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A number of countries have recently discovered and are developing oil and gas reserves. Policy makers in such countries are anxious to obtain the greatest benefits for their economies from the extraction of these exhaustible resources by designing appropriate policies to achieve desired goals. One important theme of such policies is the so-called local content created by the sectorthe extent to which the output of the extractive industry sector generates further benefits to the economy beyond the direct contribution of its value-added, through its links to other sectors. While local content policies have the potential to stimulate broad-based economic development, their application in petroleum-rich countries has achieved mixed results. This paper describes the policies and practices meant to foster the development of economic linkages from the petroleum sector, as adopted by a number of petroleum-producing countries both in and outside the Organisation for Economic Co-operation and Development. Examples of policy objectives, implementation tools, and reporting metrics are provided to derive lessons of wider applicability. The paper presents various conclusions for policy makers about the design of local content policies.

Petroleum industry and trade --- Petroleum reserves --- Business & Economics --- Industries --- Government policy --- Economic aspects --- Oil reserves --- Oil supply --- Petroleum --- Petroleum supply --- Reserves of petroleum --- Reserves --- Oil fields --- Energy industries --- Oil industries --- Petroleum industry and trade. --- Government policy. --- Economic aspects.

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Oil resources usually play a significant role in oil-rich countries, in gross domestic product and government revenues. High dependence of government revenues on oil can contribute to severe recession following an adverse commodity price shock, such as in 2014. This paper examines the extent to which a fiscal rule or stabilization fund could translate into a less pro-cyclical fiscal policy, with the government saving part of its oil revenues during periods of high prices and drawing down on the savings during difficult periods. Using the macro-structural model MFMod, the paper presents, evaluates, and discusses the strengths and weaknesses of different oil revenue management mechanisms applied to the specific case of Chad. The scenarios demonstrate that a well-designed management rule can successfully insulate the public budget from the oil price cycle, resulting in a significant reduction in the volatility of the economy.

Economic Modeling --- Energy Policies and Economics --- Fiscal and Monetary Policy --- Fiscal Policy --- Fiscal Rules --- Macroeconomic Management --- Oil and Gas --- Oil Prices --- Oil Revenue Management --- Procyclical Policy

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Sovereign wealth funds represent a large and growing pool of savings. An increasing number of these funds are owned by natural resource-exporting countries and have a variety of objectives, including intergenerational equity and macroeconomic stabilization. Traditionally, these funds have invested in external assets, especially securities traded in major markets. But the persistent infrastructure financing gap in developing countries has motivated some governments to encourage their sovereign wealth funds to invest domestically. This paper proposes some basic elements of a conceptual framework to create a system of checks and balances to help ensure that the sovereign wealth funds do not undermine macroeconomic management or become a vehicle for politically driven "investments." First, the risks and opportunities of domestic investment by sovereign wealth funds are analyzed. Central issues are the relationship of sovereign wealth fund financing to the budget process and to the procurement systems of sector ministries, as well as the establishment of appropriate benchmarks and safeguards to ensure the integrity of investment decisions. The paper argues that a well-governed sovereign wealth fund, with a sound mandate and professional management and staffing, can possibly improve the quality of the public investment program. But its mandate should not duplicate that of other government institutions with investment mandates, such as the budget, the national development bank, the investment authority, and state-owned enterprises. Establishing rules on the type of investment (for example, commercial and/or quasi-commercial) and its modalities (for example, no controlling stakes, leveraging private investment) is one way to ensure separation between the activities of the sovereign wealth fund and those of other institutions. The critical issue remains that of limiting the sovereign wealth fund's investment scope to that appropriate for a wealth fund. If investments that generate quasi-market returns are permitted, the size of the home bias should be clearly stipulated and these investments should be reported separately.

Access to Finance --- Capital Stock --- Debt Markets --- Domestic Investment --- Emerging Markets --- Finance and Financial Sector Development --- Fiscal Policy --- Infrastructure Investment --- Intergenerational Equity --- Investment & Investment Climate --- Macroeconomic Policy --- Macroeconomics and Economic Growth --- Non Bank Financial Institutions --- Private Sector Development --- Project Evaluation --- Public Finance --- Public Investment --- Public Private Partnerships --- Sovereign Wealth Fund --- SWF --- Wealth Management

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Governments often pursue a variety of economic, social and political objectives through their allocation policies that go beyond the maximization of the net present value of the economic rent. The optimal allocation policy depends on a range of country specific and exogenous factors. Despite the variety of factors influencing optimal design, most countries use similar solutions. In particular, when auctions or administrative procedures are used, most governments opt for simple simultaneous multi-object sealed-bid rounds. While this may appear to be paradoxical, there is a practical explanation

Petroleum industry and trade. --- Petroleum --- Prospecting.

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