Economic management in mineral- and energy-based extractive economies must confront a wide range of challenges: investments in the sector are large and long- term in nature, rents from extraction are often large relative to GDP (as are potential tax revenues), the resources’ extent and future prices are highly uncertain, information between producers and governments is asymmetric, and the resource deposits themselves are exhaustible.1 The latter point—exhaustibility—raises particular concerns about the sustainability of growth and development in these economies, and this in turn is strongly linked to fiscal policy.

Policies to Harness the Power of Natural Resources