paper estimates the true economic income of Peru’s metal mining sector for the period 1992–2006, using a model of green economic income based on Hamilton (2000). The total depletion of natural capital caused by metal mining is calculated by estimating, on the one hand, the depreciation of mining resources (using the Hotelling rent approach) and, on the other, the environmental degradation provoked by metal mining activities. The results show that the total loss of natural capital represents between 31% and 51% of the metal mining GDP and between 2% and 4.9% of Peru’s GDP. On the other hand, correcting the usual GDP measure produced by the traditional National Account System (NAS) for the total loss of natural capital caused by mining activities shows that the GDP traditional measure overestimated by 51–64% the true economic income generated by Peruvian's metal mining sector during the period 1992–2006. The importance of the generation, taxation, and disposition of mining economic rents for Peru’s sustainable development in the future is also discussed.     

Nature of property rights and motivation for blue growth: An empirical evidence from the fisheries industry

If unauthorized resource use is prevented, managing marine resources by allocating property rights may match economic and environmental conservation incentives. However, because of the developing exploitation of marine resources and accompanying pollution, species' living conditions in Europe's waters are changing more quickly than before. By considering the roles of fisheries productivity, intellectual property rights, intellectual capital rights, market size, governance, and economic growth from 1990 to 2022, this paper aims to investigate the dynamic effect of property rights factors on the sustainability of the fisheries industry in 27 European countries. At higher quantiles, the findings showed a significant positive association between governance and fisheries sustainability adopting a new method, the MMQR with fixed effects, the Method of Moments Quantile Regression. In addition, in EU27 nations, the impact of intellectual property rights was favorable and statistically significant from the first to ninth quantiles. The findings show that the EU14 developed nations have more excellent governance and intellectual capital rights than the EU13 developing countries, significantly benefiting fisheries sustainability. In the same way that market size and economic growth condense fisheries sustainability in EU14 developed and EU13 developing countries, it has been discovered that intellectual property rights do the same across all quantiles, supporting the growth hypothesis for fisheries-producing countries. The findings specifically show that the beneficial solid impact of intellectual property rights, market size, and economic development on the sustainability of fisheries is more significant in EU13 developing nations than in EU14 developed countries. These results provide policymakers with helpful information for promoting property rights aspects in EU14 and EU13 nations via effective green technologies in the fisheries sector to meet sustainable development objectives.     

Making private capital flows to developing countries environmentally sustainable: the policy challenge

The 1990s have seen a dramatic shift in capital flows into the developing world. Despite pledges made at the 1992 UNCED Conference in Rio de Janeiro, official development aid has declined in real terms. At the same time, private direct investment and lending to developing countries has risen from $44 billion at the beginning of this decade to $256 billion in 1997, supporting a record economic boom in the developing world. Developing countries have become significant sources of capital, as well as hosts to transnational corporations.
Cases illustrating the negative impacts of large investments under environmentally lax conditions are contrasted with the rise of environmental screening of funds by commercial entities, such as banks, insurance companies and investors. Although the new inflows of foreign capital may have brought the spread of Western consumerism, this new economic potential has also contributed cutting-edge environmental technologies, that may assist developing countries leapfrog over the most damaging phases of industrialization.
The article discusses the role of public lending agencies, international organizations and NGOs in setting the investment climate that determines the effects of foreign capital on the natural resources base, communities and the environment. Various mechanisms for defining environmental standards are discussed, and a more active role for governments and the United Nations is advocated.     

Pollution Control Policies and Natural Resource Dynamics: A Theoretical Analysis

Policies for the management of natural resources and the resources themselves interact to form complex systems. In this paper, we present a highly simplified model that can be used to study the general features of those systems. The model has three state variables, the abundance of the resource, environmental pollution, and the capital devoted to pollution control. We analyse it graphically using the singular perturbation approach. Two modes of behavior are possible; stationary and cyclic. When the abundance of the resources varies cyclically, the length of the period of resource scarcity depends on population size, economic activity, pollution per unit of output, and policy constraints. We distinguish between two classes of policies, one in which decision-makers base their investments in pollution control capital on the abundance of the resource, and another in which those decisions depend on the amount of pollution. We show that policies based on the observation of pollution are safer than those based on resource abundance, because in the latter case, small changes in policy variables can lead much more easily to a collapse of the resource. Increases in population size, even when accompanied by an equiproportional increase in the pollution control budget can lead to a change from stationary to cyclic behavior, especially where policies are based on resource abundance.     

Valuing natural resources and the implications for land and water management

New models of sustainable development stress the importance of the efficient management of resources, including labour, capital equipment and natural resources. Overuse of the resource base today will lead to shortages tomorrow; yet it can be a difficult task persuading politicians and planners in developing countries of the importance of resource management. This paper suggests methodologies for doing so and argues the urgency of the task.     

Do natural resources and economic components exhibit differential quantile environmental effects?

In view of the resource curse assumption, the environmental aspects of resource utilization are arguably posing more dangers to human existence. In the Middle East and North Africa (MENA) region, the region that holds more than 60% and 50% of the world's oil and gas reserves respectively, the need to examine the contribution of natural resources to environmental quality among other factors cannot be overemphasized. By leveraging on the novelty of observing the differential impact of natural resources and other economic components such as income and primary energy utilizations across the quantiles of carbon emission, this study implements the quantile regression approach alongside other relevant techniques to analyze data between 1990 and 2018 for selected countries in the MENA region including Saudi Arabia, Iran, Kuwait, Qatar, Algeria, Morocco, Oman, Egypt, and the United Arab Emirates (UAE). The result posits that natural resource utilization generally hampers the environment across the quantiles. However, this negative effect decreases until the 50th quantile before starting to rise again toward the upper quantiles. Additionally, primary energy utilization and globalization respectively worsen and improve environmental quantile, especially toward the upper quantiles while income affirms the inverted U-shaped hypothesis across the entire quantiles. Moreover, there is a statistically significant one-way directional causality from natural resources, economic expansion, primary energy use, and globalization to carbon emission levels. Hence, the study offers environmentally friendly resource utilization policies to the MENA economies and other resource-rich states by extension.     

Towards sustainable community‐based natural resource management in the indigenous Meqmegi community in Taiwan: Rethinking impacts of local participation

This paper examines approaches for local resident participation in community‐based natural resource management (CBNRM); focusing particularly on the potential impacts that local participation imposes on the natural environment. This study used qualitative methods to collect data, and selected Meqmegi, an indigenous community in Taiwan, as a case study. The findings indicate that many opportunities can be created that stimulate a community to participate in natural resource management; moreover, residents are prone to use their own ways to participate. Therefore, although local participation is praised for its people‐oriented way of natural resource management, impacts from the participation process will ultimately be imposed on the environment. We suggest that more consideration be given to the environmental conditions during the process of local participation via CBNRM to make sure that impacts on the environment are positive, and lead to a truly sustainable future.     

People matter: The importance of social capital in the co-management of natural resources

Co‐management involves the shared administration of natural resources by two or more parties. This study examines the role of social capital in the process of developing co‐management in three river corridors in Canada. Qualitative analysis reveals that social capital acts as a catalyst helping groups to progress through the stages of the co‐management process. Forms of social capital (bridging and bonding) are identified that advance and/or inhibit the development of co‐management. The article reaffirms the need to expand the institutional basis for natural resource management and provides empirical evidence that social capital plays a fundamental role in developing co‐management. In conclusion, the article suggests that resource agencies need to recognize the value of social capital and the necessity for government representatives to be informed of and practiced in these skills, if they are to engage meaningfully with the civilian population.     

Socio-economic changes and sacred groves in South India: Protecting a community-based resource management institution

The sacred groves along the forest belts of south India, which were traditionally managed by village communities, are gradually disappearing. This study conducts an analysis of how this community‐based resource management institution has evolved over time and what socio‐economic factors have caused its gradual disintegration. Commercial agriculture, changing demographics and weak property‐rights systems are found to be some of the enabling factors. While the grass‐roots enthusiasm to save the sacred groves is still alive, government action is needed to strengthen the traditional village organizations, which are still perhaps in the best position to manage local resources. Several economic and financial incentive mechanisms at the local level that might lead to more efficient and equitable resource use outcomes are suggested.     

Assessment of risk in a minerals industry: Canadian nickel

The level of rents attributable to natural resource producers depends on the risk faced by those producers. This paper argues that estimates of risk in mining should control for characteristics of firms such as diversification and debt financing. The capital asset pricing model is applied to securities of three Canadian nickel mining firms over the period 1961–1974. It is concluded that the level of risk was not unusually high.     

Change in vegetation cover in East Timor, 1989–1999

Forest resources play a key role and provide many basic needs to communities in developing economies. To assess the patterns of vegetation cover change, as a corollary of resource utilization, satellite imagery, ground truth data, and image processing techniques can be useful. This article is concerned with identifying change in major vegetation types in East Timor between 1989 and 1999, using Landsat Thematic Mapper data. The results highlight a significant level of deforestation and decline in foliage cover. All major vegetation cover types declined from 1989 to 1999, and there was a sizeable increase in degraded woodlands. This decline has had considerable impact on the livelihoods of rural and urban communities. Causes for these changes include: economic exploitation of abundant resources; and implications of transmigration policies implemented during Indonesian rule, resulting in increased competition for land and woodland resources. As the new nation of Timor‐Leste establishes itself, it must consider its current stock and distribution of natural capital to ensure that development efforts are geared towards sustainable outcomes. Without the knowledge of historical patterns of resource consumption, development efforts may, unwittingly, lead to continuing decline in forest resources.     

Myanmar under reform: Emerging pressures on water,energy and food security

Myanmar's water‐related sectors are subject to intensive changes, as the country's abundant land and water resources provide substantial scope for development. Recent steps towards economic reform in Myanmar have led to a surge of foreign investment directed towards intensified natural resource extraction. Both the agricultural and the energy sector are increasingly affected by foreign investments that will impact the status of water, energy and food security in the country. With these on‐going developments, Myanmar's future is largely dependent on how its natural resources are managed and how the benefits from the resource extraction are shared. With various institutional changes and new actors welcomed to the sectors, existing livelihoods and ecosystems dependent on the land and water resources are to face increasing competition for the shared resources, while lacking secured access to them. There are increasing concerns that this sectoral development is occurring at the expense of environmental and social sustainability. As one way to tackle these challenges, the water‐energy‐food nexus approach could help in finding synergies and co‐benefits across sectors by addressing the imbalances along the nexus and externalities derived from the on‐going intensification.