Political Economy of Oil - Revenue Sharing in a Developing Country Illustrations from Nigeria

26 Pages Posted: 28 Jan 2006

See all articles by Ehtisham Ahmad

Ehtisham Ahmad

International Monetary Fund (IMF)

Raju Singh

International Monetary Fund (IMF)

Date Written: January 2003

Abstract

Control over natural resource revenues is a contentious, politically divisive issue in most developing countriesespecially for oil production. A typical policy response of the center in such cases has been to introduce revenue sharing arrangements. Such measures have generally not assuaged the aspirations of the oil-producing regions and have exposed them to volatility in their revenue flows that they are generally unable to cope with.

An alternative is to assign more stable revenue bases to the regional administrations, together with a general-purpose transfer system that incorporates a floor. This acts as an insurance mechanism for the regional administrations and facilitates the stable provision of public services in the oil-production regions, as well as the possibility of redistribution. We use the recent history of oil-revenue sharing in Nigeria to illustrate the propositions.

Keywords: Intergovernmental Fiscal Relations

JEL Classification: H7

Suggested Citation

Ahmad, Ehtisham and Singh, Raju, Political Economy of Oil - Revenue Sharing in a Developing Country Illustrations from Nigeria (January 2003). IMF Working Paper No. 03/16, Available at SSRN: https://ssrn.com/abstract=879091

Ehtisham Ahmad (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Raju Singh

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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