Redefining Economic Sustainability in Resource-rich States: Comparative Lessons
The chapter redefines “economic sustainability” in resource-dependent states by offering a definition anchored in growth theory that accounts for economic challenges of resource dependence and takes into account the volatility and depletion features of resource-driven revenue. The chapter first summarizes the changing and elusive definition of economic sustainability in the context of resource-dependent economies, including its recent focus on diversification as a main recipe. The chapter then redefines economic sustainability as an issue that needs to be considered from two main perspectives: volatility and depletion. The definition reverts to economic growth theory as a basis for designing sustainability-promoting economic policies in line with drivers of economic growth and taking into account both perspectives. Successful growth-sustaining policies include appropriate management of resource windfall to achieve fiscal sustainability and long-term diversification. These policies include fiscal rigor and savings for capital accumulation; human capital development; technology and institutions; and regulation and industrial reform of oligopolies. Lessons are offered drawing on examples from Botswana, Chile, and Kuwait.
Shehabi M. (2021) Redefining Economic Sustainability in Resource-rich States: Comparative Lessons. In: Luciani G., Moerenhout T. (eds) When Can Oil Economies Be Deemed Sustainable?. The Political Economy of the Middle East. Palgrave Macmillan, Singapore.
