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Sara Torregrosa Hetland . Photo

Sara Torregrosa Hetland

Senior lecturer

Sara Torregrosa Hetland . Photo

Resource abundance and public finances in five peripheral economies, 1850s–1930s

Author

  • José Peres-Cajías
  • Sara Torregrosa Hetland
  • Cristian Ducoing

Summary, in English

The resource curse literature has established that taxation of natural resources might limit the long-term development of fiscal capacity in resource-rich countries. This article explores if, and how, natural resource abundance generates fiscal dependence on natural resource revenues. We compare five peripheral economies of Latin America (Bolivia, Chile, Peru) and Scandinavia (Norway, Sweden) over a period of 90 years, between 1850 and 1939. Both groups were natural resource abundant, but in the latter natural resource dependence decreased over time. By using a novel database, we find that fiscal dependence was low in Norway and Sweden, while high and unstable in Bolivia, Chile and Peru. This suggests that natural resource abundance should not be mechanically linked to fiscal dependence. An accounting identity shows that sudden increases in fiscal dependence were related to both economic and political factors: countries’ economic diversification, and attitudes of the relevant political forces about how taxation affects the companies operating in the natural resource sector.

Department/s

  • Department of Economic History
  • Economic development of the Global South
  • Sustainability transformations over time and space

Publishing year

2022-06

Language

English

Publication/Series

Resources Policy

Volume

76

Document type

Journal article

Publisher

Elsevier

Topic

  • Economic History

Keywords

  • Natural Resources curse
  • Latin America
  • Taxation
  • Scandinavia
  • fiscal contract
  • Rentier State

Status

Published

Project

  • Sustainable development, Fiscal policy and Natural resources management. Bolivia, Chile and Peru in the Nordic countries’ mirror
  • Taxing for the welfare state: public finances and progressivity in the rise of social spending (1910-1970)

ISBN/ISSN/Other

  • ISSN: 0301-4207