To investigate the effects on Papua New Guinea’s economy of substantial liquified natural gas revenues arriving in 2015, we employ a model to examine the macroeconomic effects of a scalingup of natural resource windfall revenues and the implications for a variety of policy responses. The model is a multi-sector dynamic stochastic general equilibrium (DSGE) model, and features components that allow for a detailed study of the effects of both fiscal and monetary policy in response to a positive shock to the mineral resource value of a country. The model contains tradable, non-tradable, and mining sectors, as well as an independent central bank and fiscal authority. We calibrate the model to the current economy of Papua New Guinea and run a suite of policy simulations. We find that macroeconomic effects from a resource boom typically associated with Dutch Disease effects such as a real appreciation and a fall in tradable sector production stem largely from the non-tradable component of government spending. The central bank can offset the real appreciation, but not without crowding out the private sector. A sovereign wealth fund (SWF), combined with a smooth capital spending path, entails the best means of dealing with macroeconomic volatility and maintaining a stable fiscal regime.

Public sector balance sheets provide the most comprehensive picture of public wealth. They bring together all the accumulated assets and liabilities that the government controls, including public corporations, natural resources, and pension liabilities. They thus account for the entirety of what the state owns and owes, offering a broader fiscal picture beyond debt and deficits. Most governments do not provide such transparency, thereby avoiding the additional scrutiny it brings. Better balance sheet management enables countries to increase revenues, reduce risks, and improve fiscal policymaking. There is some empirical evidence that financial markets are increasingly paying attention to the entire government balance sheet and that strong balance sheets enhance economic resilience. This issue of the Fiscal Monitor presents a new database that shows comprehensive estimates of public sector assets and liabilities for a broad sample of 31 countries, covering 61 percent of the global economy, and provides tools to analyze and manage public wealth. Estimates of public wealth reveal the full scale of public assets and liabilities. Assets are worth US$101 trillion or 219 percent of GDP in the sample. This includes 120 percent of GDP in public corporation assets. Also included are natural resources that average 110 percent of GDP among the large natural-resource-producing countries. Recognizing these assets does not negate the vulnerabilities associated with the standard measure of general government public debt, comprising 94 percent of GDP for these countries. This is only half of total public sector liabilities of 198 percent of GDP, which also includes 46 percent of GDP in already accrued pension liabilities. Once governments understand the size and nature of public assets, they can start managing them more effectively. Potential gains from better asset management are considerable. Revenue gains from nonfinancial public corporations and government financial assets alone could be as high as 3 percent of GDP a year, equivalent to annual corporate tax collections across advanced economies. In addition, considerable gains could be realized from government nonfinancial assets. Public assets are a significant resource, and how governments use and report on them matters, not just for financial reasons, but also in terms of improving service delivery and preventing the misuse of resources that often results from a lack of transparency.

Economic Consequences of Large Extraction Declines: Lessons for the Green Transition

This paper reviews recent literature on the macroeconomic effects of environmental taxes. It attempts to delineate the conditions under which a cleaner environment is compatible with attaining macroeconomic objectives, such as more employment and economic growth. The analysis reveals that an environmentally motivated fiscal reform—using the revenues from environmental taxes to cut labor taxes—may yield employment and environmental dividends if the tax burden can be shifted to agents outside the labor market, such as capitalists, transfer recipients, and foreigners. A cleaner environment and a higher rate of economic growth go hand in hand if the environment is considered an important public input into production.

Topical Issues of Rational Use of Natural Resources 2019 contains the contributions presented at the XV International Forum-Contest of Students and Young Researchers under the auspices of UNESCO (St. Petersburg Mining University, Russia, 13-17 May 2019). The Forum-Contest is a great opportunity for young researchers to present their work to the academics involved or interested the area of extraction and processing of natural resources. The topics of the book include: Volume 1 • Geotechnologies of resource extraction: current challenges and prospects • Solid minerals mining technologies. Industrial and labour safety • Underground space development technologies. Rock mechanics and control of rock conditions • Cutting edge technologies of geological mapping, search and prospecting of mineral deposits • Digital and energy saving technologies in mineral resource complex Volume 2 • Breakthrough technologies of integrated processing of mineral hydrocarbon and technogenic raw materials with further production of new generation materials • The latest management and financing solutions for the development of mineral resources sector • Environment protection and sustainable nature management • New approaches to resolving hydrocarbon sector-specific issues Topical Issues of Rational Use of Natural Resources 2019 collects the best reports presented at the Forum-Contest, and is of interest to academics and professionals involved in the extraction and processing of natural resources.

The economy is embedded in, and dependent on, nature. Yet economic activity is degrading nature at an unprecedented pace. Interacting with climate change, nature loss and transformation generates significant threats to the global economy and financial system. However, work on the implications of nature-related risks for macroeconomic and financial sector policies remains at an early stage. This note seeks to contribute to this emerging policy space in three main ways: (i) it proposes a conceptual framework for understanding nature-related risks by mapping out macroeconomic transmission channels, emphasizing their impact on the economy and financial systems through “double materiality;” (ii) it conducts empirical analysis, finding that nearly 38 percent of bank loans of the 100 largest global banks are to harmful subsidies-dependent sectors and 44 percent are exposed to conservation areas under the Global Biodiversity Framework, and that industries most exposed to nature degradation are not well prepared to manage these risks; and (iii) it discusses takeaways for macroeconomic and financial sector policies and frameworks.

This book is a sequel to the World Bank's World Development Report 2013: Jobs. The central message of that report was that job creation is at the heart of development. Jobs raise living standards and lift people out of poverty, they contribute to gains in aggregate productivity, and they may even foster social cohesion. In doing so, jobs may have spillovers beyond the private returns they offer to those who hold them. Poverty reduction is arguably a public good, making everybody better off; higher productivity spreads across co-workers, clusters, and cities; and social cohesion improves the outcomes of collective decision-making. But which jobs make the greatest contribution to development and what policies can facilitate the creation of more of these jobs? There is no universal answer - it depends on the country's level of development, demography, natural endowments, and institutions. This volume explores the diversity of jobs challenges and solutions through case studies of seven developing countries. These countries, drawn from four continents, represent seven different contexts - a small island nation (St. Lucia), a resource-rich country (Papua New Guinea), agrarian (Mozambique), urbanizing (Bangladesh), and formalizing (Mexico) economies, as well as young (Tunisia) and aging (Ukraine) populations. Using methods drawn from several branches of economics and the social sciences more broadly and analyzing a wide range of data, the authors show the different ways in which jobs have contributed to social and economic development in the countries they have studied and how they can contribute in the future. The policy priorities vary accordingly. They often extend well beyond traditional labor market instruments to include policy areas not typically considered in national growth strategies.

Since the 1960s the per capita incomes of the resource-poor countries have grown significantly faster than those of the resource-abundant countries. In fact, in recent years economic growth has been inversely proportional to the share of natural resource rents in GDP, so that the small mineral-driven economies have performed least well and the oil-driven economies worst of all. Yet the mineral-driven resource-rich economies have high growth potential because the mineral exports boost their capacity to invest and to import. "Resource Abundance and Economic Development" explains the disappointing performance of resource-abundant countries by extending the growth accounting framework to include natural and social capital. The resulting synthesis identifies two contrasting development trajectories: the competitive industrialization of the resource-poor countries and the staple trap of many resource-abundant countries. The resource-poor countries are less prone to policy failure than the resource-abundant countries because social pressures force the political state to align its interests with the majority poor and follow relatively prudent policies. Resource-abundant countries are more likely to engender political states in which vested interests vie to capture resource surpluses (rents) at the expense of policy coherence. A longer dependence on primary product exports also delays industrialization, heightens income inequality, and retards skill accumulation. Fears of 'Dutch disease' encourage efforts to force industrialization through trade policy to protect infant industry. The resulting slow-maturing manufacturing sector demands transfers from the primary sector that outstrip the natural resource rents and sap the competitiveness of the economy. The chapters in this collection draw upon historical analysis and models to show that a growth collapse is not the inevitable outcome of resource abundance and that policy counts. Malaysia, a rare example of successful resource-abundant development, is contrasted with Ghana, Bolivia, Saudi Arabia, Mexico, and Argentina, which all experienced a growth collapse. The book also explores policies for reviving collapsed economies with reference to Costa Rica, South Africa, Russia and Central Asia. It demonstrates the importance of initial conditions to successful economic reform.

Publisher description

This timely Handbook draws together insightful analyses of natural resource management challenges and solutions in the face of sustainable development targets and a changing global climate.