The Macroeconomic Management of Natural Resources

2018 ◽  
Author(s):  
Mark Henstridge ◽  
Alan Roe
Keyword(s):  
Decision Making ◽  
Exchange Rate ◽  
Direct Investment ◽  
Commodity Prices ◽  
Renewable Resource ◽  
Macroeconomic Policies ◽  
Resource Wealth ◽  
Natural Resource Wealth ◽  
Public Revenues ◽  
Macroeconomic Management

Managing natural resource wealth requires accommodating very large increases in investment, production, exports, and government revenues within the economy of the host country, and setting appropriate macroeconomic policies—especially fiscal, monetary, and exchange-rate policies—both to prevent resource wealth from destabilizing the economy and to ensure that its potential for economic development is maximized. This chapter focuses on the complexity of decision-making and policy on the unusual characteristics of the macroeconomic flows of the extractives sector: (i) foreign direct investment, production, exports, and revenues are often large; (ii) for each project there is a strong degree of uniformity in the sequence of activity from discovery through development to production; (iii) the non-renewable resource is finite, and so are the revenues; (iv) commodity prices are often volatile, hence public revenues can be also volatile.

scholarly journals Exchange Rate, Uncertainty and Foreign Direct Investment Inflow in West African Monetary Zone

2018 ◽  
Vol 20 (1) ◽  
pp. 1-12 ◽  
Author(s):  
Perekunah B. Eregha
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Exchange Rate Volatility ◽  
Commodity Prices ◽  
Fixed Effect Model ◽  
West African ◽  
Effect Model ◽  
Exchange Rate Movements ◽  
Global Shocks

Exchange-rate movements are mostly unpredictable, and this tends to affect both trade and foreign investment flows. This is because foreign investors are unclear on the returns to investment decisions in such cases. Hence, this study examines the effect of exchange rate, its volatility and uncertainty on foreign direct investment (FDI) inflow in West African monetary zone (WAMZ). The study covers the period1980–2014, and the within estimator for the fixed effect model is employed. The study accounts for both exchange rate volatility and uncertainty measures which are anticipated and unanticipated exchange rate innovations measures, respectively. The results show that exchange-rate movements in WAMZ countries are more of unanticipated than anticipated innovations in affecting FDI inflow. Therefore, policies aimed at targeting exchange-rate stability are essential in the WAMZ countries since investors are profit maximizers; hence, investment uncertainties must be kept as low as possible. Also since WAMZ export sectors are primary products based, policies should be geared towards the diversification of the export sectors to combat unanticipated global shocks from commodity prices movement in having an effect on the exchange rate through the foreign exchange reserve channel.

Macroeconomic Policy Frameworks for Resource-Rich Developing Countries - Background Paper 1

Policy Papers ◽  
2012 ◽  
Vol 2012 (69) ◽  
Author(s):  
Keyword(s):  
Developing Countries ◽  
Technical Assistance ◽  
Policy Makers ◽  
Policy Frameworks ◽  
External Stakeholders ◽  
Surveillance Programs ◽  
Resource Wealth ◽  
Set Up ◽  
Natural Resource Wealth ◽  
Macroeconomic Management

This paper provides deeper insights on a few themes with regard to the experience with macroeconomic management in resource-rich developing countries (RRDCs). First, some stylized facts on the performance of these economies relative to their non-resource peers are provided. Second, the experience of Fund engagement in these economies with respect to surveillance, programs, and technical assistance is assessed. Third, the experience of selected countries with good practices in the management of the natural resource wealth is presented. Fourth, the experience of IMF advice in helping RRDCs set up resource funds is discussed. Finally, the main themes and messages from the IMF staff consultation with external stakeholders (CSOs, policy makers, academics) are presented.

The China Investment Corporation

2017 ◽  
Author(s):  
Christopher Balding ◽  
Kevin Chastagner
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Current Account ◽  
Natural Resource ◽  
Bank Of China ◽  
State Administration ◽  
The World ◽  
Resource Wealth ◽  
Natural Resource Wealth ◽  
Do So

China’s sovereign wealth fund (SWF), the China Investment Corporation (CIC), was established in 2007 and has grown to become the fourth largest SWF in the world with assets and offices spanning the globe. This chapter looks at the range of unique factors that need to be understood in order to place the CIC in context. When China decided to form its own SWF, it decided to do so by borrowing from the central bank in a complicated swap transaction in order to highlight the CIC’s independence from existing entities like the People’s Bank of China and the State Administration of Foreign Exchange. While most SWFs grow from an excess of natural resource wealth, the Chinese SWF is unique in that it grew out of years of current account surpluses accumulated from ensuring a fixed exchange rate. The chapter discusses the macroeconomic interplay between China and the CIC.

scholarly journals Economic Analysis Of The Determinants Of Foreign Direct Investment (FDI) In Nigeria

2020 ◽  
Vol 8 (1) ◽  
pp. 74-81 ◽  
Author(s):  
Emmanuel Oluwagbenga Adebayo ◽  
Suleiman Purokayo Gambiyo
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Direct Investment ◽  
Trade Openness ◽  
Negative Relationship ◽  
Least Square ◽  
Economic Policies ◽  
Macroeconomic Policies ◽  
Ordinary Least Square

The study examined the factors that determine Foreign Direct Investment (FDI) in Nigeria.  It assessed the extent to which exchange rate, interest rate, degree of trade openness affects foreign direct investment inflow to Nigeria.  The study used data from Central Bank of Nigeria (CBN) Bulletin and World Bank (1981 - 2017).  The results were interpreted based on the Ordinary Least Square (OLS) method, apart from series of test statistics and some diagnostics on data was performed. The estimated linear regression model reveals that the degree of openness positively and significantly affect FDI. Exchange rate has a positive but non-significant relationship with FDI and interest rate has a negative relationship with FDI, but it is not statistically significant. The study therefore recommends that economic policies that allow free trade should be formulated since macroeconomic policies are important in stabilization, enhance standard growth and improvements in the standard of living as a result of improved and higher productivity.

scholarly journals The Role of Governance and International Norms in Managing Natural Resources

2018 ◽  
Author(s):  
James Cust
Keyword(s):  
Natural Resources ◽  
Fossil Fuels ◽  
Commodity Prices ◽  
Decision Makers ◽  
Checks And Balances ◽  
Resource Wealth ◽  
Causal Impact ◽  
Rich Countries ◽  
Natural Resource Wealth

The governance of natural resource wealth is considered to constitute a key determinant in whether the extraction of natural resources proves to be a blessing or a curse. In response to this challenge, a variety of international initiatives have emerged to codify successful policies pursued by countries, and promote global norms and best practices to guide decision-makers. These initiatives, such as the Extractives Industry Transparency Initiative, have seen success in spreading and embedding governance norms, ranging across revenue transparency, contract disclosure, and the creation of instruments such as resource funds and building institutions for checks and balances. However, evidence for causal impact remains weak and sometimes limited to anecdotal cases. The end of the super-cycle of commodity prices, and the prospect of permanently lower prices for fossil fuels, creates new challenges for resource-rich countries but may also allow space and time for reflection, lesson-learning and improvements in governance.

scholarly journals MEASUREMENT OF FINANCIAL RISK TO ECONOMIC POLICY IN INDONESIA

2021 ◽  
Vol 6 (2) ◽  
pp. 238
Author(s):  
Yoseva Maria Pujirahayu Sumaji
Keyword(s):  
Decision Making ◽  
Economic Policy ◽  
Exchange Rate ◽  
Financial Risk ◽  
World Economy ◽  
Commodity Prices ◽  
The State ◽  
Real Effective Exchange Rate ◽  
The World ◽  
The Difference

The world of economy is in a state of uncertainty as shown by the improvement in the projected growth of the world by international institutions. The state of development of the world economy is flutuative due to declining economic growth of developed and developing countries, lower commodity prices, and the difference in direction between monetary and fiscal policy. The development of the world economy can be seen from the Real Effective Exchange Rate (REER) indicator, which sees the exchange rate as a measure of the state of the world economy. This can attract investors to invest in Indonesia due to good REER conditions. REER can be used as one of the reference by investors to make investment decisions in the company that will later affect the company's decision-making. Decision-making will determine how far the company will experience the financial risks that will be set up in risk management. There are 120 non-financial companies registered with IDX Indonesia. The sampling techniques in this study used nonprobability sampling. The inferential statistical analysis conducted in this study is through classic assumption tests, regression analysis, mediation tests and hypothesis tests. The results of the study showed that the Risk Measurement of Economic Policy in Indonesia had a significant positive effect.

scholarly journals PENGARUH HARGA KOMODITAS, KURS, INFLASI, FOREIGN DIRECT INVESTMENT (FDI), DAN SUMBER DAYA MANUSIA (SDM) TERHADAP PEREKONOMIAN NEGARA OKI

2020 ◽  
Vol 7 (8) ◽  
pp. 1607
Author(s):  
Evi Aninatin Ni'matul Choiriyah ◽  
Ilmiawan Auwalin
Keyword(s):  
United States ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Human Resources ◽  
Labor Force ◽  
Direct Investment ◽  
Commodity Prices ◽  
Precious Metals ◽  
The United States ◽  
United States Dollar

This study aims to determine the effect of world commodity prices on agriculture, energy, fertilizer, metals and minerals, precious metals, inflation, exchange rate of the United States Dollar (USD), Foreign Direct Investment, human resources on economics of Organization of Islamic Cooperation (OIC) which is proxied in Gross Domestic Product (GDP) in the 2009-2018 period. In this study, there are two models regarding the human resources variable, namely total population and labor force. Random Effect Model (REM) is used in this study to examine the relationship of independent variables to the dependent variable, both partially and simultaneously. The findings of this study, both the first and second models show that commodity prices in the agriculture, fertilizer, metal and mineral sectors, Foreign Direct Investment, and inflation have a negative and significant effect on the GDP of the OIC countries. Meanwhile, commodity prices in the energy sector, precious metals, and the exchange rate of the United States Dollar (USD) have a positive and significant effect on the GDP of the OIC countries. As well as the human resources variable, both the population and the labor force also have a positive and significant effect on the GDP of the OIC countries. This paper can be considered for the government or related institutions and agencies in formulating policies or regulations to improve and maintain economic stability in each OIC member country.Keywords: Macroeconomics, World commodities prices, OIC, and GDP

Impact of external currency exposures on macroeconomic policies

2020 ◽  
pp. 23-40
Author(s):  
I. V. Prilepskiy
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Positive Impact ◽  
Exchange Rate Regime ◽  
Macroeconomic Policies ◽  
Panel Regressions ◽  
Financial Account ◽  
Currency Exposure ◽  
Cross Country ◽  
The Impact

Based on cross-country panel regressions, the paper analyzes the impact of external currency exposures on monetary policy, exchange rate regime and capital controls. It is determined that positive net external position (which, e.g., is the case for Russia) is associated with a higher degree of monetary policy autonomy, i.e. the national key interest rate is less responsive to Fed/ECB policy and exchange rate fluctuations. Therefore, the risks of cross-country synchronization of financial cycles are reduced, while central banks are able to place a larger emphasis on their price stability mandates. Significant positive impact of net external currency exposure on exchange rate flexibility and financial account liberalization is only found in the context of static models. This is probably due to the two-way links between incentives for external assets/liabilities accumulation and these macroeconomic policy tools.

Macroeconomic Balance

2017 ◽  
Author(s):  
Jonathon W. Moses ◽  
Bjørn Letnes
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
International Competitiveness ◽  
Local Economy ◽  
Dutch Disease ◽  
Economic Sectors ◽  
Incomes Policy ◽  
Subsequent Loss ◽  
Resource Wealth

One of the biggest challenges from petroleum wealth comes from a subsequent loss of international competitiveness. Resource wealth can easily inflate the local economy, making it more difficult for other economic sectors to maintain international competitiveness. This chapter introduces the challenge of Dutch Disease and its diverse remedies. The latter part of the chapter describes how Norway has always struggled with the need to maintain international competitiveness, and has developed a highly organized economy (corporatism) as a result. Norwegian incomes policy, responsible budgeting policies, devaluations, and a restricted pace of extraction have all been used, at various times, to limit the threat of a real exchange rate appreciation.

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