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Reducing Natural Resource Dependency for Economic Growth in Resource Rich Countries

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This book examines the reduction of natural resource revenue dependency in resource-rich countries. Such countries experience lower economic growth due to factors of high volatility in commodity prices, reduction in accountability, undermining of the competitiveness of other economic sectors, and weak power of institutions. The analysis is based on an identified gap in the literature regarding how private sector development and public sector development affect the degree of dependency on resource revenue in natural resource-rich countries.

This book studies the interaction between private and public sector development with dependency on natural resources, specifically exploring whether the two diversified factors lead to a decrease in the degree of dependency, which is important for economic growth and to overcome the "resource curse". Economic diversification is viewed as a long-term solution to the high economic dependency from natural resources. Private sector development and public sector reforms may lead to this diversification.

The analysis of the book helps to shed light on private sector development, public services sector privatization, and a taxation system to diversify sources of income, with the objective to reduce dependency on natural resources extraction.

This book is an invaluable read for public policymakers, the public and private sectors, law makers, and scholars of developmental studies.

Author(s): Goran M. Muhamad
Series: Perspectives on Development in the Middle East and North Africa (MENA) Region
Publisher: Springer
Year: 2023

Language: English
Pages: 211
City: Singapore

Preface
Acknowledgements
Contents
About the Author
Abbreviations
List of Figures
List of Tables
1 Overview of the Book
1.1 Introduction
1.2 Problem of Natural Resource Dependency
1.3 Research Aims and Objectives
1.4 Research Questions and Hypotheses
1.5 Significance of the Study
1.6 The Book Design and Organisation
1.7 Summary
Bibliography
2 Economic Diversification to Reduce Natural Resource Dependency in the Literature
2.1 Introduction
2.2 Natural Resource Dependency in Resource Rich Countries
2.3 Why Is Natural Resource Dependency Reduction Important?
2.4 The Effects of Economic Diversification on Resource Dependency
2.4.1 The Private Sector Development
2.4.2 Investment in Human Development and Infrastructure
2.4.3 The Public Sector Development
2.5 Successful Cases of Economic Diversifications Policies
2.6 Critics of the Previous Literature
2.7 Summary
Bibliography
3 Methodology and Empirical Specifications
3.1 Introduction
3.2 Econometric of Panel Data Estimation
3.3 Empirical Specifications
3.3.1 The Speed of Adjustment
3.3.2 Flexible Dynamic Adjustment Model
3.3.3 System of Equations
3.4 Model Specification
3.4.1 The Static Model
3.4.2 The Dynamic Flexible Adjustment Model
3.4.3 The System of Equations
3.5 Summary
Bibliography
4 Data Presentation and Analysis
4.1 Introduction
4.2 Data Presentation
4.2.1 Data Sources
4.2.2 Sampling Strategy
4.2.3 The Dependent and Independent Variables
4.2.4 County Classification
4.2.5 Validation and Multicollinearity Results
4.2.6 Countries Heterogeneity and Variance Heteroskedasticity
4.2.7 Summary Statistics
4.3 Data Analysis, Model Specification, Estimation and Testing
4.3.1 Static vs Dynamic Models
4.3.2 Single Equation vs. System of Equations Estimations
4.4 Summary
Bibliography
5 Presentation of Results
5.1 Introduction
5.2 Results of Private Sector Development
5.2.1 Determinants of Optimal Private Sector Development (PSD)
5.2.2 The Speed of Adjustment Values
5.3 Privatisation Effect Results
5.3.1 Determinant of Optimal Privatisation
5.3.2 The Speed of Adjustment Values
5.4 The Result of Taxation Effects
5.4.1 Determinant of Optimal Taxation
5.4.2 The Speed of Adjustment Values
5.5 Results of Natural Resource Dependency Reduction
5.5.1 Factors Affecting the Reduction of Dependency
5.5.2 The Speed of Adjustment Values
5.6 Summary
Bibliography
6 Overall Summary, Hypotheses Tests and Policy Implications
6.1 Introduction
6.2 The Research Questions and Hypotheses Test
6.2.1 The Research Questions
6.2.2 Hypotheses Testing
6.3 Summary of Results
6.4 Policy Implications
6.5 Final Conclusion and Contributions to the Literature
6.5.1 Final Conclusion
6.5.2 Contributions to the Literature
6.6 Limitations and Recommendations for Further Research
Bibliography
Appendix 1 Country Classification and Coefficient Correlations
Appendix 2 Single Equation Model
Appendix 3 The Determinants of Speed of Adjustment
Appendix 4 Country Mean Indicator Values