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This paper uses a computable general equilibrium model Maquette for Millennium Development Goal Simulations (MAMS) calibrated to Mongolia to investigate how the development of major mining projects leads to Dutch disease. The simulations suggest that the process is complex, with the relative strength of the different spending and resource movement channels determined by structural features of the economy, such as factor input needs of the mining sector and substitution elasticities, and how mineral windfalls are eventually spent. In Mongolia, mining sector demand for domestic factor inputs explains two-thirds of the appreciation of the real exchange rate, with demand for labor, aquasi-fixed factor, the most potent channel for transmitting Dutch disease. The simulations also suggest that public policies may only play a limited role in limiting Dutch disease, even if growing fiscal revenues are channeled toward productivity-enhancing public investment rather than public consumption or lower taxes. This finding suggests that policy makers face real trade-offs, namely that, as an equilibrium response, Dutch disease is unavoidable and at odds with an export-led, manufacturing-oriented development strategy unless resources are left in the ground (or mining earnings are saved abroad). If the objective is to limit Dutch disease, then the simulations point to policies that minimize the usage of domestic inputs by the mining sector, or that accommodate the growing demand for key inputs such as labor e.g. through immigration. Regarding spending, policy makers should channel mining revenues toward public investment, to expand the economy's long-run supply potential. Where large direct income flows from the mining sector to households are important, monetary policy may be more useful than fiscal policy in constraining private spending.

CGE --- Computable General Equilibrium --- Dutch Disease --- Mams --- Mdgs --- Millennium Development Goal

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This paper examines spending plans suggested by the recent literature regarding Dutch disease and examines their implications to Niger relative to its expanding mineral sector. The key to the benefits of significant mineral revenue lies with the productivity and supply responses of spending. If significant output gain is ensured, then there is little difference across the spending plans in their effects on real consumption. The overshooting of relative prices of the non-tradable sector or the shrinking share of traded sectors in gross domestic product is also ameliorated with greater supply flexibility. Growth paths of alternative spending strategies differ markedly in timing and pattern when spending does not raise productivity. As a caution against expectations that exaggerate the benefits of mineral revenue under all circumstances, the more aggressive spending plan may result in a boom-bust cycle if fiscal adjustments and debt repayments are necessary for any significant borrowing against future revenue and productivity gains are not realized. Using extractive industries revenue for transfers to households would have a greater effect on poverty reduction in the short and medium term but the long-run gains from investment in human and physical capital are likely to offset the initial lack of pro-poor bias. Different strategies differ significantly with regard to risks and required technical implementation capacity and political capacity to sustain a chosen course of action.

Banks & Banking Reform --- Computable General Equilibrium (CGE) Models --- Currencies and Exchange Rates --- Debt Markets --- Dutch Disease --- Economic Development --- Economic Theory & Research --- Emerging Markets --- Macroeconomics and Economic Growth --- Poverty Reduction --- Spending Strategies

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One of the key objectives of this first SCD of the Republic of Congo is to serve as an essential input to the Country Partnership Framework. The SCD is not intended to carry out substantial new analytical work, but rather to draw upon and synthesize the existing evidence. A substantial amount of analytical work on Congo has been carried out in recent years, covering a wide range of subjects. These reports and studies conducted by the World Bank were supplemented by studies prepared by the government and other development partners and formed a solid basis for the analysis presented in the chapters to follow. The report is divided into two main parts. The first part presents the growth drivers and constraints for achieving the twin goals of eliminating extreme poverty in Congo by 2030 and promoting shared prosperity. The second part categorizes the constraints, prioritizes them according to the impact they have on the twin goals, identifies areas for improvement, and provides recommendations for leveraging the country's opportunities and achieving sustainable and equitable growth.

Access Of Poor To Social Services --- Commodities --- Dutch Disease --- Economic Growth --- Educational Attainment --- Governance --- Human Capital --- Inequality --- Job Creation --- Labor Market --- Labor Markets --- Macroeconomics And Economic Growth --- Mining --- Politics And Government --- Poverty --- Poverty Reduction --- Productivity --- Social Protections And Labor

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This paper examines whether natural resource dependence has a negative influence on various indicators of institutional quality when controlling for the potential effects of other geographic, economic and cultural initial conditions. Analysis of a panel of countries from 1996 to 2010 indicates that a high degree of resource dependence, measured as the share of mineral fuel exports in a country's total exports, is associated with worse government effectiveness, as well as with reduced levels of competition across the economy. Furthermore, estimation of long-run elasticities suggests that government effectiveness and the intensity of domestic competition decrease over time as the dependence on natural resources increases. An illustration of the Russian case shows that the negative effects accumulate in the long run, leading to a worse deterioration of government effectiveness in Russia than in Canada, a country with a comparable resource endowment but far better overall institutional quality. This result is corroborated by a significant negative correlation found between regional resource dependence and an indicator of regulatory capture in Russian regions, which indicates that the regulatory environment is more likely to be subverted in regions that are more dependent on extractive industries. Overall, the findings would be consistent with a situation in which a generally weak institutional environment would allow resource interests to wield the bidding power accruing from export revenues to subvert the content of laws and regulations, as well as their enforcement. The fact that this is associated with negative externalities for the rest of the economy, notably by undermining a level playing field across non-resource sectors, sheds light on a potential channel for the resource curse.

Competition --- Dutch disease --- E-Business --- Economic Theory & Research --- Emerging Markets --- Environmental Economics & Policies --- Finance and Financial Sector Development --- Governance Indicators --- Institutions --- Natural resources --- Regulatory capture --- Resource curse --- World Governance Indicators --- Russia

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In this paper, we assess whether recent economic developments in Russia are symptomatic of Dutch Disease. We first provide a brief review of the literature on Dutch Disease and the natural resource curse. We then discuss the symptoms of Dutch Disease, which include (1) real exchange rate appreciation; (2) slower manufacturing growth; (3) faster service sector growth; and (4) higher overall wages. We test these predictions for Russia while carefully controlling for other factors that could have led to similar symptoms. We conclude that, while Russia has all of the symptoms, the diagnosis of Dutch Disease remains to be confirmed.

Foreign Exchange --- Macroeconomics --- Economic Theory --- Industries: Manufacturing --- Industries: Service --- Energy: Demand and Supply --- Prices --- Industry Studies: Manufacturing: General --- Industry Studies: Services: General --- Resource Booms --- Manufacturing industries --- Currency --- Foreign exchange --- Economic theory & philosophy --- Oil prices --- Manufacturing --- Real exchange rates --- Services sector --- Dutch disease --- Service industries --- Economic forecasting --- Russian Federation --- Foreign exchange rates --- Economic development