Todd Moss, Caroline Lambert, and Stephanie Majerowicz offer a well-argued explanation of how oil-to-cash transfers could help countries overcome the corruption, economic volatility, and lack of government accountability that too often plague countries with rich resources but weak institutions.
This brief is a summary of the book Oil to Cash: Fighting the Resource Curse through Cash Transfers (Washington, DC: Center for Global Development, 2015).
Historical data shows that large natural resource endowments have not translated into better quality of life in Sub-Saharan Africa (“Africa” for short).
This paper lists—and attempts to address—the most serious objections to Oil-to-Cash. The response to many objections is to ask about a plausible counterfactual (how do cash transfers compare to the alternative policy options?). Others warrant a clearer articulation of available evidence or ways to mitigate real worries through smart program design.
Reliance on natural resource revenues, particularly oil, is often associated with bad governance, corruption, and poverty. Worried about the effect of oil on Alaska, Governor Jay Hammond had a simple yet revolutionary idea: let citizens have a direct stake. Thirty years later, Hammond’s vision is still influencing oil policies throughout the world.
Pedro L. Rodríguez, José R. Morales, and Francisco J. Monaldi ask whether the direct and automatic distribution of oil rents to citizens is a viable option in Venezuela.
Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal - Working Paper 281
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 accruing directly to the government—is more likely to be scrutinized by citizens and hence subject to greater efficiency.
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.
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
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.
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 often has on governance.
In this paper Gillies discusses the political feasibility and political implications of cash transfers in the specific context of resource-rich states.
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 that seem to be important in enabling countries to obtain a positive payoff from resource wealth. These include a strong concern for social stability and growth, a capable and engaged technocracy, and interests in the non-oil sectors able to act as agents of restraint.
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.
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 stewards of the resource.