Commodity Price Volatility and Inclusive Growth in Low-Income Countries
Back Matter

Back Matter

Author(s):
Rabah Arezki, Catherine Pattillo, Marc Quintyn, and Min Zhu
Published Date:
October 2012
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Index

Note: Page numbers followed by f indicate figures, page numbers followed by t indicate tables, and page numbers followed by b indicate boxes.

A

Absolute pro-poor growth, 149, 150b

Access. See Services, access to

Accountability

  • commodity price volatility and, 354
  • of government budget, 113–14, 113f
  • new technology for, 363
  • proposals for reform of fiscal rule for, 132
  • of sovereign wealth fund, 115f

Ad-hoc social support scheme, 63

Advisory Committee for Fiscal Responsibility Funds of the MoF, 117–18

Advisory Committee for the Reference Copper Price of the MoF (ACRCP), 117–18, 123

Advisory Committee for Trend GDP of the MoF (ACTG), 117–18, 122

Africa. See also Sub-Saharan Africa country

  • capital good pricing in, 92–93
  • diversification of weather risks in, 325
  • economic activity, diversifying, 219–20
  • mineral exports from, 36
  • as oil/gas exporter, 37–38
  • resource horizon to depletion in, 89
  • as resource-rich country, 87

Africa RiskView software, 325

African Development Bank, 102

African Growth Opportunity Act (AGOA), 220

Afrobarometer, 249

Aggregate consumption, 252

Aggregate demand

  • factors affecting, 80
  • reduction of, 80

Agricultural employment, 260

  • working age population in, 261f

Agricultural input subsidy, 63

Agricultural Price Risk Management Product, 325

Agricultural productivity, farm policies for, 322

Agricultural raw material index, 56f

Agriculture. See also Natural resource

  • low total factor productivity growth in, 292

Agriculture investment/development, 327

Agriculture productivity growth, 291–93

Agriculture risk management

  • joint donor program for, 325–27
  • public-private partnership for, 327–28

Alaska Permanent Fund, 24–25

Anarchy, unsustainability and, 15–17

Anderson-Neary balance-of-trade function, 335

Anticorruption commissions, 101–2

AR(1) productivity shock, in flexible and sticky price sectors, 78

Arab resource-rich country, wealth of, 228

Arab Spring, 234

ASEAN Emergency Rice Reserve (AERR), 290–91

ASEAN. See South East Asian Nations (ASEAN)

ASEAN+3 Emergency Rice Reserve (APTERR), 290–91

Asia. See also Developing Asia

  • agriculture productivity in, 291–93

Asian Development Bank (ADB), food prices and poverty, 277

Asian term option, 305–6, 305f

  • cost comparison of, 304t
  • volatility of, 304

Auditing, of government budgets, 110, 134

Autocratic institution, 14–15

  • commodity endowment and, 25

Azerbaijan

  • GDP growth by sector, 169, 170, 170f
  • growth, understanding sources of, 170–72
  • inclusive growth and labor market, 172–78
  • labor productivity and wage gains, 173, 173f, 174, 175, 176, 176f
    • manufacturing, 175f
    • mining, 174f
  • natural resource boom and, 161–62

B

Bachelet, President, 23

Balance-of-trade function, 337

Banco de México

  • FEIP year-end balances in, 300f
  • oil hedging program participation, 300

Bangladesh, macroeconomic, poverty, consumption aggregates in, 255t

Barter contract, 41–42

“Beggar-thy-neighbor” policy, 279

Bird-in-the-hand rule, 90

Blair, Tony, 47

Botswana’s Pula Fund, management of, 22

Brent crude oil, 304

Brent-Maya spread/monthly correlation, 298b

Bretton Woods system, 45

  • breakdown of, 287
  • food price volatility and, 319

Budget Office of MoF (DIPRES), 120

Budgetary management, 110

  • elements of, 138
  • as opaque, adverse effects of, 137

Budget-planning horizon, 110–11, 137

Bundling, 42

Bureaucratic overstretch, 38

C

Cambodia

  • employment in, 260t
  • macroeconomic, poverty, consumption aggregates in, 255t

Cameroon. See also Sub-Saharan Africa country

  • employed, definition of, 273
  • employment in, 260t
  • Engel curves for food in, 266t
  • growth incidence curves in, 254f
  • growth spell ending in, 199f, 200
  • household consumption determinants for, 257t
  • living standards survey characteristics for, 269t, 271t
  • macroeconomic, poverty, consumption aggregates in, 253t
  • working age population versus employment ratio for, 259f

Capital good pricing, 92–93

Capital spending, 93–94

Cardin-Lugar Amendment, 103

Cash transfer program, 215–16

Central bank

  • for custodial role of natural assets, 99
  • inflation targeting and, 71–72
  • interest rate smoothing and, 78
  • of Mexico
    • put option trading, 309
  • oil-hedging program and, 308–9
  • oil-hedging program execution and, 300, 308–9
    • challenges to, 309
  • roles of, 101–2
  • welfare gain and, 79–80

Central government

  • accounts, growth and copper prices, 106f
  • expenditure and revenue ratio to GDP, 126f
  • net assets ratio to GDP, 128f
  • revenue and expenditure growth rate, 126f

Centre for Regional Information and Studies, 364

Ceteris paribus, 122

Child mortality, growth spells and, 195

Chile

  • advisory committees of MoF, 116
  • copper production/exportation by, 105
  • external control/auditing of government, 114
  • fiscal committees in, 117
  • fiscal policy for commodity exporting countries, 105–140
  • government revenue volatility and, 106
  • government transparency and accountability, 114
  • law on fiscal responsibility, 108–10
  • one-year budgeting framework of, 111
  • sovereign wealth funds in, 112
  • vector autoregression for economy, 131

Chile-style fiscal rule, 21, 22–23

  • CAB and, 119
  • objectives of, 118–19
  • shortcomings and proposals for reform of, 133–36
  • simulation studies for, 130

Civil society organization

  • EITI and, 355
  • transparency, role in, 350

Civil war

  • economic growth and, 17
  • mineral wealth and, 38

Claim-jumping, 17

Code of Good Practices on Fiscal Transparency, 350

CODELCO, 119

Collateral management, for oil-hedging program, 309

Colombia, growth spell ending in, 199, 199f

Commission on Growth and Development, systematic inequality of opportunity and, 148

Commitment technology

  • building, 98–99
  • features of, 99

Commodity boom, 20

  • bust versus, 7
  • Dutch disease and, 25
  • fiscal policy/macroeconomic performance and, 136–37

Commodity endowment, effects of, 25

Commodity export, 2

  • fiscal policy for, 105–40
    • countries, lesson for, 136–40
  • industrialization and, 20
  • in sub-Saharan African countries, 206–7

Commodity fund, 21

Commodity price contingent aid contract, 219

Commodity price index (CPI)

  • fluctuations of, 56f
  • food share in, 255t
  • inflation and, 58f
  • synchronized movements in, 279f

Commodity price index (CPI) basket, composition of, 57f

Commodity price shock, 55

  • effects of another, 62f
  • household budget and, 61
  • increasing resilience to, 65–66
  • inflation and, 64, 64f
  • policy responses to, 61, 63–65
  • risks of, 59–61
  • solutions to, 63

Commodity price subsidy, 63

Commodity price volatility, 2, 319

  • fiscal/monetary policy and, 61
  • impact and policy changes, 55–66
  • indices for recent years, 56f
  • inflation and, 60f
  • instruments to cope with
    • cash transfer program, 215–16
    • fiscal policy management, 218–19
  • international development community/donors and, 219–20
  • management of, 95–97
  • monetary policy and, 63
  • policies to deal with, 21–21
  • poverty and, 206
  • Prebisch-Singer hypothesis on, 25
  • reasons for, 12–13
  • savings/investment policies for, 96–97
  • in sub-Saharan Africa countries, 205
  • transparency/accountability and, 354

Commodity revenue

  • distribution of, 24–25
  • management of, 24

Common Market for East and Southern Africa (COMESA), 325

Common pool resource, 17

Commonwealth of Independent States, mineral exports from, 36

Comprehensive Africa Agriculture Development Programme (CAADP), 324–25

Concessionary countercyclical loan, 219

Conditional cash transfer program, 63

Constitutional law, 99

Consumer durable

  • NIPA versus survey data measures for demand of, 252
  • respondents owning, 251f
  • types of, 249

Consumer price index (CPI)

  • cost of living measures, 264
  • exports versus imports and, 24
  • product pricing versus, 21

Consumer price index (CPI) inflation, food price increases and, 285, 285f

Consumption, NIPA versus survey data measures for, 248b

Consumption demand, 80

Consumption growth, factors affecting, 246–47

Consumption inequality, terms of trade and, 213, 14f, 215

Consumption smoothing, 217

Contract, indexation to world prices, 21–22

Contract transparency, 360–61

Contractionary fiscal policy, 122

Convergence

  • investments and, 92–93
  • low-income countries and, 90–91

Copper

  • Chile exporting of, 105
  • indexation of debt and, 22
  • revenue from, 106f

Copper price elasticity, 120

Copper price, projected versus actual, 124, 129f

Copper price shock, 106

  • impulse response function for, 131, 131f, 132, 132f, 133f, 142f, 143f, 144f

Copper Revenue Compensation Fund, 109

Core inflation, 72–73

  • flexible headline IT versus, 81–82
  • sticky price sector and, 77–78
  • strict versus fexible, 77

Core price index, 73

Corruption, 39–40

  • uncovering in India, 50
  • weak transparency and oversight, 345

Countercyclical borrowing, 47–48

Countercyclical fiscal policy, 22–23

Credit market imperfection, 193

Credit-constrained consumer

  • consumption versus aggregate demand of, 80–81
  • interest rates and, 81

Cyclically adjusted balance (CAB), 109

  • definition of, 106
  • expenditure and revenue ratio to GDP, 125, 126
  • fiscal rule adoption based on, 138
  • fiscal rules and, 112, 119–20
  • government requirements under, 111
  • proposals for reform of fiscal rule for, 136
  • ratio of to GDP, 125, 125f
  • reduction of, 123, 124
  • target value for, fiscal policy variable for, 123–24

Cyclically adjusted revenue, proposals for reform of fiscal rule for, 135

D

Debt, denomination of, 21, 22

Deepwater Horizon drilling rig, 44

Demand

  • labor productivity and wage gains, 180
  • productivity shock and nontraded goods, 181–84 traded goods, 184–85

Democracy

  • in MENA region, 238f
  • privatization and, 45–46
  • taxation and, 14

Democratization, oil hindering, 226

Developing Asia

  • food price increase in, 277–93
    • poverty rate and, 282, 282f
  • global food trade, restoring confidence in, 287–88
  • inflation and growth effects in, 286f
  • public spending, rechanneling, 288–89
  • trade liberalization and, 287–88

Developing country

  • agricultural/food security policies in, 323–25
  • agriculture risk management in, 326
  • fiscal policy in, 19
  • foreign direct investments and, 37f
  • global price increase effect on, 285, 286
  • international trade and, 10
  • mineral wealth in, 36–38
  • as price-takers, 9
  • real per capita income in, 191f
  • rice/wheat Ti’s for, 344t
    • percentage changes, 345f

Direct distribution fund, 43

Diversification

  • challenges to
    • in MENA region, 234
    • in resource-rich countries, 232–33
  • industrial policies for, 238, 239
  • sustainable growth and, 161
  • sustainable growth, inclusive growth and, 164
  • of weather risks in Africa, 325

Dodd-Frank Act, Section 1504, 359–61

Dodd-Frank law, 363

Doha Round, 287

Doing Business, 92, 93

Domestic credit market, for low-income countries, 57

Domestic insulation policy, 287

Domestic retail price increase, 283f

Downbreak. See Growth downbreak

Dutch disease, 17–19, 25

  • approach to countering, 94
  • in MENA region, 233
  • resource curse and, 232–33

E

East Asian Emergency Rice Reserve (EAERR), 290

East Asia/Pacific, savings rate in, 229f

Economic and social stabilization fund (ESSF), 109

Economic challenge, of low-income countries, 1

Economic Community for West African States (ECOWAS), 325

Economic diversifcation. See Diversifcation

Economic growth

  • civil war and, 17
  • inclusive growth and, 150
  • of low-income countries, 1
  • Macroeconomic volatility versus, 230
  • in MENA region, 227
  • quality of institutions and, 14
  • of resource-rich countries, 2
  • volatility and, 39

Economic recovery, low-income countries and, 58

Ecuador, growth spell ending in, 199f, 200

Education, growth spells and, 195

Emerging country/group, 227

  • average schooling years in, 237f
  • bank deposits for, 232f
  • democracy, tendency of, 240, 240f, 241
  • GDP per capita growth and volatility, 230, 230f
  • life expectancy/mortality rate in, 237f
  • mean domestic credit to private sector for, 232f
  • natural capital of, 228f
  • output fluctuations in, 235f
  • production structure in, 233f

Employment

  • in sub-Saharan Africa countries, 259, 260t
  • in urban areas, 260
  • working age population ratio to, 261, 261f

Employment gain

  • during boom period, 177, 177f
  • labor productivity versus, 177f, 178
    • model for, 179–84
  • in sub-Saharan Africa countries, 260

Engel curve, 246

  • for food
    • in Cameroon, Ghana, Uganda, Zambia, 266t
    • in Ghana, 262, 264f, 265t
  • formula for, 262

Engel’s Law, 9

  • income changes, measuring, 262

Environmental scarcity, fear of, 11

Ethnic fractionalization, 198

Euler equation, 153–54

Europe, foreign direct investments and, 36, 37f

Everything But Arms (EBA), 220

Exchange rate overvaluation, 196, 197

Exchange rate policy, 21, 23

  • increase in, effects of, 94
  • noncommodity exporter and, 64–65

Expansionary fiscal policy, 123

Expenditure transparency, 50

Export

  • hedging proceeds of, 21, 22
  • impact of
    • barrier increases/decreases, 333, 334, 334f
    • restrictions, 332, 333f
  • productivity shock and demand, 181–84

Export tariff increase, 332

Extensive growth, 147–48

External control, of government budgets, 114

External shock, growth spells and, 196

Extraction. See also Resource extraction

  • low-income countries and, 41
  • of minerals, 40, 85

Extraction rate, 89–90

Extractive contract, 360–61

Extractive Industries Transparency Initiative (EITI), 49–50, 102–3

  • accountability at local level, 361
  • commitment to, 350
  • economic/development incomes and, 354–59
  • implementation of, 351
  • implementation of, effects of, 356
  • political constraints/capture of, 357
  • role of, 354–55
  • transparency and, 241
    • new technology for, 363

Extractive industry, 15

Extractive Industry Review, 350

F

Factor income, resource extraction and, 88

Farm policy, 322

  • in developing countries, 323–25

FARM-D, 325

Fertilizer subsidy, 284

  • Indonesia and, 284t

Financial Advisory Committee on Sovereign Funds of the MoF, 109, 112, 117, 118

Financial development, growth spells and, 195

Financial globalization, growth spells and, 197

Financial service, access to, 74, 75f

First-best policy, 61

Fiscal committee, 114

  • establishment of, 108
  • role of, 116
  • tasks of, 116

Fiscal council (FC), 114

  • establishment of, 108, 139–40
  • features of, 117
  • tasks of, 116, 135–36

Fiscal decentralization, 44

Fiscal policy, 19

  • for Chile, 22–23, 105–40
  • lessons for commodity exporting countries, 136–40
  • strengthening institutional framework of, 137–38
  • transparency/accountability of budgetary information, 138

Fiscal policy management, 218–19

Fiscal procyclicality, fiscal policy reform and, 137

Fiscal responsibility law, 108–10, 137

Fiscal revenue, resource-rich countries and, 56–57

Fiscal rule. See also Chile-style fiscal rule

  • adoption of, 138–39
  • CAB and, 119–20
  • elasticities in, 120
  • implementation, change and budget performance, 120–27
  • macroeconomic impact of, 127
  • number of countries with, 111
  • objectives of, 111–12
  • shortcomings and proposals for reform of, 133–36

Flexible core IT, 77

  • welfare gain and, 79, 80f

Flexible headline IT, 78

  • core IT versus, 81–82
  • welfare gain and, 80, 80t

Flexible price, sticky price versus, 75–78

Floating exchange rate, 24

Food and Agriculture Organization (FAO), 342

Food crisis/riot, 321

Food emergency

  • definition of, 289

Food expenditure

  • Engel curve for
    • in Cameroon, Ghana, Uganda, Zambia, 264t
    • in Ghana, 262, 264f, 265t
  • household budget and, 73–74, 74f, 74t
  • in total household expenditures, 281, 281f

Food export/import, 2

  • commodity price volatility and, 55–56

Food inflation, 73

Food price increase

  • contributing factors to, 331
  • CPI inflation and, 284, 285, 285f
  • crisis/riots from, 319
  • in developing Asia, 277–93
  • effects of, 280
    • fiscal costs, 283–84
    • local populations, 283
    • poor vulnerability, 281, 282, 283
  • factors affecting, 279–80
  • global, countries affected by, 286
  • household budget, effects of, 62f
  • inflation and, 60f
  • rice and wheat, 283f
  • trade barriers and, 287, 293
  • trade distortion and, 331–45

Food price index, 56f

  • increase in, effects of, 277, 278
  • for rice/wheat, 344f
  • structural shifts in, 278f
  • supply depletion and, 278
  • volatility and level of, 316, 316f

Food price shock, 60

  • agricultural input subsidy and, 63
  • impact of, 319

Food price volatility. See also Price volatility

  • adjustments in, 316
  • approaches to, 316–17
  • as international policy challenge, 315–28
  • over long term, 317f
  • trade bans and, 287

Food reserve, management of, 289–90

Food sector (flexible price), 76–78

Food security, 320

  • in developing countries, 326
  • international policy challenge with, 328–29
  • private actors and, 327

Food subsidy, 282

  • Indonesia and, 282t

Food voucher program with proxy-means testing, 63

Foreign direct investment, 37f

  • North American/Europe attracting, 36

Foreign loan, 48

Formal sector employment, 259

Fuel price increase

  • household budget, effects of, 63f
  • inflation and, 60f

Fuel price index, 56f

Fuel price shock, 60

Futures market, drawbacks of, 22

G

G20 declaration

  • agriculture risk management and, 326
  • food price volatility and, 315
  • objectives of, 322
  • role of, 323

Gas exporter

  • countries becoming, 37–38
  • Dodd-Frank Act, Section 1504 and, 359–60

Gas price index, 56f

Generally Accepted Principles and Practices for SWFs, 358–59

Ghana. See also Sub-Saharan Africa country

  • employed, definition of, 272–73
  • employment in, 260t
  • food expenditures for, 263f
    • Engel curve, 262, 264f, 265t, 266t
  • growth incidence curves in, 254f
  • household consumption determinants for, 257t
  • living standards survey characteristics for, 270t, 272t
  • macroeconomic, poverty, consumption aggregates in, 255t
  • Public Interest and Accountability Committee in, 351, 362b
  • working age population versus employment ratio for, 261f

Gini coefficient, 193

Global commodity price shock, 56

  • inflation and, 64f

Global energy trade, low-income countries and, 36

Global financial crisis, low-income countries and, 1

Global food trade, restoring confidence in, 287–88

Global market equilibrium, 338–39

Global price increase

  • countries afected by, 286
  • economic impact of, 280
    • on Asian economies, 285, 286
    • fiscal costs, 283–84
    • poor vulnerability, 281, 82

Global Witness, 49

Government assets/liabilities, rules for management of, 112–13

Government budget

  • external control/auditing of, 114, 138
  • transparency/accountability of, 113–14, 113f, 138
  • variables, GDP growth, and copper prices, correlations between, 129f

Government rent capture, 88

Government revenue, 40–50

  • changing sources of, 44–46
  • effects of, 38–40
  • reducing size of, 40–44
  • reform measures and, 40–50
  • undocumented, 351

Government spending

  • CAB and, 106–7
  • in Chile, 119
  • stabilization of, 138

Government transparency, 48–50

Government Watch, 50

Grain

  • pricing of
    • spikes in, 333
    • structural shifts in, 278f
  • reserve management of, 289–90
  • supply depletion of, 278

Gross domestic product (GDP)

  • central government expenditure and revenue ratio to, 126f
  • Chile and, 108
  • government assets and debts, 106
  • net government assets ratio to, 128f
  • per capita real GDP in Saudi Arabia, 165, 165f
  • projected growth rate of, 123f
  • revenue ratio to, 127f
  • trend growth rate of, 122f
  • in whole economy and oil sector, 163–64, 163f

Gross domestic product (GDP) deflator, growth, understanding sources of, 170–72

Gross domestic product (GDP) growth, 106f

  • GDP growth volatility versus, 209, 210, 210f
  • poverty reduction and, 209–10

Gross domestic product (GDP) growth volatility

  • GDP growth versus, 209, 210, 210f
  • poverty reduction and, 209–10
  • terms of trade volatility efect on, 212f

Growth. See also specific types of

  • constraint/factors affecting, 153–54
  • developing Asia, efect on, 286f
  • hazards to, 194–96
  • hills, valleys and plateaus of, 191f
  • hills of, 189f
  • income distribution and, 188, 198
  • macroeconomic versus microeconomic dimensions of, 148
  • methods to jumpstart, 149
  • pace and pattern of, 148, 150b
  • percentage, by sector, 172f
  • poverty reduction and, 151
  • in sub-Saharan Africa countries, 253, 256
  • super pro-poor policy efect on, 152
  • terms of trade/volatility efect on, 211–13
  • understanding sources of, 170–72

Growth break, by region and decade, 192t

Growth downbreak, 190

  • by region and decade, 192t

Growth incidence curve (GIC), findings for, 253

Growth laggard, 190, 192

Growth miracle, 192

Growth Report: Strategies for Sustained Growth and Inclusive Development, 148

Growth spell, 188

  • characteristics of, 193t
  • definition of, 190
  • duration of, 190, 194f
  • variables determining, 195–96, 197, 197f
  • ending of, 199–201, 199f

Growth sustainability, income distribution and, 192

Growth upbreak, 190

  • by region and decade, 192t

Grupo Propuesta Ciudadana (GPC), role of, 364

Guatemala, growth spell ending in, 199f, 200

Guide to Resource Revenue Transparency, 350

Gulf Cooperation Council (GCC) group, 227

  • average schooling years in, 237f
  • bank deposits for, 231, 232f
  • democracy, tendency of, 240, 240f, 241
  • GDP per capita growth and volatility, 230, 230f
  • life expectancy/mortality rate in, 237f
  • mean domestic credit to private sector for, 232f
  • output fluctuations in, 235f
  • production structure in, 233f

H

Hartwick rule, 228

Hausmann, Rodrick, and Velasco (HRV) framework

  • growth constraints, identification of, 153, 154–55
  • inclusive growth analytics and, 155

Headline inflation, 77–78

High-income country

  • rice/wheat Ti’s for, 342t
    • percentage changes, 343f

Historical volatility, 316–17

Hotelling rule, 90

Household budget

  • commodity price shocks and, 61
  • food expenditure and, 73–74, 74f, 83f
  • food expenditures and, 281, 281f
  • food/fuel price efect on, 63f

Household consumption

  • determinants of, 256, 257t, 258–59
  • expenditures per capita, 263f
  • growth incidence curves of, 254f
  • income and, 259
  • welfare measures through, 248, 248b, 252

HRV framework. See Hausmann, Rodrick, and Velasco (HRV) framework

Hubbert, Marion King, 11

Hubbert’s Peak, 11

I

Import Substitution Industrialization policy, 10

Import tariff reduction, 63

  • effects of, 334

Inclusive growth (IG)

  • analysis of, 149–50
  • definition of, 147–48
  • diversifcation and, 164
  • focus of, 150b
  • HRG framework to, 155
  • income growth and, 162
  • labor market and, 172–78
  • in MENA region, 225–41
  • natural resource wealth and, 164
  • in natural resource-intensive economies, 161–85
  • per capita growth and, 246
  • policies for, 150
  • productive employment and, 156–57
  • in sub-Saharan Africa countries, 249
  • in sub-Saharan Africa country, 245–67
  • transparency/accountability and, 359–60
  • wage gains and, 173

Inclusiveness, 148

Income

  • growth rate of, 19–20
  • household consumption and, 259
  • labor productivity versus mining, 173, 174
  • oil industry as, 310
  • raw material demand versus, 9

Income distribution, 149

  • equality in, 193
  • growth and, 188, 198
  • growth sustainability and, 192
  • social heterogeneity and, 198

Income elasticity, 74, 75f

Income growth, 149

  • inclusive growth and, 162, 173
  • in MENA region, 227
  • underestimation of, 264

Income insurance, 216

  • types of, 217

Indexation

  • copper producer and, 22
  • of oil/mineral contracts, 21–22

India

  • food/fertilizer subsidies in, 284, 284t
  • uncovering corruption in, 50

Indonesia

  • Centre for Regional Information and Studies in, 362
  • food/fertilizer subsidies in, 284

Indonesia and, food/fertilizer subsidies in, 284t

Industrial revolution, 15

Industrialization

  • commodity exports and, 20
  • history of, 15

Inequality

  • asset versus income, 152
  • decline in, 149
  • ethnic/religious fractionalization and, 198
  • factors countering, 188
  • Gini coefficient and, 193
  • growth spells and, 194f, 196
  • importance of, 187
  • of opportunity, 148
  • super pro-poor policy effect on, 152
  • sustainable growth and, 198
  • unsustainable growth and, 187–202

Inflation

  • commodity price index and, 58f
  • commodity price shock and, 64, 64f
  • developing Asia, effect on, 286f
  • impact of, 56
    • commodity pricing and, 60f
  • regional variations of, 58–59

Inflation targeting (IT), 21, 23–24

  • low-income country central banks and, 71–72

Institution, oil wealth versus, 20

Institutional rule, 99

Insurance, investment risks and, 95–96

Intensive growth, 147–48

Interest rate smoothing, 77–78

International Budget Partnership, 50

  • Open Budget Survey by, 113

International development community/donor, role of, 219–20

International Emergency Food Reserve, 290

International financial institution (IFI)

  • commitment technologies, role in, 99
  • low-income countries and, 66
  • transparency, role in, 352

International financial integration, 195

International Monetary Fund (IMF)

  • accountability/transparency initiatives, 363
  • transparency agenda, 350
  • undocumented government funds and, 349

International price volatility, national policy response to, 332–34

International public policy, challenges for, 319–23

International trade, developing countries and, 10

Investing-in-investing process

  • components of, 92–93
  • savings/investment policies and, 96

Investment

  • convergence and, 92–93
  • insuring, 95–96
  • resource depletion and, 98

Iraq EITI, 357

Isthmus crude oil, 304

J

Job for food program, 63

K

Kazakhstan, 94–95

Keynes-Ramsey rule, 153–54

L

Labor force

  • in MENA region growth rate of, 239f
  • in sub-Saharan Africa countries, defining, 274–75

Labor market

  • inclusive growth and, 172–78
  • in MENA region, 224

Labor productivity, 151

  • average wage growth based on, 176, 176f
  • average wage versus, 174
    • manufacturing, 175f
    • mining, 173, 174, 174f
  • employment gain versus, 177f, 178
    • model for, 179–84
  • value added per employee, 173, 173f, 174

Laspeyres-type CPI index, 264

Law-cum-institution, 99

Legislation, building commitment technology and, 99

Liquidity-constrained economy, 154

Low total factor productivity (TFP) growth, 291

Low-income, commodity price volatility and, 2

Low-income country

  • agriculture productivity in, 291–92
  • capital spending in, 93–94
  • commodity price shocks and, 55, 57–66
  • convergence of, 90–91
  • CPI basket composition for, 57f
  • economic status of, 1
  • food expenditure and, 73–74, 74f
  • formal sector employment in, 261
  • global energy trade and, 36
  • growth of, 58f, 157
  • inclusive growth approach and, 150
  • increasing resilience in, 65–66
  • inflation targeting and, 71–72
  • instruments to cope with volatility
    • cash transfer program, 215–16
    • fiscal policy management, 218–19
  • investing in, 37
  • monetary policy in, 81–82
  • petroleum extraction and, 41
  • petroleum wealth in, 35–50
  • recession and recovery, 58
  • resource depletion of, 87–88
  • savings/investment policies for, 88
  • tax and social safety net systems for, 57

M

Macroeconomic buffer, 65

Macroeconomic dimension of growth, 148

Macroeconomic volatility

  • economic growth versus, 230
  • growth spells and, 196

Manufactured goods volatility, 317

Manufacturing

  • crowding out, 7, 13–14
  • labor productivity and wage gains, 174, 175, 175f
  • model for, 180–84

Maya crude oil, 304

Maya put option

  • premium dispersion of, 309f
  • pricing of, 307
  • proxy of, 307f
  • strike price of, 306

Measurement of Economic Performance and Social Progress, The, 247

Merchandise trade, metals versus fuel, 36, 36f

Metal price index, 56f

Metal price shock, 60

Mexico. See also Oil Income Stabilization Fund (FEIP)

  • hedging strategy of, 21, 22
  • oil industry in, 297
    • crude types, 304
    • export shares, 298f
    • as income source, 314
    • monthly exports of, 303f
    • revenue from, 298f

Microcredit program, 216

Microecronomic dimension of growth, 148

Microfinance, 217

Middle East and North Africa (MENA) region

  • average schooling years in, 237f
  • classification of, 227
  • democracy, tendency of, 240f
  • diversification challenges for, 234
  • Dutch disease in, 233
  • economic growth in, 219
  • GDP per capita growth and volatility, 222, 222f
  • income growth in, 227
  • labor force in
    • expansion, 226
    • growth rate of, 239f
  • life expectancy/mortality rate in, 237f
  • natural resource curse in, 229, 230
    • financial development, 231
  • natural resources, volatility and inclusive growth in, 225–41
  • output fluctuations in, 235f
  • production structure in, 233f
  • savings rate in, 229f
  • stabilization of
    • boom-bust cycle, 234, 235–36
    • human capital/infrastructure investments, 236, 237–38
    • industrial policies, 238, 239
    • institutions and governance, 240, 241

Middle East, mineral exports from, 36

Mineral

  • indexation of contracts, 21–22
  • as natural resource curse, 8–9
  • as total merchandise trade share, 36, 36f

Mineral export, growth and, 8f

Mineral revenue, distribution of, 21

Mineral wealth

  • civil wars and, 38
  • effects of, 40
  • importance of, 36–38

Minerals Management Service, 45

Mining

  • Dodd-Frank Act, Section 1504 and, 361–62
  • labor productivity and wage gains, 173, 173f, 174, 174f

Mining revenue, fiscal rule and, 121

Ministry of Finance (MoF)

  • Advisory Committee for Fiscal
    • Responsibility Funds of, 117–18
  • Advisory Committee for the Reference
    • Copper Price of, 117–18, 123
  • Advisory Committee for Trend GDP of, 117–18, 122
  • advisory committees of, 116
  • Advisory Financial Committee for Fiscal
    • Responsibility Funds of, 109
  • budgetary management, elements of, 138
  • Financial Advisory Committee on Sovereign Funds of, 112
  • management of, 110
  • trend GDP growth and output gap projection by, 122f

Molybdenum price elasticity, 120

Monetary policy

  • commodity price volatility and, 63
  • in low-income economies, 81–84

Money-metric political-economy welfare loss function equation, 335–37

Motor vehicle, respondents owning, 251f

Mozambique. See also Sub-Saharan Africa country

  • employed, definition of, 274–76
  • employment in, 260t
  • growth incidence curves in, 254f
  • household consumption determinants for, 257t
  • living standards survey characteristics for, 270t, 272t
  • macroeconomic, poverty, consumption aggregates in, 255t
  • working age population versus employment ratio for, 261f

Multi-annual budgeting, 110–11

N

National income product account (NIPA) data, 247, 248b

Nationalization, privatization versus, 44–46

Natural capital

  • in Arab resource-rich countries, 228
  • of emerging countries, 228f
  • shares by region, 229f

Natural resource

  • access to, 250f
  • benefits versus risks of, 25
  • countries low/high in, 7–8
  • depletion of, 16
  • labor productivity and wage gain, model for, 180–84
  • in MENA region, 225–41
  • property rights of, 16–17
  • as public asset, 354
  • specialization, effects of, 25
  • true endowments versus exports, 20

Natural resource boom

  • impact of, 182
  • model for, 180–84
  • Saudi Arabia and Azerbaijan, 161–62

Natural resource curse

  • cause and examples of, 7
  • Dutch disease and, 232–33
  • ideas to address, 26
  • in MENA region, 229, 30
    • financial development, 231
  • policies to deal with, 20–25
  • public investment and, 98–99
  • skeptics to, 19–20

Natural resource exporter, 2

Natural resource fund management. See also Sovereign wealth fund (SWF)

  • transparency and, 358–59

Natural resource wealth

  • inclusive growth and, 164
  • income growth rate and, 19–20

Natural resource-intensive economy, inclusive growth in, 155–79

Natural Resources Charter, 49

  • transparency and, 357–58

New Economic Partnership for African Development (NEPAD), 324–25

New Partnership for Africa’s Development (NEPAD), 102

New Vision of Agriculture, 327

Newly industrialized country (NIC), postwar growth of, 151

Nigeria

  • barter contracts and, 42
  • growth spell ending in, 199f, 200

No taxation without representation, 14–15

Nominal assistance coefficient (NAC), 340–41

  • for upward wheat/rice price periods, 342t

Nominal rate of assistance (NRA), 344

  • contributions to total agriculture, by region, 346t

Noncommodity exporter, exchange rate policy and, 64–65

Nonfood inflation, 73

Nonfood sector (sticky price), 76–78

Nongovernment organization (NGO), oil sector transparency and, 49

Nongovernment salaried employee, defining, 274–75

Non-Gulf Cooperation Council (non-GCC) group, 227

  • average schooling years in, 237f
  • bank deposits for, 232f
  • democracy, tendency of, 240, 240f, 241
  • GDP per capita growth and volatility, 230, 230f
  • life expectancy/mortality rate in, 237f
  • mean domestic credit to private sector for, 232f
  • output fluctuations in, 235f
  • production structure in, 233f

Non-resource economy, natural resource boom and, 182–83

North American, foreign direct investments and, 36, 37f

North American Free Trade Agreement (NAFTRA), 297

O

Oil

  • countries producing, 36
  • crude types of, 304
  • democratization and, 226
  • developing countries and, 9
  • Dodd-Frank Act, Section 1504 and, 359–60
  • indexation of contracts, 21–22
  • as natural resource curse, 8–9
  • price scenario and strike price, 303f
  • pricing trends of, 10–12

Oil boom, in Saudi Arabia, 165–66, 166f

Oil contract, 360–61

Oil exporter

  • countries becoming, 37–38
  • Mexico as, 297, 298f
    • crude types, 277
    • income source for, 310
    • revenue from, 298f

Oil Income Stabilization Fund (FEIP), 298f

  • objective of, 299
  • source and use of funds from, 299t
  • year-end balances of, 300f

Oil revenue

  • decentralization of, 44
  • distribution of, 21

Oil sector transparency, 49

Oil wealth, institution versus, 20

Oil-denominated loan, 48

Oil-hedging program

  • accumulated barrels during, 309f
  • Banco de México participation in, 300
  • Central Bank executing, 300, 308–9
    • challenges to, 309–11
  • collateral management for, 309
  • execution of, 301, 308, 309
    • steps before, 301b
  • governance structure of, 299
  • objectives of, 301
  • performance of, 309
  • strategy characteristics for, 302t
    • options, 302, 302f

Oligarchic institution, 14–15

  • commodity endowment and, 25

Olmeca crude oil, 304

One-year budgeting, 110–11

Open Budget Survey, 113

Open-access resource, 16

Opportunity, systematic inequality of, 148

Option market, 21

  • cost comparison of, 304t
  • hedging proceeds on, 22
  • oil-hedging program and, 302, 302f

Organization for Economic Co-operation and Development (OECD)

  • CPI basket composition for, 57f
  • food trade and, 56
  • redistribution scheme, 149
  • volatility in economic growth, 230

Organization for Economic Co-operation and Development (OECD) country, as high-income, resource scarce, 88

Output gap projection, 122f

Output growth

  • percentage, by sector,172f
  • understanding sources of, 170–72

P

Panama, growth spell ending in, 199f, 200

Pension reserve fund, 109

Per capita growth, inclusive growth and, 246

Permanent-income approach, 106

Petroleum contract, 362–63

Petroleum revenue

  • distribution of, 42–43
  • government and, 38–40
  • stabilization of, 46–48

Petroleum wealth

  • importance of, 36–38
  • political economy of, 35–50

Philippines, Government Watch and, 50

Phosphate, 16

“Point source” resource, 15

Point-source natural resource-rich country, 352

Policy, for commodity price volatility, 20–21

Political economy, 194

  • growth spells and, 195

Political instability, 194

Postwar growth, in newly industrialized countries, 151

Poverty

  • commodity price volatility and, 206
  • economic growth and, 1
  • food price increases and, 277
    • in developing Asia, 282, 282f
  • food/fuel price effect on, 63f
  • GDP per capita growth and, 207
  • high growth rates and, 151
  • inflation and increase in, 61
  • microfinance and, 217
  • price volatility and, 321
  • redistribution schemes for, 149
  • in resource-rich country, 351
  • statistics on, 58

Poverty reduction

  • GDP growth/volatility, 209–10
  • in sub-Saharan Africa countries
    • determinants of, 207, 208–09, 208t
    • income growth and, 260
  • sustainable growth and, 187, 188

Prebisch-Singer hypothesis, 9–10, 25

Price index, as output- versus consumption-oriented, 24

Price insulation, 334–38

  • impact of, 338

Price stickiness, 73

Price volatility. See also Food price volatility

  • impact of, 319
  • international, 332–34
  • international policy challenge with, 328–29
  • as time persistent, 318

Price-taker assumption

  • conditions of, 9
  • flexible (food) price sector and, 77

Private investment, 92–94

Privatization

  • nationalization versus, 44–46
  • of natural resources, 16

Procyclical fiscal policy, 22–23

Procyclical spending, 19

Product price, consumer price index versus, 21

Product price targeting (PPT), 24

Productive employment, 149

  • inclusive growth and, 150b
  • for sustainable and inclusive growth, 156–57

Productivity shock

  • demand and
    • nontraded goods, 181
    • traded goods, 184–185
  • price increases and, 172, 172f

Progresa and Bolsa Familia, 215–16

Property rights, unenforceability of, 16–17

Pro-poor growth, absolute versus relative, 149

Public employment program, 217

Public Interest and Accountability Committee, 361, 362b

Public investment, 92–94

  • resource curse through, 98–99
  • volatility and, 96

Public Investment Management Index (PIMI), 92

Public spending

  • rechanneling in Asia, 288–89
  • smoothing of, 96

Publish What You Pay, 49

  • government reporting standards, 360

Put option, 302, 302f

  • cost comparison of, 304t
  • Maya, strike price of, 306
  • trading of, 311–12

R

Radio, respondents owning, 251f

Raw material demand, income versus, 9

Recession, low-income countries and, 58

Redistribution scheme, 149

Regional Information and Studies, Centre for, 362

Relative pro-poor growth, 149

Religious fractionalization, 198

Rent, resource extraction and, 88

Rent cycling theory, 14

Resource dependence, 20

Resource depletion, savings/investment policies for, 96, 98

Resource extraction. See also Extraction factor income and rents, 88

Resource wealth See Natural resource wealth

Resource-rich country

  • average schooling years in, 237f
  • bank deposits for, 232f
  • democracy, tendency of, 240, 240f, 241
  • diversification challenges for, 232–33
  • economic growth of, 2
  • examples of, 25
  • fiscal revenues and, 56–57
  • institutional capacity weakness in, 352
  • life expectancy/mortality rate in, 237f
  • mean domestic credit to private sector for, 232f
  • in MENA region
    • economic growth, 227
  • output fluctuations in, 235f
  • policy agenda, features of, 241
  • poverty in, 351
  • production structure in, 233f
  • revenue transparency and, 49
  • savings/investment policies for, 87–88
  • secrecy/social contract fragility, implications of, 352–353

Revenue

  • government and, 38–40
  • saving and investing, 90–91
  • volatility of, 95

Revenue boom, 38

Revenue decentralization, 44

Revenue stability, 46–48

Revenue transparency, expenditure versus, 50

Revenue Watch Institute, 49

Rice

  • nominal assistance coefficients and, 342–43
  • price increase for, 281
  • price index for, 344f
  • reserve management of, 289–90
  • Ti’s for, 344t
    • percentage changes, 343f

Rice price increase, 283f

Rice self-sufficiency, 287

Ring-fenced import duty exemption, 63 “Rule of thumb” consumer, 79

  • description of, 77

S

SAARC Food Security Reserve, 290

Salaried employee, defining, 274–75

Santiago Principles, 358–59

  • sovereign wealth funds and, 361

Saudi Arabia

  • annual growth/contribution to by sector/time period, 168–69, 168t
  • boom and bust by sector, 166–67, 167t
  • diversification and effects of, 169
  • GDP in economy and oil sector, 163–64, 163f
  • natural resource boom and, 161–62
  • oil boom in, 165–66, 166f
  • per capita real GDP in, 165, 165f
  • as price-taker, 9
  • structural change in [1970-86], 167t

Savings, resource depletion and, 98

Savings rate

  • convergence and, 90–91
  • from natural source revenues, 89
  • by region, 227f

Scale, government revenue and, 38

School-based feeding scheme, 63

Secrecy, government revenue and, 39–40

  • reducing, 48–50

Self-sufficiency initiative, 287–88

Services, access to

  • measures of, 249
  • natural resources, 250, 250f, 251–52

Seven Sisters, 45

Slutsky own-price elasticity of food, 74, 75f

Social contract, 354–55

Social heterogeneity, income distribution and, 198

Social safety net system, for low-income countries, 57

Solow-Swan-type balanced growth, 148

Source, government revenue and, 38

  • altering, 40
  • volatility and, 44–46

South East Asian Nations (ASEAN), 289–90

Sovereign Development Fund (SDF), 99

  • central bank and, 101–2
  • rules of, 100

Sovereign Resilience Fund (SRF), 99

  • central bank and, 101–2
  • purpose of, 100

Sovereign Wealth Fund Institute, transparency/accountability of government accounts, 114

Sovereign wealth fund (SWF), 112

  • establishment of, 24, 139
  • governance over, 363
  • rules for management of, 112–13
  • rules of, 99
  • transparency/accountability of, 114, 115f
    • Santiago Principles, 358–59

Stability

  • government revenue and, 39
  • in MENA region
    • boom-bust cycle, 234, 235–36
    • human capital/infrastructure investments, 236, 237–38

Stability and Growth Pact, 107

  • ceilings on government deficit and debt, 111–12

Stabilization fund, 46

Stabilization plan, elements of, 46

Standby Credit Facility, 219

Sticky price, 73

  • flexible price versus, 75–78

Strict core IT, 77, 78

  • welfare gain and, 79–80

Strict headline IT, 77

  • welfare gain and, 79, 79f

Strike price, of Maya put option, 306

Structural change, 148

  • growth sustainability and, 154

Subnational revenue fund, 44

Sub-Saharan Africa country. See also Africa commodity exports and poverty in, 206–7

  • commodity price volatility in, 205
  • employment in, 259, 260
  • growth incidence curves in, 253, 254f, 256
  • household consumption expenditures per capita, 263f
  • inclusive growth in, 245–67, 249
  • living standards survey characteristics for, 269t
  • macroeconomic, poverty, consumption aggregates in, 255t
  • poverty reduction in
    • determinants of, 207, 208–9, 208t
    • income growth and, 262
  • public employment program in, 217
  • savings rate in, 227f
  • working age population versus
    • employment ratio for, 261f

Super pro-poor policy, 152

Supply shock, 78

  • food and energy prices as, 72

Sustainability Framework, 350

Sustainable growth

  • difficulties with, 190, 192
  • diversification and, 161, 164
  • factors important to, 154
  • inclusive growth policies for, 150, 158
  • inequality and, 198
  • pace and pattern of growth for, 148
  • poverty reduction and, 187, 188
  • productive employment and, 156–57

Systematic inequality of opportunity, 148

T

Tanzania. See also Sub-Saharan Africa country

  • employed, definition of, 274–75
  • employment in, 260t
  • growth incidence curves in, 254f
  • household consumption determinants for, 257t
  • living standards survey characteristics for, 271t, 273t
  • macroeconomic, poverty, consumption aggregates in, 255t
  • working age population versus employment ratio for, 261f

Tax systems, for low-income countries, 57

Taxation

  • freedom from, 14
  • privatization and, 45

Television, respondents owning, 251f

Terms of trade, consumption inequality and, 213, 214f, 215

Terms-of-trade volatility

  • GDP growth volatility and, 212f
  • growth and, 211–13

Time inconsistency, 21–22

Total agricultural NRA, contributions by region, 348t

Trade barrier, 293

  • food price volatility and, 287

Trade distortion, food price surges and, 333–47

Trade liberalization

  • Asia and, 287–88
  • growth spells and, 195

Trade tax in region (Ti’s), for rice/wheat countries, 340

Tragedy of the commons, 16

Transparency, 48–50

  • civil society organizations and IFI role in, 350
  • commodity price volatility and, 354
  • EITI and, 241
  • GDP growth and copper pricing, 113
  • lack of, consequences of, 353
  • natural resource fund management and, 358–59
  • Natural Resources Charter guidelines for, 357–58
  • new technology for, 363
  • proposals for reform of fiscal rule for, 136
  • strengthening demand for, 361, 362
  • of SWF, 111f

Transparent sovereign wealth fund, establishment of, 24

Treaty of Breda, 15

U

Uganda. See also Sub-Saharan Africa country

  • employment in, 260t
  • Engel curves for food in, 262t
  • growth incidence curves in, 254f
  • household consumption determinants for, 257t
  • living standards survey characteristics for, 271t, 273t
  • macroeconomic, poverty, consumption aggregates in, 255t
  • working age population versus employment ratio for, 261f

Uganda Debt Network, 50

Unconstrained consumer, consumption versus aggregate demand of, 80–81

Undernourishment, population affected by, 320, 320f

Unemployment insurance, 216

United Kingdom, hills of growth in, 189f

United States

  • hills of growth in, 189f
  • as petroleum importer, 36

Unsustainability, anarchy and, 15–17

Unsustainable growth, inequality and, 187–202

Upbreak. See Growth upbreak

Urban employment, 260

Uruguay Round agreement, 340

Utilitarian framework, 90–91

V

Vector autoregression (VAR), 131

Vietnam

  • employment in, 260t
  • macroeconomic, poverty, consumption aggregates in, 255t

Volatility

  • economic growth and, 39
  • in MENA region, 225–41

W

Wage. See Income

Wage stickiness, 73

War. See also Civil war

  • in oil-producing regions, 38, 39f

Wealth, in MENA region, 227

Weather Risk Management Facility, 325

Welfare

  • evaluation of, 78–79
  • measures of, 247, 248
    • asset holdings and access to services, 248–49
    • consumption versus income, 252
    • household consumption, 252
  • NIPA versus survey data measures for, 248b
  • strict core IT policy and, 79

Welfare gain, 79

  • from alterative IT rules, 79f

West Texas Intermediate (WTI), 305b–6b

Wheat

  • nominal assistance coefficients and, 341–42
  • price increase for, 283, 283f
  • price index for, 344f
  • Ti’s for, 342t
    • percentage changes, 343f

World Bank, 22

  • Doing Business annual rating of, 93
  • low-income countries and, 66
  • poverty rates and, 58
  • transparency agenda, 350

World commodity, long-term trends of, 9–12

World Food Program, 290

  • agriculture risk management and, 325

World price, indexation of oil/mineral contracts to, 21–22

World Trade Organization (WTO), 342

WTI crude oil, 304

WTI put option, strike prices of, 307t

WTI-Maya spread/monthly correlation, 305b

Z

Zambia. See also Sub-Saharan Africa country

  • employed, definition of, 274–75
  • employment in, 260t
  • Engel curves for food in, 266t
  • growth incidence curves in, 254f
  • household consumption determinants for, 257t
  • living standards survey characteristics for, 271t, 273t
  • working age population versus employment ratio for, 261f

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