Oil to Cash: An Idea to Fight the Resource Curse

Tina Rosenberg has a terrific piece in the New York Times on cash transfer programs in Brazil. She concludes:

For skeptics who believe that social programs never work in poor countries and that most of what’s spent on them gets stolen, conditional cash transfer programs offer a convincing rebuttal.  Here are programs that help the people who most need help, and do so with very little waste, corruption or political interference.

That’s one reason why cash transfers are increasingly popular not only in places like Brazil and Mexico, but also Mongolia, Malawi, and other poor countries.Just as cash transfers are gaining recognition, there are also a bunch of countries facing the very real problem of what to do with newly-found oil wealth.  Ghana began pumping oil last month, Cambodia and Uganda will start this year, and the likes of Liberia, Sierra Leone, and Papua New Guinea may be next.  Given the problems so many countries have faced managing oil (Nigeria has earned some $400 billion from oil but its population has gotten poorer), so many of these new producers are fragile states, and the very limited ideas we have so far (sequester funds, promote transparency, cross your fingers) isn’t it perhaps time to try something fresh?Why not just give the money to the people?  Why not ride the wave of cash transfers to break the resource curse?  Here is my short working paper that explains how it all might work and why.  For those of you who can already think of why this idea cannot work in your country, I try to address those objections too.  (If you have ones that I haven’t answered, please let me know.)This paper is part of our Oil to Cash Initiative.  We already have papers out on Ghana, the politics of cash transfers, with more to come soon.