Escaping the resource curse in regional development: a case study on the allocation of oil royalties

The Basilicata Wealth Fund: Resource Policy and Long-Run Economic Development in Southern Italy

“…The recent empirical studies of Percoco (2012), Rocchi et al (2015), Iacono (2015) and Biasi (2015), all point in the direction of missing or negligible positive e¤ects from oil extraction activity in Basilicata. Percoco (2012) exploits a geographical Regression Discontinuity Design (RDD) in order to obtain the causal e¤ects of almost two decades (1991 2008) of large-scale oil extraction on per capita extra enterprise creation.…”

“…Iacono (2015) implements the Synthetic Control Method (SCM) in order to construct a data-driven comparison unit to the treated region of Basilicata, and con…rms that the causal e¤ects on a set of regional macroeconomic variables (real GDP per capita, employment rates and gross …xed investments) are negligible. Rocchi et al (2015) construct a multi-sector model of the Basilicata region built on a Social Accounting Matrix (SAM), in order to analyze the potential impact on regional development (on both economic growth and distributive aspects) of the allocation of royalty revenues (1997 2010). Rocchi et al (2015) conclude that a more productive use of resource revenues at the level of regional government might have resulted in stronger regional growth and higher employment rates.…”

“…Rocchi et al (2015) construct a multi-sector model of the Basilicata region built on a Social Accounting Matrix (SAM), in order to analyze the potential impact on regional development (on both economic growth and distributive aspects) of the allocation of royalty revenues (1997 2010). Rocchi et al (2015) conclude that a more productive use of resource revenues at the level of regional government might have resulted in stronger regional growth and higher employment rates. Another recent study by Biasi (2015) provides an estimation of the genuine savings dynamics for the region of Basilicata as compared to other regions of Italy, showing clearly that extraction of nat-ural capital combined with unproductive revenue spending diminishes the overall sustainability of the process of regional economic development.…”

The Sustainability of Non-renewable Resources Use at Regional Level: A Case Study on Allocation of Oil Royalties

“…Different studies suggest that the appropriate policy to prevent the curse in developing countries is based on the allocation of the financial resources derived from oil-related activities towards policies aimed at promoting productivity, competitiveness and well-being improvement (Levy 2006;Breisenger et al 2010;Rocchi et al 2015).…”

“…It is worth noting that developing countries are not the unique countries involved by this curse, which may also influence, to a different extent, the regions lagging behind in developed economies that start to exploit a new natural resource, such as oil fields (Rocchi et al 2015). The negative impact in these cases seems to be mostly due to the following: (1) the opening of the regional economy would result in the loss of most effects derived from the expenditure of royalties out of the regional boundaries; (2) the sudden increase in the export base may conceal the lack of competitiveness of the regional non-oil exporting sectors in relation to the rest of the country, reducing the investments required to improve their competitiveness; (3) part of oil royalties are used in short-term local redistribution policies aimed at reducing the negative effect of the regional economic gap (including unemployment and poverty), but are ineffective in improving the competitiveness of the regional system in the long run.…”