PhD Defence: Rachid Pafadnam

Rachid Pafadnam
UCA, CERDI 
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Examiners

Samuel Guerineau, Professor, Université Clermont Auvergne. 
Antonio Savoia, Professor, University of Manchester. 
Rabah Arezki, Research director, CNRS - Université Clermont Auvergne. 
Lisa Chauvet, Professor, Université Paris 1 Panthéon-Sorbonne. 
Chadi Bou-Habib, PhD, World Bank Group. 

Abstract

The extractive sector is of primary importance to many developing countries. Just the announcement of a major oil discovery ripples through the economy, with a significant feedforward effect on the current account, through both investment and savings channels (Arezki et al., 2017). However, resource abundance is not always a blessing for these countries (Van der Ploeg, 2011). Sachs and Warner (1995) highlighted the existence of a negative and significant relationship between natural resource abundance and economic growth, referred to as the "resource curse" phenomenon. This phenomenon can manifest itself in the Dutch disease (Corden et al., 1982) or through conflicts over rents (Collier and Hoeffler, 2004). But the major determinants of the resource curse are institutional and governance problems such as low quality institutions (Sala-i-Martin and Subramanian, 2008) or corruption (Bhattacharyya and Hodler, 2010; Arezki and Brückner, 2011), which are widespread in these countries where leaders, due to weak institutions, appropriate rents from natural resources and use them to buy off opponents, applying the "divide and rule" strategy (Acemoglu et al., 2004).

The quality of institutions is a major determinant of economic development (Acemoglu et al., 2001). Improving the quality of institutions determines the effectiveness of extractive revenue booms (Robinson et al., 2006). States that will benefit from extractive rents to finance their development are those with quality institutions (Mehlum et al., 2006). Policies to promote transparency and fight corruption increase the accountability of leaders to the public (Acosta, 2013), increase the costs associated with episodes of corruption, and thus are an instrument to fight bad governance (Kolstad et al., 2009).

Works on the resource curse has fostered the emergence of fiscal institutions and international organizations. As a budgetary framework, we can point to sovereign wealth funds, which are country-owned investment funds made up of surplus revenues (mostly from natural resource revenues), invested in various assets in other countries (Mohaddes et al., 2017), and act as constraints on the available budget. Of the international organizations promoting transparency and fighting corruption, the Extractive Industries Transparency Initiative (EITI), created in 2003, is the best known and most influential in the extractive sector, implemented at the state level (Lujala, 2018). The Kimberley Process, created in 2003, is another major initiative for better global governance in the diamond sector (Le Billion, 2011). These institutions aim to improve governance, institutional quality, and state accountability, with the goal of promoting sustainable economic growth and reducing poverty and income inequality in resource-rich countries.

The topic of natural resources is topical with the Russian-Ukrainian conflict. With Western economic sanctions imposed on Russia, yet the main supplier of oil and gas to Europe (Harsem et al., 2013), European countries will have to find alternative sources of supply. Developing countries rich in natural resources should benefit from significant investments from the West not only in standard resources such as oil and gas, but also in scarce resources for the ecological transition. The notions of governance and quality of institutions in these countries will play an important role in the attractiveness of these foreign investments.

Given the importance of natural resources and governance in the extractive sector, this thesis focuses on resource-rich developing countries and analyzes issues that have not yet been addressed in the natural resource literature, while assessing the effectiveness of institutional and fiscal instruments in fostering better management of extractive rents and their effective contribution to development financing. This thesis also relies on the use of sophisticated econometric methods. The first chapter examines the effects of EITI implementation on economic growth and identifies the main transmission channels. The second chapter looks at the effects of transparency policies on the fight against illicit financial flows. The third chapter analyzes the effects of the establishment of sovereign wealth funds on the composition of public spending. Finally, the fourth chapter discusses the impact of extractive rents on the quality of public spending and the role of governance.

Keywords

Natural resources, Governance and institutional quality, Financing for development, Resource-rich countries, Developing countries

theses.fr/s363482