Natural resource dependence

Proposed and experimental methods

Methods that are proposed, under trial, approved in some places, or tried and then failed. Each shows a stage label and an evidence rating. A stage label shows how far a method has progressed, not whether it works. The stage labels are explained on the environmental factor page.

• Resource dividends paid directly to residents (Approved but not scaled, B). Builds on guaranteed income (see "Learned helplessness and low sense of control" in the psychological factors). Alaska has paid every resident a yearly cash dividend from its Permanent Fund since 1982, and a synthetic control analysis found no effect on employment and a 1.8 percentage point (17%) rise in part-time work (Jones and Marinescu, 2022). The "Oil to Cash" proposal would place resource windfalls in a transparent ring-fenced fund, pay equal scheduled dividends to all citizens, and tax part of the dividends to build a tax system that links citizens to government, which the authors argue fits best where resource income is high and corruption is severe (Moss et al., 2015). It has not been tested as proposed, and Mongolia's attempt is described below.
• Sovereign funds to save petroleum revenue (In wide use, contested, B for facts only). Countries place oil and gas revenue in a fund so that spending can be spread over time. In 2025 the IMF warned that, without further reforms, Timor-Leste's budget deficits would lead to "a full depletion of the Petroleum Fund by the end of the 2030s" and that the economy remains under-diversified (IMF, 2025).
• Not shown to help: Extractive Industries Transparency Initiative membership (In wide use, contested, C). EITI member countries publish what oil, gas, and mining companies pay and what governments receive, overseen by groups that include civil society. A review found the initiative most successful at becoming a recognized brand and setting reporting standards, with its development effects still unclear (Rustad et al., 2017). A cross-country study found that membership offered "a shielding mechanism" against the tendency of mineral-rich countries to see corruption rise over time (Papyrakis et al., 2017), but synthetic control analyses of five early Latin American members (Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago) found no substantial reduction in corruption in any of them (Lopez-Cazar et al., 2021).
• Reversed: U.S. rule on disclosure of payments to governments (Failed or reversed, B). Section 1504 of the Dodd-Frank Act required oil, gas, and mining companies listed in the U.S. to disclose payments to governments. Congress overturned the SEC's 2016 rule under the Congressional Review Act, and the President signed the resolution on February 14, 2017 as Public Law 115-4 (Executive Office of the President, 2017). The SEC adopted a new rule on December 16, 2020 that defines a "project" at the national and major subnational level and adds conditional exemptions, with the first reports due after a two-year transition (SEC, 2020).
• Reversed: Mongolia's resource cash transfers (Failed or reversed, B). Mongolia began resource-financed payments for all children in 2006, extended larger payments to all citizens in 2010, and returned to child payments only in 2012. Payments were tied to election promises rather than mineral earnings, at times exceeded mineral revenue and were met by borrowing, and public support for direct payouts fell from a peak of 25% to under 10%, although the transfers reduced poverty and inequality (Yeung and Howes, 2015b). The authors concluded that the scheme largely failed because of design and implementation flaws, and that this one case should not rule out the approach (Yeung and Howes, 2015a).
• Failed: World Bank-backed oil revenue management in Chad (Failed or reversed, B). As part of the Chad-Cameroon oil pipeline project, Chad passed a Law on Revenue Management in December 1998 with an oversight commission that included civil society members, but in December 2005 Parliament loosened the limits on using oil revenue for general spending and the World Bank suspended loan disbursements (EIB, n.d.). Chad prepaid the remaining $65.7 million of a $140.7 million loan on September 5, 2008, and on September 9 the World Bank ended the arrangement, saying Chad had not set aside oil revenue for local communities, health, and education as agreed (Reuters, 2008).

Sources cited on this page

1. Sachs, J. D., & Warner, A. M. (2001). The curse of natural resources. European Economic Review, 45, 827-838. C Limited: contested
2. Ma, L., Graham, D. J., & Stettler, M. E. J. (2021). Has the ultra low emission zone in London improved air quality? Environmental Research Letters, 16, 124001. link B Moderate
3. Jones, D., & Marinescu, I. (2022). The labor market impacts of universal and permanent cash transfers: Evidence from the Alaska Permanent Fund. American Economic Journal: Economic Policy, 14(2), 315-340. link B Moderate
4. Lopez-Cazar, I., Papyrakis, E., & Pellegrini, L. (2021). The Extractive Industries Transparency Initiative (EITI) and corruption in Latin America: Evidence from Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago. Resources Policy, 70, 101907. link C Limited
5. Moss, T., Lambert, C., & Majerowicz, S. (2015). Oil to cash: Fighting the resource curse through cash transfers. Center for Global Development. link C Limited
6. Papyrakis, E., Rieger, M., & Gilberthorpe, E. (2017). Corruption and the extractive industries transparency initiative. Journal of Development Studies, 53(2), 295-309. link C Limited
7. Rustad, S. A., Le Billon, P., & Lujala, P. (2017). Has the Extractive Industries Transparency Initiative been a success? Identifying and evaluating EITI goals. Resources Policy, 51, 151-162. link C Limited
8. Yeung, Y., & Howes, S. (2015a). Resources-to-cash: A cautionary tale from Mongolia (Development Policy Centre Discussion Paper No. 42). Australian National University. link C Limited

Every source for this factor is listed on the environmental factor page.