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The Dynamics of Reforms in Resources-rich Countries: Towards Incentive-compatible Approaches

Briefing Note 48

March 2013

Bilal, S. 2013. The dynamics of reforms in resources-rich countries: Towards incentive-compatible approaches. (Briefing Note 48). Maastricht: ECDPM.

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When properly managed, natural resources can effectively contribute to sustainable and equitable development. Yet, too often, resource-rich countries have failed to capitalize from the benefits and transformative potential of their natural endowment. Poor or inappropriate governance and institutional structures have commonly been blamed for this resource curse. While political economy considerations have usefully been advanced to explain some of these weaknesses, proposed remedies have often been prescriptive in nature, focusing on best practices. However, it might be more effective to take greater account of the dynamics of reforms in resource-rich countries. This would notably entail also adopting a
political economy approach to identifying incentive-compatible reforms, as well as promoting initiatives that can enhance domestic incentives towards a pro-development path in resource-rich countries.

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Economic Transformation and TradeBriefing Notes (series)