How to spend it: resource wealth and the distribution of resource rents

Natural resource revenues differ from other government revenues both in their time profile, and in their political and legal status: they are volatile and exhaustible, and belong to all citizens of the country in which they are located. This paper discusses the optimal expenditure of natural resource revenues, based on economic theory and with reference to existing international practices. It considers both the distributional impact and the efficiency of alternative policies, focusing on the extent to which they succeed in providing all citizens with their share of the benefits due to natural resources. It also shows how, by dropping the assumption of a representative agent, a concern for poverty and social welfare more generally interacts with and alters standard recommendations for the intertemporal management of resource revenues.