Natural Resources in Latin America and the Caribbean

Emily Sinnott

Description

Policy makers in many countries in the Latin American and Caribbean region have found it challenging to determine how to treat natural resource commodity production and how to manage the recurrent cycles of booms and busts. 'Natural Resources in Latin America and the Caribbean: Beyond Booms and Busts?' addresses the major concerns associated with commodity dependence, summarizing the state of the art in existing literature and filling in the knowledge gaps with new analysis. The report finds that some commonly accepted negative effects of dependence on natural resources are largely myths, while some are realities. But the authors find that all the effects can be managed, and they provide practical advice on how to do so. Issues covered include long-term fiscal growth, fiscal volatility, institutional impacts, and environmental and social effects. The report analyzes the implications for the region's development and policies.
'Natural Resources in Latin America and the Caribbean: Beyond Booms and Busts?' will be of interest to policy makers, academics, and analysts, as well as others interested in the economics of commodity markets and their role in economic development.

Sujets

• Mines
• Measures of national income and output
• Natural Resources
• Oil
• Price of petroleum
• Producer
• Terms of trade
• Economic growth
• Mercancía (economía)
• Industry

Informations

• Publié par: world-bank-publications
• Publié le: 24 juin 2010
• Nombre de lectures: 49
• EAN13: 9780821384923
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

WORLD BANK LATIN AMERICAN
AND CARIBBEAN STUDIES
Natural Resources in Latin
America and the Caribbean
Beyond Booms
and Busts?
Emily Sinnott
John Nash
Augusto de la TorreThis is the city of Potosi, in current day Bolivia, and the Cerro Rico (Rich
Mountain), the location of the biggest mining operation of its day. Founded
in 1546, the city boasted 86 churches and close to 200,000 inhabitants by
1672, placing it among the largest and richest cities in the world. Today it is
one of Bolivia’s poorest regions.
Cover photo: This is an image of the Escondida copper, gold, and silver open-pit mine
in Chile’s Atacama Desert, as seen by the Advanced Spaceborne Thermal Emission and
Reflection Radiometer, or ASTER, in shortware infrared light. This view highlights the
various types of rocks on the surface and disturbances due to mining activities.
Image credit: NASA/GSF/MITI/ERSDAC/JAROS and U.S./Japan ASTER Science TeamNATURAL RESOURCES IN LATIN AMERICA
AND THE CARIBBEAN
BEYOND BOOMS AND BUSTS?NATURAL RESOURCES IN LATIN AMERICA
AND THE CARIBBEAN
BEYOND BOOMS AND BUSTS?
Emily Sinnott
John Nash
Augusto de la Torre© 2010 The International Bank for Reconstruction and Development/The World Bank
1818 H Street, NW
Washington, DC 20433
Telephone: [phone]
Internet: www.worldbank.org
All rights reserved
1 2 3 4 13 12 11 10
This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings,
interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank
or the governments they represent.
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territory or the endorsement or acceptance of such boundaries.
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ISBN: 978-0-8213-8482-4
eISBN: 978-0-8213-8492-3
DOI: 10.1596/978-0-8213-8482-4
Library of Congress Cataloging-in-Publication Data
Torre, Augusto de la.
Natural resources in Latin America and the Caribbean : beyond booms and busts? / Augusto de la Torre, Emily Sinnott, John Nash.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-8213-8482-4 — ISBN 978-0-8213-8492-3 (electronic)
1. Natural resources—Latin America. 2. Natural resources—Caribbean Area. I. Sinnott, Emily. II. Nash, John, 1953- III. Title.
HC85.T67 2010
333.7098—dc22
2010022086
Cover design: Naylor Design, Inc.Contents
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix
Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xi
1. Introduction1
2. Stylized Facts of Commodity Production and Trade in LAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3. Natural Resources and Long-Term Growth: Exploring the Linkages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
4. Institutions and the Resource Curse or Blessing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
5. Managing Commodity Price Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6. Environmental and Social Consequences of Commodity Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
7. Conclusions and Policy Implications57
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Boxes
3.1 A Brief History of Economic Thought on Dutch Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.1 No Exit? How a Country May Get Stuck in a Bad Institution Trap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.1 Potential Anchors for Monetary Policy for Commodity Producers and Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . .48
6.1 Environmentally Perverse Subsidies: Electricity Fees for Irrigators in Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
6.2 Examples of Social Conflicts in Peru during the Last Decade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
7.1 Key Design Elements for a Natural Resource Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
7.2 Fiscal Rules as Social Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
7.3 IBRD Commodity Products and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
7.4 Technological Innovation as a Means to Cope with Dutch Disease: The Chilean Experience . . . . . . . . . . . . . . . . . . .64
7.5 Extractive Industries Transparency Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
7.6 Reforming Environmentally Perverse Subsidies through Decoupling: Electricity Fees for Irrigators in Mexico . . . . .68
7.7 Payment for Environmental Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Figures
2.1 Most People Live and Much of LAC GDP Is Generated in Net Commodity Exporting Countries6
2.2 Abundance in LAC Is Modest Relative to High-Income Resource-Rich Countries . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.3 LAC Is, However, More Dependent on Commodities, Especially Fiscally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.4 Fiscal Revenues from Natural Resources Have Grown in Importance for Many LAC Commodity Exporters . . . . . . . .8
2.5 The Decline in the Share of Commodity Exports Has Been Lower for LAC, the Middle East, and Africa . . . . . . . . . . .8
2.6 Concentration by Destination Has Declined Slightly Since the 1990s, While Concentration by Product Has Risen . .9
2.7 LAC Exports Have More than a Proportionate Share of Most Commodity Groups . . . . . . . . . . . . . . . . . . . . . . . . . . .10
vCONTENTS
2.8 The Latest Boom Was the Most Broad-Based at Least Since Detailed Trade Data Became
Available in the Early 1960s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.9 The Recent Boom Brought the Highest Ever Crude Oil Prices and Highest Metals Prices Since WWI,
While Real Agricultural Prices Remained Below the Heights of the 1970s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.1 Natural Capital per Capita Is Positively Correlated with GDP per Capita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.2 Commodity Prices and the Prebisch-Singer Hypothesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.3 Intra-Industry Trade in Metals Is Comparable to Other Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
3.4 LAC’s Market Share Has Expanded over Time, Due to Both Inter-Product Upgrading
and Intra-Product Quality Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
3.5 The Price Volatility of Commodities Is Higher Than That of Manufactures. . . . .21
4.1 Energy Subsidies for LAC Countries . . . . . . . . . . . . . . . .30
4.2 Bolivia: Following Privatization, the Government’s Share of Hydrocarbon Revenues Fell,
While Inequality Rose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
5.1 The Impulse Response Function to a Commod