Avoiding a natural resource curse? The impact of administrative efficiency on Colombian municipalities’ fiscal effort

Bibliographic Data

ID6302804
AuthorsMaria Antonieta Collazos-Ortiz (0000-0001-9023-3323, Pontificia Universidad Javeriana, corresponding author), Arjan H Schakel (0000-0002-1173-9316, University of Bergen)
Year2024
Volume50
Issue3
Pages596-616
Publication date2024-05-03
Open AccessYes
TypeARTICLE
VenueLocal Government Studies (JOURNAL)
Journal identifiersISSN: 0300-3930 • E-ISSN: 1743-9388
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/03003930.2023.2282565
OpenAlexW4389387361
LanguageEN
Citations received1
References cited39

The term ‘paradox of the plenty’ was coined to describe an often-found inverse relationship between royalty revenue and economic development. The main causal mechanism is thought to be a substitution effect whereby governments use royalty revenue to lower taxes instead of investing in activities that promote long-term economic growth. However, the occurrence of a ‘natural resource curse’ differs widely both for countries and subnational jurisdictions. Based on a dataset that traces 1,078 municipalities in Colombia from 2006 to 2017 and utilising a policy reform in 2012 that reduced royalty revenue for producer municipalities, we argue and find that municipal fiscal effort is higher when producer municipalities have more-efficient administrations. Our findings have important implications for the design of policy that allocates royalty revenue across subnational jurisdictions, in particular for developing countries where administrative efficiency tends to vary widely between local governments

Business · Curse · Economic policy · Economics · Natural resource · Political science · Public economics · Resource (disambiguation · Resource curse · Revenue · Fiscal Policy and Economic Growth · Mining and Resource Management · Natural Resources and Economic Development · Finance

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