The shifting natural wealth of nations: The role of market orientation

Arezki, Rabah; Ploeg, Frederick van der; Toscani, Frederik

doi:10.1016/j.jdeveco.2018.12.002

Cited by 36 publications

(21 citation statements)

References 35 publications

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“…Giant discoveries in the developing world have increased oil supply for decades, thus narrowing the gap in (known) resource wealth between developed and developing countries. These have to a large extent been driven by efforts in emerging market and developing economies to attract foreign investment and improve institutions and the rule of law (Arezki et al, 2019). While this might have been a one-off surge in proven reserves, the producers are now sitting on more carbon than ever.…”

Section: Recent Developments In Oil and Gas Exploration Investments Amentioning

confidence: 99%

“…The coming to market of new technology and nurturing of an environment that encourages exploration investments reinforce each other and boost fossil fuel discoveries, especially in developing economies. The micro evidence of Bjørnland et al (2017) for unconventional oil and Arezki et al (2019) more generally suggests that exploration and discoveries are driven by the world price of oil too. A crash in the world oil price depresses exploration investments and curbs opening of new oil and gas reserves.…”

Section: Recent Developments In Oil and Gas Exploration Investments Amentioning

confidence: 99%

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The risk of policy tipping and stranded carbon assets

Ploeg

Rezai

2020

Journal of Environmental Economics and Management

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If global warming is to stay below 2°C, there are four risks of assets stranding. First, substantial fossil fuel reserves will be stranded at the end of the fossil era. Second, this will be true for exploration capital too. Third, unanticipated changes in present or expected future climate policy cause instantaneous discrete jumps in today's valuation of physical and natural capital. Fourth, if timing and intensity of climate policy are uncertain, revaluation of assets occurs as uncertainty about future climate policy is resolved. E.g. abandoning climate policy plans immediately boosts scarcity rent, market capitalization, exploration investment and discoveries. To explain and quantify these four effects, we use an analytical model of investment in exploration capital with intertemporal adjustment costs, depletion of reserves and market capitalization, and calibrate it to the global oil and gas industry. Climate policy implements a carbon budget commensurate with 2°C peak warming and we allow for different instruments: immediate or delayed carbon taxes and renewable subsidies. The social welfare ranking of these instruments is inverse to that of the oil and gas industry which prefers renewable subsidy and delaying taxes for as long as possible. We also pay attention to how the legislative "risk" of tipping into policy action affects the timing of the end of the fossil era, the profitability of existing capital, and green paradox effects.

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Section: Recent Developments In Oil and Gas Exploration Investments Amentioning

confidence: 99%

Section: Recent Developments In Oil and Gas Exploration Investments Amentioning

confidence: 99%

The risk of policy tipping and stranded carbon assets

Ploeg

Rezai

2020

Journal of Environmental Economics and Management

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“…This concentration effect is moderated by better quality political institutions. Arezki et al (2017) argue that large oil discoveries are not exogenous as countries with open economies are more likely to make discoveries. Therefore, we run Table 5 panel A with the "openness" dummy variable as an additional control variable.…”

Section: Robustnessmentioning

confidence: 99%

Oil Discovery, Political Institutions and Economic Diversification

Alsharif

Bhattacharyya

2018

Scottish J Political Eco

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Diversification is touted as a desirable policy objective for oil‐rich nations because it reduces exposure to volatility. However, the empirical relationship between petroleum and diversification is not well understood. Here, we test the effect of giant oil discoveries on diversification using a panel dataset of 136 countries observed over the period from 1962 to 2012. We notice non‐oil sector export concentration 8 years after a discovery. However, we do not observe any effect on the structure of employment in non‐resource and manufacturing sectors. Democratic political institutions moderate the export and employment concentration effects of petroleum discovery.

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“…However, by 2030 an estimated US$11-17 trillion of new investment is needed in mineral, oil and gas projects in LICs (McKinsey 2013). Research suggests that as investment has moved towards the Global South, the role of institutional quality has increasingly come to the forefront of investors' minds and has shaped the pattern of investments around the world (Cust and Harding 2015;Arezki et al 2016). As well as shaping investment choices, governance and the quality of institutions also shapes outcomes; and is generally considered to be the crucial determinant in whether a country succumbs to the resource curse or not (Mehlum et al 2006 andRobinson et al 2006).…”

Section: Introductionmentioning

confidence: 99%

The role of governance and international norms in managing natural resources

Cust¹

2017

WIDER Working Paper

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The governance of natural resource wealth is widely considered to constitute a key determinant in whether the extraction of natural resources proves to be a blessing or a curse. What is meant by governance can span a wide range of components, while the steps to achieving good governance remain subject to debate and uncertainty.In response to this challenge, a variety of international initiatives have emerged seeking to support those striving for better governance in their countries. These initiatives range across efforts to promote transparency, to codify successful historical experiences and effective policies; to help guide decision makers in their choices, and, in some cases, to provide external standards that countries can bind themselves to.These initiatives, such as the Extractives Industry Transparency Initiative, have seen some success in spreading and embedding governance norms, ranging across revenue transparency, contract disclosure, supply chain certification, creation of saving instruments such as resource funds and building institutions for checks and balances such as fiscal rules and accountability bodies.The paper provides a review of initiatives targeting governments as the key agents of change. We find a mixed picture of success, where uptake has been strong, for example in terms of the number of countries engaging with or signing onto normative frameworks. However, evidence for causal impact remains weak and sometimes limited to anecdotal cases. We offer some critical reflections on challenges faced and potential ways forward to build on the lessons and achievements of the past decade and a half.

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The shifting natural wealth of nations: The role of market orientation

Cited by 36 publications

References 35 publications

The risk of policy tipping and stranded carbon assets

The risk of policy tipping and stranded carbon assets

Oil Discovery, Political Institutions and Economic Diversification

The role of governance and international norms in managing natural resources

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