© 2018 by Daniel Anthes

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Fighting the resource curse through cash transfers

Todd Moss, senior fellow and vice president for programs at the Center for Global Development (CGD), demonstrates how leaders of poor countries can beat the resource curse. His policy option, called Oil to Cash, helps foster a social contract in resource-rich countries by directly distributing natural resource revenues to society. Under this proposal, a government would transfer some or all of the revenues from natural resource extraction to citizens in a universal, transparent, and regular payment. and, importantly, then tax part of it back.

 

 

A recent working paper published by CGD and Shanta Devarajan and Marcelo Guigale (both World Bank) in person sheds light on the case for direct transfers of resource revenues in Africa's resource-rich countries. Based on theoretical considerations  the paper shows that by transferring a portion of resource-related government revenues uniformly and universally as direct payments to the population, some countries could increase both private consumption and the provision of public goods, and thereby reduce poverty and enhance social welfare. 

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