Notes

1. For instance, Botswana succeeded in converting its diamond rents into higher educational attainment for its adult population (see figure 12A.1, in annex 12A). 2. The argument can be reversed: resource abundance can negatively affect the degree of democratization and the institutional framework (Ahmadov 2013;

Hendrix 2018; Wigley 2018). 3. In this chapter we use the term resource rich for all countries that have at least 20 percent of exports or 20 percent of fiscal revenue from nonrenewable natural resources (oil, gas, coal, or minerals) over 2006–10 while non-resource-rich countries are the rest of the world. 4. The definition of RR countries is taken from IMF (2012) and Venables (2016) and is detailed in the first section of this chapter. 5. IMF (2012) and Venables (2016) define RR countries as any country deriving at least 20 percent of exports or 20 percent of fiscal revenue from nonrenewable natural resources over 2006–10. In addition, a subcategory of countries that do not necessarily meet the thresholds are included in their list as prospective natural resource–exporting low-income and lower-middle-income countries:

Afghanistan, the Central African Republic, Ghana, Guatemala, the Kyrgyz

Republic, Madagascar, Mozambique, São Tomé and Príncipe, Sierra Leone,

Tanzania, Togo, and Uganda (IMF 2012, 49). This chapter keeps these countries on the list of RR countries. Kuwait and South Africa are not included because of the lack of data for Kuwait for 2006–10, South Africa was close but did not meet the thresholds for that period, and both countries are not lowincome or lower-middle-income, so they do not enter to the category of prospective countries. 6. The World Bank regional classifications are used as a reference, https:// datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank -country-and-lending-groups. 7. The qualitative interpretation is reversed for Europe and Central Asia when excluding high-income RR countries, as 27 of 28 high-income countries in this region are also non-RR countries (the only exception is Norway, which is an

RR country with a high-income level). The results when excluding highincome countries for every region are available in table 12A.3 in annex 12A. 8. RR countries in the Middle East and North Africa overperform the level of human capital per capita of non-RR countries in the same region. But when considering the whole sample of countries, they underperform compared with non-RR countries with similar levels of gross domestic product per capita (see figure 12.3). 9. Europe and Central Asia is not considered because 27 non-RR countries in the region (of 40) are high-income countries and only one (Norway) is an RR country and a high-income country. The Middle East and North Africa region is not considered because the region’s five major regional RR countries (Bahrain, Oman, Qatar, Saudi Arabia, and the United Arab Emirates), of 11 countries, are high-income countries and only three countries (Israel, Kuwait, and Malta) are non-RR countries with high income levels. North America is de facto discarded because it is composed of Bermuda, Canada, and the United

States. South Asia is not considered because of limited comparison data;

Afghanistan is the only RR country in that region.

10. The qualitative interpretation, including the rapid accumulation of human capital per capita in East Asia and Pacific between 1995 and 2018, does not change when high-income countries are excluded.The results when excluding high-income countries for every region are available in figure 12A.2, in annex 12A. 11. In endogenous growth theory, learning by doing is a concept by which productivity is achieved through practice, self-perfection, and minor innovations. 12. For this exercise, the ratio of public employment over the whole population (less precise for the size of the public sector, as it includes children and elderly people) is used instead of the ratio of public employment over the workingage population. 13. The score for government effectiveness reflects the perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies. For more details, see the Worldwide Governance Indicators. 14. See van der Ploeg and Venables (2011, 3) for a list of references advocating the implementation of a sovereign wealth fund. 15. The bird-in-hand hypothesis assumes that all resource revenue is put in a sovereign wealth fund and incremental consumption is restricted to the interest earned on the fund. 16. In addition, Cust and Manley (2018) note that sovereign wealth funds may not be a satisfying solution to decarbonize the economy, if financial assets held are linked to fossil fuel extraction—as is often the case in diversified financial portfolios. 17. The full list includes Bahrain, Brunei Darussalam, Chile, Norway, Oman,

Qatar, Saudi Arabia, Trinidad and Tobago, and the United Arab Emirates. 18. This could occur as a reversal of the distortions described by Ross (2008), where, for example, he found that oil production can reduce the female labor force and thus reduce women’s political influence. This could therefore have an impact on the kinds of norms and political institutions that dominate in a society. 19. Devarajan and Singh (2012) illustrate this point with the following examples from three Central African fossil fuel exporters. Cameroon spends US$50 per capita on health, with the epidemiological profile of countries that spend

US$10 per capita. Road maintenance costs are double the African average, and three-quarters of contracts circumvent the regular procurement system. Chad has the highest cost of classroom construction in Africa, and that cost represents four times the next most expensive country. Despite a larger public sector and about the same amount of health spending per capita, immunization rates are one-third those in Senegal, for instance. Finally, the leakage rate for nonwage health spending is close to 99 percent. The Republic of Congo has 47 percent transmission losses in electricity; the average for Africa is 27 percent. 20. On empirical evidence on scrutiny, Weigel (2020) shows that the introduction of property taxes in the Democratic Republic of Congo increased citizen participation in town hall meetings and evaluations of public projects at local levels. The results provide support to the idea that broadening the tax base has a “participation dividend” that works even in the context of an RR-country with a weak state.