Oil-to-Cash: Fighting the Resource Curse through Cash Transfers

The resource curse is well known. Countries rich in extractable natural resources, especially oil, often suffer from high poverty, frequent conflict, crummy governance, and endemic corruption. Current policy prescriptions for countries hoping to evade the curse often fall short, partly because they do not address the internal political economy effects of the massive unearned income—the so-called “rents”—generated by natural resource extraction. When governments can survive on natural resource rents, they do not need to tax their citizens. In turn, citizens do not expect or demand public services, clean government, or even basic accountability.

Oil-to-Cash Paper Series

Summary Paper

Oil-to-Cash Proposal

Thematic Studies:

Case Studies:

Ghana
Uganda
Iraq
Niger Delta
Equatorial Guinea
Sierra Leone (forthcoming)
Venezuela (forthcoming)

Case Studies from Revenue Watch:

Bolivia (forthcoming)
Timor-Leste (forthcoming)
Alaska (forthcoming)

CGD is expanding work on one policy option that may address the root of the resource curse and help to foster a social contract in resource-rich countries: direct distribution of revenues. Under this proposal, a government would transfer some or all of the revenue from natural resource extraction to citizens in a universal, transparent, and regular payment. Having put this money in the hands of its citizens, the state would treat it like normal income and tax it accordingly—thus forcing the state to collect taxes and fueling public demand for the government to be transparent and accountable in its management of natural resource revenues and in the delivery of public services.

CGD has a long history of work on the resource curse, and has been exploring the idea of direct distribution. Senior fellow Alan Gelb was one of the first authors to analyze the political economy effects of rents in his 1988 book, Oil Windfalls: Blessing or Curse? Senior fellow Arvind Subramanian has proposed direct distribution for Nigeria, and President Nancy Birdsall and Subramanian made a case for the policy in Iraq. Senior fellow Todd Moss in 2009 proposed that Ghana set up a system for direct distribution ahead of the oil revenues, and continues to oversee the initiative.

This new CGD initiative brings together Birdsall, Gelb, Moss, and Subramanian to explore the conceptual and practical questions of piloting direct distribution: Where might such a scheme make sense? What conditions might be necessary for success? Who might be the winners and losers? How would it be distributed? What new technologies could be employed?

Newest Popular Experts Publications Events Multimedia Selected Works

Implementing Oil-to-Cash—Todd Moss - Feb 6, 2012

When a poor country finds oil, bad things often get worse. Countries rich in extractable natural resources, especially oil, frequently suffer from crummy governance, high poverty, endemic corruption and conflict. Is it possible to beat this oil curse? My guest on the Wonkcast this week, Todd...
Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal - Working Paper 281 - Dec 20, 2011

To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues...
Implications of Ghana’s New Middle Income Status – Todd Moss - Nov 21, 2011

Ghana’s recent recalculation of its GDP led to an overnight $500 per capita jump, putting in motion unexpectedly rapid graduation from the International Development Association (IDA) and ultimately a new relationship with the World Bank. In this week’s Wonkcast, I speak with Todd Moss,...
Iraq’s Last Chance to Beat the Oil Curse: Lessons for the Arab Spring (Event Video) - Nov 7, 2011

The Arab Spring has grabbed the world’s attention, yet Iraq—the Arab country that not long ago was the very epicenter of American foreign policy—has almost entirely fallen off the front pages. While Iraq’s security has improved greatly, the country is still struggling to consolidate a...
Oil 2 Cash in Iraq: Johnny West - Sep 12, 2011

Johnny West is a man of many talents. An expert on oil, civil society, and governance in the Middle East who works as an advisor to the UNDP, he is fluent in Arabic, spent more than two decades in the Middle East as a journalist for Reuters, and has just published a highly readable book...
Iraq’s Last Window: Diffusing the Risks of a Petro-State - Working Paper 266 - Sep 12, 2011

Johnny West describes how an oil-dividend program could be structured by, for example, taking advantage of Iraq’s existing rationing system, ubiquitous mobile phone networks, and new biometric ID cards.
Oil for Uganda – or Ugandans? Can Cash Transfers Prevent the Resource Curse? - Working Paper 261 - Jul 26, 2011

Uganda has sought to finance its development agenda with oil since discovering the resource in its Albertine Lakes Basin in 2009. This paper considers alternative methods for distributing the rents from oil that mitigate some of the governance risks associated with natural resource revenues.
Cash at Your Fingertips: Biometric Technology for Transfers in Developing and Resource-Rich Countries - Working Paper 253 - Jun 2, 2011

This paper surveys the arguments for and against cash-transfer programs in resource-rich states, discusses some of the new biometric identification technologies, and reaches preliminary conclusions about their potentially very large benefits for developing countries.
Oil to Cash: Fighting the Resource Curse through Cash Transfers - Working Paper 237 - Jan 4, 2011

Todd Moss proposes that countries seeking to manage new natural resource wealth should consider distributing income directly to citizens as cash transfers. Beyond serving as a powerful and proven policy intervention, cash transfers may also mitigate the corrosive effect natural resource revenue...
Giving Money Away? The Politics of Direct Distribution in Resource-Rich States - Working Paper 231 - Nov 5, 2010

In this paper Gillies discusses the political feasibility and political implications of cash transfers in the specific context of resource-rich states.

Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal - Working Paper 281 - Dec 20, 2011

To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues...
Oil to Cash: Fighting the Resource Curse through Cash Transfers - Working Paper 237 - Jan 4, 2011

Todd Moss proposes that countries seeking to manage new natural resource wealth should consider distributing income directly to citizens as cash transfers. Beyond serving as a powerful and proven policy intervention, cash transfers may also mitigate the corrosive effect natural resource revenue...
Saving Ghana from Its Oil: The Case for Direct Cash Distribution - Working Paper 186 - Oct 19, 2009

CGD vice president and senior fellow Todd Moss and reasearch assistant Lauren Young propose direct cash distribution of Ghana's oil profits to help the country avoid the natural resource curse. One positive effect of the plan would be to strenghten democratic pressure on the government to be good...
Cash at Your Fingertips: Biometric Technology for Transfers in Developing and Resource-Rich Countries - Working Paper 253 - Jun 2, 2011

This paper surveys the arguments for and against cash-transfer programs in resource-rich states, discusses some of the new biometric identification technologies, and reaches preliminary conclusions about their potentially very large benefits for developing countries.
Oil for Uganda – or Ugandans? Can Cash Transfers Prevent the Resource Curse? - Working Paper 261 - Jul 26, 2011

Uganda has sought to finance its development agenda with oil since discovering the resource in its Albertine Lakes Basin in 2009. This paper considers alternative methods for distributing the rents from oil that mitigate some of the governance risks associated with natural resource revenues.
Iraq’s Last Window: Diffusing the Risks of a Petro-State - Working Paper 266 - Sep 12, 2011

Johnny West describes how an oil-dividend program could be structured by, for example, taking advantage of Iraq’s existing rationing system, ubiquitous mobile phone networks, and new biometric ID cards.
Giving Money Away? The Politics of Direct Distribution in Resource-Rich States - Working Paper 231 - Nov 5, 2010

In this paper Gillies discusses the political feasibility and political implications of cash transfers in the specific context of resource-rich states.
How Should Oil Exporters Spend Their Rents? - Working Paper 221 - Aug 10, 2010

This paper argues for approaches that increase public understanding of the need for prudent spending of oil revenues in booms, and for comprehensive consideration of a range of options for using rents. Drawing on the experience of a few successful countries, it points to a number of common factors...
An Idea to Avoid the Oil Curse: Direct Cash Distribution - Oct 19, 2009

CGD vice president and senior fellow Todd Moss explains the benefits to democracy and development of direct cash disbursement of Ghana's forthcoming oil revenue.
Iraq’s Last Chance to Beat the Oil Curse: Lessons for the Arab Spring (Event Video) - Nov 7, 2011

The Arab Spring has grabbed the world’s attention, yet Iraq—the Arab country that not long ago was the very epicenter of American foreign policy—has almost entirely fallen off the front pages. While Iraq’s security has improved greatly, the country is still struggling to consolidate a...

Nancy Birdsall, President
An internationally recognized expert on the impact of rich-country policies on poor people in developing countries, Nancy Birdsall is the author, co-author, or editor of more than a dozen books and over 100 articles in scholarly journals and monographs, published in English and Spanish. She is the...
Alan Gelb, Senior Fellow
Alan’s recent research includes aid and development outcomes, the transition from planned to market economies, and the special development challenges of resource-rich countries. He was previously director of development policy at the World Bank and chief economist for the Bank’s Africa region.
Todd Moss, Vice President for Programs and Senior Fellow
Todd Moss works on U.S.-Africa relations and financial issues facing sub-Saharan Africa, including policies that affect private capital flows, natural resource management, debt, and aid. He oversees the Center’s fundraising efforts and relations with external partners.
Arvind Subramanian, Senior Fellow
Arvind Subramanian’s current work focuses on the economics of climate change and the ascendancy of China. His latest book is Eclipse: Living in the Shadow of China's Economic Dominance. He is a joint senior fellow at the Peterson Institute for International Economics.

Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal - Working Paper 281 - Dec 20, 2011

To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues...
Iraq’s Last Window: Diffusing the Risks of a Petro-State - Working Paper 266 - Sep 12, 2011

Johnny West describes how an oil-dividend program could be structured by, for example, taking advantage of Iraq’s existing rationing system, ubiquitous mobile phone networks, and new biometric ID cards.
Oil for Uganda – or Ugandans? Can Cash Transfers Prevent the Resource Curse? - Working Paper 261 - Jul 26, 2011

Uganda has sought to finance its development agenda with oil since discovering the resource in its Albertine Lakes Basin in 2009. This paper considers alternative methods for distributing the rents from oil that mitigate some of the governance risks associated with natural resource revenues.
Cash at Your Fingertips: Biometric Technology for Transfers in Developing and Resource-Rich Countries - Working Paper 253 - Jun 2, 2011

This paper surveys the arguments for and against cash-transfer programs in resource-rich states, discusses some of the new biometric identification technologies, and reaches preliminary conclusions about their potentially very large benefits for developing countries.
Oil to Cash: Fighting the Resource Curse through Cash Transfers - Working Paper 237 - Jan 4, 2011

Todd Moss proposes that countries seeking to manage new natural resource wealth should consider distributing income directly to citizens as cash transfers. Beyond serving as a powerful and proven policy intervention, cash transfers may also mitigate the corrosive effect natural resource revenue...
Giving Money Away? The Politics of Direct Distribution in Resource-Rich States - Working Paper 231 - Nov 5, 2010

In this paper Gillies discusses the political feasibility and political implications of cash transfers in the specific context of resource-rich states.
How Should Oil Exporters Spend Their Rents? - Working Paper 221 - Aug 10, 2010

This paper argues for approaches that increase public understanding of the need for prudent spending of oil revenues in booms, and for comprehensive consideration of a range of options for using rents. Drawing on the experience of a few successful countries, it points to a number of common factors...
An Idea to Avoid the Oil Curse: Direct Cash Distribution - Oct 19, 2009

CGD vice president and senior fellow Todd Moss explains the benefits to democracy and development of direct cash disbursement of Ghana's forthcoming oil revenue.
Saving Ghana from Its Oil: The Case for Direct Cash Distribution - Working Paper 186 - Oct 19, 2009

CGD vice president and senior fellow Todd Moss and reasearch assistant Lauren Young propose direct cash distribution of Ghana's oil profits to help the country avoid the natural resource curse. One positive effect of the plan would be to strenghten democratic pressure on the government to be good...

There are no events related to this initiative.

Implementing Oil-to-Cash—Todd Moss - Feb 6, 2012
When a poor country finds oil, bad things often get worse. Countries rich in extractable natural resources, especially oil, frequently suffer from crummy governance, high poverty, endemic corruption and conflict. Is it possible to beat this oil curse? My guest on the Wonkcast this week, Todd...
Implications of Ghana’s New Middle Income Status – Todd Moss - Nov 21, 2011
Ghana’s recent recalculation of its GDP led to an overnight $500 per capita jump, putting in motion unexpectedly rapid graduation from the International Development Association (IDA) and ultimately a new relationship with the World Bank. In this week’s Wonkcast, I speak with Todd Moss,...
Iraq’s Last Chance to Beat the Oil Curse: Lessons for the Arab Spring (Event Video) - Nov 7, 2011
The Arab Spring has grabbed the world’s attention, yet Iraq—the Arab country that not long ago was the very epicenter of American foreign policy—has almost entirely fallen off the front pages. While Iraq’s security has improved greatly, the country is still struggling to consolidate a...
Oil 2 Cash in Iraq: Johnny West - Sep 12, 2011
Johnny West is a man of many talents. An expert on oil, civil society, and governance in the Middle East who works as an advisor to the UNDP, he is fluent in Arabic, spent more than two decades in the Middle East as a journalist for Reuters, and has just published a highly readable book...
Can Oil Money Be Spent Well? Alan Gelb on Resource Revenues and Development. - Sep 14, 2010
Many developing countries have found that large deposits of oil or other natural resources are more a curse than a blessing. My guest on this week's Wonkcast is Alan Gelb, a senior fellow at the Center for Global Development. Together with co-author Sina Grassman, Alan has written a paper that...
The Gulf Gusher & Africa’s Offshore Oil Boom: Todd Moss and Vijaya Ramachandran - Jun 22, 2010
As the BP well in the Gulf of Mexico continues to spew thousands of barrels of oil each day, media attention has been focused on the toll on nearby economies and ecosystems and on the U.S. political response. On this edition of the Global Prosperity Wonkcast, we look beyond the Gulf of Mexico to...
Ghana’s Oil: Black Gold or Fools Gold? (podcast) - Oct 16, 2009
In CGD’s first Global Prosperity Wonkcast I interview senior fellow Todd Moss on his innovative proposal for managing Ghana’s anticipated $1 billion per year oil windfall: money to the people. Subscribe to the podcast if you have iTunes; read Moss’s executive memo to Ghana’s President John...