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1、INTERNATIONAL DEVELOPMENT IN FOCUSProsperity UnearthedWealth-Sharing Mechanisms for Peace and Equitable Growth in the Middle East and North AfricaProsperity UnearthedThis book,along with any associated content or subsequent updates,can be accessed at https:/ to go to this publication online.INTERNAT

2、IONAL DEVELOPMENT IN FOCUSProsperity UnearthedWealth-Sharing Mechanisms for Peace and Equitable Growth in the Middle East and North Africa 2025 International Bank for Reconstruction and Development/The World Bank1818 H Street NW,Washington,DC 20433Telephone:202-473-1000;Internet:www.worldbank.orgSom

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9、25.Prosperity Unearthed:Wealth-Sharing Mechanisms for Peace and Equitable Growth in the Middle East and North Africa.International Development in Focus.Washington,DC:World Bank.doi:10.1596/978-1-4648-2218-6.License:Creative Commons Attribution CC BY 3.0 IGOTranslationsIf you create a translation of

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13、.The risk of claims resulting from such infringement rests solely with you.If you wish to re-use a component of the work,it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner.Examples of components can include,but are no

14、t limited to,tables,figures,or images.All queries on rights and licenses should be addressed to World Bank Publications,The World Bank,1818 H Street NW,Washington,DC 20433,USA;e-mail:pubrightsworldbank.org.ISBN:978-1-4648-2218-6DOI:10.1596/978-1-4648-2218-6Cover photos:Shutterstock(left to right):Sa

15、lim AL-Obeidani(ID:2424211291);Mohamed S.Saleem(ID:2381670767);ded pixto(ID:1719908836);George Trumpeter(ID:2185205475);Creative Family(ID:1626762484);and FS11(ID:577220509).Used with permission;further permission required for reuse.vContentsAcknowledgments ixExecutive Summary xiAbbreviations xviiCH

16、APTER 1 Wealth,Geography,and Prosperity in the Middle East and NorthAfrica 1Oil and gas wealth and development outcomes in the Middle East and North Africa 1Challenges and constraints 5Geospatial inequality and the redistribution of oil and gas wealth 10Fostering an equitable transition to alow-carb

17、on economy 14Notes 16References 17CHAPTER 2 Sharing Wealth Across Time 19Managing resource revenues for stabilizationandsaving 19Institutional arrangements for managing resource revenues acrosstime 27Policy implications 31Notes 32References 32CHAPTER 3 Sharing Wealth Across Space 33Revenue sharing a

18、round the world 33Revenue sharing in MENA 38Unitary states 38Federations 40Policy implications 43References 47vi|PROSPERITY UNEARTHEDCHAPTER 4 Sharing Wealth for Peace andStability 51The role of natural resource revenues in countries affected by fragility,conflict,and violence in the Middle East and

19、 NorthAfrica 51Wealth sharing for sustainable peace in FCV countries:Big promise,limited success 53Policy implications 56Notes 58References 59APPENDIX A The Revenue-Sharing Tool:Technical Note 61Boxes1.1 The middle-income trap and MENA countries 81.2 The empirical relationship between inequality and

20、 economic development 91.3 Energy transition,trade,and labor in MENA 152.1 The Santiago Principles 293.1 The empirical relationship between transparency,accountability,and development 423.2 The empirical relationship between institutions and development 43Figures1.1 Real GDP per capita in oil-rich a

21、nd non-oil-rich MENA countries,constant 2015 US$41.2 Development outcomes in oil-and gas-rich MENA countries,Human Capital Index and poverty rate,201024 71.3 Development outcomes in oil-and gas-rich MENA countries,child mortality and Gini index,201024 71.4 Human capital in oil-rich and non-oil-rich

22、MENA countries,201024 111.5 Spending on direct transfers and explicit budgetary energy subsidiesinthe MENA region 131.6 Top 25 countries by value of fossil-fuel subsidies,2022 131.7 Effect of government transfers on poverty reduction 142.1 Commodity price index,monthly,19902024 202.2 Distribution of

23、 monthly price changes for key commodities,19902024 212.3 Expenditure cyclicality of oil prices in oil-rich MENA countries,200022 222.4 Expenditure cyclicality over the business cycle in oil-rich and non-oil-rich MENA countries/economies,200022 232.5 GDP growth forecasting errors,19912023 232.6 Reve

24、nue and expenditure flows under different rules:A hypothetical example 263.1 Budget transparency by world region 393.2 Budget transparency in MENA 393.3 Evolution of budget transparency in MENA,201223 40Contents|vii4.1 Share of oil-rich and non-oil-rich countries with conflict-related deaths inMENA

25、514.2 Number of conflict-related deaths in oil-rich and non-oil-rich MENAcountries 524.3 The wage bill as a share of non-oil GDP in selected MENA countries 544.4 The execution rate of non-oil capital expenditures in Iraq 54A.1 The structure of the Revenue-Sharing Tool 62A.2 Levels of government and

26、distribution criteria across subnational governments 63A.3 Example of simulations 68A.4 Example of simulations:Structure of government revenue allocations 69A.5 Example of simulations:Regional distribution of revenues by sharingcriteria 70A.6 Example of simulations:Regional share of natural resource

27、 revenue by origin of resources 71Tables1.1 Oil and gas reserves and production in MENA countries and economies,latest year available,202123 21.2 Development outcomes in selected hydrocarbon-rich and non-rich MENA countries and economies 52.1 Fiscal balances in selected MENA countries:Actual versus

28、permanent income benchmark,2022 263.1 Revenue-sharing models 35ixAcknowledgmentsThis report was prepared by a multidisciplinary team from the Prosperity Department of the World Banks Middle East and North Africa Region under the direction and guidance of Nadir Mohammad,Jens Kromann Kristensen,Clelia

29、 Rontoyanni,Eric Le Borgne,Salman Zaidi,Irina Astrakhan,and Djibrilla Adamou Issa.Support from the Climate Support Facility Whole of Economy trust fund is gratefully acknowledged.The report was prepared by eljko Bogeti,Harun Onder,and Roland Lomme,with research support from Yahui Zhao,Dominik Naeher

30、,and Sriram Balasubramanian.The report is based on inputs and contributions from Naoko Kojo,Olena Ftomova,Ashwaq Natiq Maseeh,Omar Al-Aqel,Michael Papaioannou,Yasmine Osman,Helene Grandvoinnet,Majid Kazemi,Nayantara Sarma,Daniel Prinz,Alan Fuchs,Beenish Amjad,Alia Jane Aghajanian,Bilal Malaeb,Sandra

31、 Baquie,Chitra Balasubramanian,Fiona Davies,Mahi Elattar,Abdelkrim Araar,Gladys Lopez-Acevedo,Ekaterina Stefanova,Sara Alnashar,Fatma Elashmawy,Javier Diaz Cassou,Cyril Desponts,Gianluca Mele,Mohammad Al-Akkaoui,Norbert Matthias Fiess,Dima Krayem,Khaled Alhmoud,Saki Kumagai,Nataliya Biletska,John Go

32、ddard,Abdoulaye Sy,Kevin Carey,Verena Fritz,and Ehtisham Ahmad.xiExecutive SummaryThe Middle East and North Africa(MENA)has long experienced both the benefits and the drawbacks of hydrocarbons.The MENA region holds more than half of the worlds oil reserves and 40 percent of its gas reserves.These re

33、sources have enabled several countries in the region to achieve high-income status and driven the rise of some of the worlds largest financial and business hubs,while indirectly supporting less fortunate economies through remittances,investment,and job creation.However,hydrocarbon wealth has also co

34、ntributed to conflict,increased economic instability,and fostered excessive dependence on a narrow range of commodity exports.Even in successful cases,hydrocarbon-led development has not always met expectations,and the regions performance on the Human Capital Index remains below what its average inc

35、ome level would predict.This report examines the causes of different development outcomes and suggests ways to promote inclusive prosperity and peace.It does so by looking at wealth sharing through three prisms:time,space,and fragility and conflict.More specifically,the report assesses how policy ma

36、kers in the MENA region have approached the sharing of resources across time(forexample,saving versus spending)and across geographical space(forexample,concentrating versus distributing).The report argues that deviations from good practices in these two dimensions help explain some of the regions un

37、fulfilled development promise,including in countries affected by fragility,conflict,and violence(FCV).Based on this assessment,the report identifies opportunities to leverage hydrocarbon resources to build sustainable and inclusive prosperity.The report focuses on wealth sharing and emphasizes the c

38、rucial role that inclusive economic policies,robust transparency arrangements,and strong,capable institutions play in providing services,infrastructure,and equitable transfers financed by resource wealth.xii|PROSPERITY UNEARTHEDSHARING WEALTH ACROSS TIMETo responsibly manage hydrocarbon revenues acr

39、oss time,policy makers can decouple fiscal spending from resource-based income.Hydrocarbon prices are highly volatile even compared with other commodities:Since 1990,crude oil has been about three times more likely than copper,and 100times more likely than gold,to experience a 10 percent price reduc

40、tion in a given month.The short-term volatility of resource revenues is compounded by their long-term unsustainability:Oil and gas reserves are finite.To optimize natural resource revenue utilization,it is important to address these two critical characteristics.This can be achieved by implementing p

41、olicies and instruments along two dimensions:(1)stabilization,because volatile and/or procyclical fiscal spending can hinder private economic activity and limit growth,and(2)savings,where revenues that exceed the governments absorptive capacity or the macro-economic utility of additional spending ar

42、e held in reserve until viable projects can be developed and implemented and when additional spending is warranted.Savings are also vital to intergenerational equity because they enable current financial resource wealth to finance future consumption.Policy makers in hydrocarbon-rich countries in MEN

43、A have faced challenges with respect to effectively managing resource revenues.In terms of stabilization and saving objectives,the performance of MENA over the last two decades has been mixed.Stabilization.When benchmarked against oil prices,spending in most oil-rich MENA countries has been moderate

44、ly countercyclical,with the notable exceptions of the Arab Republic of Egypt and the Republic of Yemen.However,in other MENA countries,including the Islamic Republic of Iran and Qatar,spending has been procyclical with respect to the business cycle.In many cases,fiscal procyclicality can stem from a

45、 multitude of factors,including the absence or limited effectiveness of automatic stabilizers such as progressive taxes and social protection mechanisms;a narrow tax base dependent on resource revenues,as well as limited administrative,statistical,and analytical capabilities;and short-term policy ma

46、king in a context marked by weak public institutions.Saving.Spending in most oil-rich MENA countries exceeds their respective permanent income benchmarks(the level of spending that can be sustained indefinitely),but there have been important gains in recent years.The positions of Gulf Cooperation Co

47、uncil(GCC)countries have been improving rapidly.Between 2019 and 2022,Oman narrowed the gap between its fiscal deficit and its permanent income benchmark from 16 percentage points of gross domestic product to about 7,Saudi Arabia from 11 percentage points to 4,and the UnitedArab Emirates from 9 perc

48、entage points to 0.2.Across MENA,policies for managing oil and gas revenues largely remain discretionary and most countries lack explicit fiscal rules to align spending with macroeconomic stability and prosperity.Six of the 20 largest sovereign wealth funds(SWFs)are in MENA,several of the oldest SWF

49、s in the world.Executive Summary|xiiiWhile SWFs in GCC countries have sound governance arrangements and have managed their portfolios well,the activities of most of the regions SWFs are weakly coordinated with macroeconomic policies.Deposits and withdrawals from SWFs are discretionary,which can inhi

50、bit their alignment with broader macro-fiscal objectives because domestic investment decisions of fund managers often bypass the checks and balances of government budget processes and result in reduced predictability.In many cases,establishing fiscal rules that apply both to the regular budget and S

51、WF operations could provide greater transparency,predictability,and fiscal policy coordination to support the sustainable and effective utilization of hydrocarbon revenues.SHARING WEALTH ACROSS SPACEMechanisms that allocate fiscal resources across regions or between levels of government often aim to

52、 balance real or perceived trade-offs between efficiency and equity.Centralized,indirect revenue-sharing models,like those used in Norway and the United Kingdom,rely on the general government budget to allocate oil and gas revenues via budgetary expenditures.In contrast,direct revenue-sharing models

53、,like those used in the United States and Canada,allocate a share of resource revenues to subnational governments to manage at their own discretion.One version of this model,known as derivation-based sharing,explicitly recognizes the local right to resources.Both direct and indirect revenue-sharing

54、models can help address grievances associated with the extractive industries,mitigate regional inequalities,and preempt potential conflicts over resources.They can also help prevent Dutch disease effects when they separate oil and gas windfalls from public expenditures.Accountablity can also improve

55、 when more wealth is shared across space,directly or indirectly.While indirect sharing can compromise fiscal efficiency,the risk can be mitigated through additional fiscal coordination to ensure that the stabilization and saving objectives are met.However,while a well-designed direct-sharing system

56、can theoretically help diffuse tensions and contestation over resources,a poorly designed system can spark or exacerbate struggles for control over resources as seen in Colombia,Nigeria,and Peru.The direct and indirect revenue-sharing models each have their advantages and drawbacks and no single app

57、roach fits all circumstances.In MENA,neither direct nor indirect revenue sharing has succeeded in addressing the spatial inequalities associated with resource wealth.Theregions unitary states generally practice indirect revenue sharing:Oiland gas revenues combine with taxes,customs duties,and other

58、revenue streams to finance fiscal expenditures,which may be either progressive or regressive.Even unitary states that achieve high income levels and maintain significant fiscal capacity for stabilization and strategic investment continue to face regional inequalities,partly because of the uneven geo

59、graphical allocation of fiscal resources and uneven impact of public policies.xiv|PROSPERITY UNEARTHEDWhile each countrys approach to revenue sharing across space is specific to its context,all models require transparent rules-based policies and accountability mechanisms.Across the region,the geogra

60、phic distribution of revenues is typically subject to discretion;rules-based approaches are rare.Limited transparency and unclear decisions regarding resource allocation can lead to social tensions and potential conflicts.As international experience makes clear,the success of any revenue-sharing mod

61、el hinges on robust governance arrangements,including transparency and accountability and a focus on equity anchored in rules-based policy.While discretionary approaches can allow for greater short-term flexibility,their tendency to weaken social cohesion and enable rent seeking may outweigh potenti

62、al benefits.SHARING WEALTH IN THE SHADOW OF FRAGILITY ANDCONFLICTWealth sharing does not necessarily entail a trade-off between equity and efficiency,especially in FCV settings.A government facing widespread social grievances and deep socioeconomic inequality may find it infeasible to save resources

63、 for macroeconomic stabilization or the welfare of future generations.In countries with weak institutions,low levels of transparency,and limited social trust,resource revenues may be inefficiently overconsumed and used to finance conflict.In such cases,building transparent,rules-based wealth-sharing

64、 mechanisms that mitigate inequalityincluding geographical inequalitycan play a role in reducing conflict and strengthening social cohesion.In many FCV-affected countries,weak legal and institutional frameworks undermine the equitable sharing of resource wealth.In post-conflict settings,wealth-shari

65、ng mechanisms are rarely supported by explicit constitutional provisions,robust transparency and accountability mechanisms,or good resource-management practices.Technical solutions may be available,but implementing them requires stable governance arrangements and capable public administration.Risks

66、of renewed conflict can be mitigated by revenue-sharing arrangements reflecting the interests of a wide range of actors and stakeholders.To enhance transparency around the allocation of resource revenues,this report proposes a Revenue-Sharing Tool(appendix A)that is designed to help national technic

67、al staff analyze the implications of using alternative approaches through indicator-based revenue-sharing models.TOWARD PROSPERITY AND PEACE IN THE MIDDLE EAST AND NORTH AFRICAWhile the ideal approach to managing and sharing resource revenues is unique to each country,opportunities for improvement e

68、xist across the MENA region.Wealth-sharing mechanisms in MENA can be improved along each of their core dimensions.Executive Summary|xv1.To foster macroeconomic stability.Create or strengthen automatic stabilizers,such as social insurance systems and progressive income and property taxes,and enhance

69、macroeconomic monitoring through improvements in data quality and institutional capacity building.2.To promote savings.Decouple fiscal spending from resource revenues by introducing a target for the non-oil fiscal deficit that is compatible with domestic investment needs,the absorptive capacity of p

70、ublic institutions,and long-term resource-revenue dynamics.3.To enhance efficiency.Strengthen transparency and accountability mechanisms and limit discretion by adopting credible rules for allocating and spending natural resource revenues to support inclusive growth.4.To mitigate the risk of conflic

71、t and strengthen social cohesion in FCV contexts.Prioritize regional equity through redistribution until an adequate degree of social and political stability and post-conflict recovery makes renewed emphasis on long-term objectives possible.Include all relevant actors and stakeholders when designing

72、 a detailed framework to govern the ownership and management of natural resources and resource revenues,with third-party monitoring as appropriate.Resource-rich MENA countries can boost productivity,enhance inclusion,and achieve sustainable prosperity by diversifying their national assets.Policies f

73、or inclusive growth can progressively transform resource wealth into physical infrastructure,human capital,and economic institutions in a way that fosters the transition to a low-carbon economy.While much room for improvement remains,MENA countries are making significant progress toward these object

74、ives and are positioned to embrace both international good practices and policies informed by regional experience.In a time of tension and uncertainty across the region,inclusive growth,including by effectively sharing resource wealth,is especially important.This report is designed to help policy ma

75、kers in MENA leverage their resource endowments to promote macro-fiscal stability,long-term savings,regional and intergenerational equity,and good governance underpinned by transparency and accountability to support peace,inclusive growth,and prosperity.The report synthesizes background research,lit

76、erature reviews,analyses of constitutional and legal provisions,case studies,and empirical assessments of natural-resource wealth sharing.Chapter 1 examines the context of oil and gas production in MENA,including its geographic features and impact on economic development,poverty,and inequality.Chapt

77、er 2 evaluates the macroeconomic stability and intergenerational saving functions of revenue-sharing arrangements,including SWF operations,and proposes specific policies to help insulate the economy from revenue volatility,build savings to hedge against future shocks,and foster sustainable,rules-bas

78、ed fiscal management.Chapter 3 reviews revenue-sharing mechanisms around the world and compares them to those in MENA,especially in terms of equity across space and levels of government.The chapter also proposes reforms xvi|PROSPERITY UNEARTHEDbased on regional and international good practices.Chapt

79、er 4 assesses the revenue-sharing experience of FCV-affected countries worldwide and in MENA,examines the special challenges they face,and presents policy recommendations for leveraging oil and gas revenues to support stability and peace.xviiAbbreviationsDefinitionAbberviationsEITIExtractive Industr

80、ies Transparency InitiativeEPsenvironmental provisionsFCVfragility,conflict,and violenceGCCGulf Cooperation CouncilGDPgross domestic productGLDFgeneral local development transferGNIgross national incomeHCIHuman Capital IndexIMFInternational Monetary FundKRGKurdistan Regional GovernmentLDFLocal Devel

81、opment FundMENAMiddle East and North AfricaMfMODMacro-Fiscal ModelNRGINatural Resource Governance InstituteOBIopen budget indexPPPpurchasing power parityRSTRevenue-Sharing ToolRSWTRevenue-Sharing Web ToolRTAsregional trade agreementsSWFssovereign wealth fundsUNDPUnited National Development ProgramUS

82、$United States dollar WDIWorld Development IndicatorsWDRWorld Development ReportWEOWorld Economic Outlook11Wealth,Geography,and Prosperity in the Middle East and North AfricaOIL AND GAS WEALTH AND DEVELOPMENT OUTCOMES IN THEMIDDLE EAST AND NORTH AFRICAThe Middle East and North Africa(MENA)is excepti

83、onally rich in natural resources,primarily oil and gas,which have historically been the major sources of wealth for many countries in the region.MENA countries hold over 50 percent of the worlds oil reserves and more than 40 percent of its gas reserves.Saudi Arabia,the Islamic Republic of Iran,and I

84、raq alone account for over one-third of global oil reserves and almost one-quarter of all gas reserves(table 1.1).These resources,which will continue to play a significant role in years to come,have the potential to transform economic and social conditions across the region if managed effectively an

85、d equitably for the benefit of their populations.MENAs resource wealth is highly concentrated among a few countries and in specific areas within these countries.Spatial concentration is a defining feature of oil and gas resources and poses key challenges for their successful management and equitable

86、 distribution.In countries where governments derive a substantial share of their revenue from natural resources,it is important to establish effective governance mechanisms to recycle petrodollars for stability and domestic economic development to reduce macroeconomic volatility,prevent elite captur

87、e,promote resource sharing,strengthen service delivery,and promote positive development outcomes.However,research suggests that oil rents have typically been associated with weaker governance in MENA(for example,Karl 2007).The regions oil-rich countries that are affected by fragility,conflict,and vi

88、olence(FCV)all have a history of governance challenges,including issues with accountability,transparency,corruption,and the perceived quality of the investment climate.Many are subject to particularly acute manifestations of the“resource curse”described in chapter 2.2|PROSPERITY UNEARTHEDTABLE 1.1 O

89、il and gas reserves and production in MENA countries and economies,latest year available,202123COUNTRY/ECONOMYOILGASOIL(%OF WORLD RESERVES)GAS(%OF WORLD RESERVES)Saudi Arabia Production9,733.54,303.811.93.0 Reserves258.6332.815.24.6Iraq Production4,341.4348.25.30.2 Reserves145.0131.78.51.8Iran,Islam

90、ic Rep.Production3,625.29,297.64.46.4 Reserves208.61,200.312.316.4United Arab Emirates Production3,393.52,001.74.11.4 Reserves97.8215.15.82.9Kuwait Production2,710.0681.03.30.5 Reserves101.563.06.00.9Qatar Production1,322.05,989.21.64.1 Reserves25.2842.61.511.5Libya Production1,225.4417.81.50.3 Rese

91、rves48.453.12.90.7Algeria Production1,183.13,557.11.42.5 Reserves12.2159.10.72.2Oman Production1,047.91,439.21.31.0 Reserves5.423.00.30.3Egypt,Arab Rep.Production564.22,289.00.71.6 Reserves3.363.00.20.9Bahrain Production179.6635.80.20.4 Reserves0.22.90.00.0Syrian Arab Republic Production90.8109.00.1

92、0.1 Reserves2.58.50.10.1continuedWealth,Geography,and Prosperity in the Middle East and North Africa|3TABLE 1.1,continuedCOUNTRY/ECONOMYOILGASOIL(%OF WORLD RESERVES)GAS(%OF WORLD RESERVES)Tunisia Production31.546.70.00.0 Reserves0.42.30.00.0Yemen,Rep.Production15.06.70.00.0 Reserves3.016.90.20.2Moro

93、cco Production0.02.90.00.0 Reserves0.00.10.00.0Jordan Production0.06.60.00.0 Reserves0.00.20.00.0Djibouti Production0.00.00.00.0 Reserves0.00.00.00.0Lebanon Production0.00.00.00.0 Reserves0.00.00.00.0West Bank and Gaza Production0.00.00.00.0 Reserves0.00.00.00.0MENA Production29,463.231,132.536.021.

94、5 Reserves912.13,114.553.842.7World Production81,784.4145,068.3100.0100.0 Reserves1,696.97,299.0100.0100.0Sources:US Energy Information Administration;World Bank estimates.Note:Oil reserves in billion barrels(billion bbl),oil production in 1,000 barrels per day,gas reserves in trillion cubic feet,an

95、d gas production in billion cubic feet.The actual year for the oil reserves data is 2021.Theactual year for the oil production data is 2023.The actual year for the gas reserves data is 2021.The actual year for the gas production data is 2022.Countries/economies are listed in descending order of oil-

96、production volume.Among hydrocarbon-rich MENA countries,oil and gas reserves are key for exports,government revenue,and overall economic activity.Oil and gas reserves are extensive in countries like Algeria,the Islamic Republic of Iran,Iraq,Kuwait,Libya,Qatar,Saudi Arabia,and the United Arab Emirate

97、s.These countries have reached much higher levels of per capita income than other countries in the region(figure 1.1).However,heavy reliance on hydrocarbon revenues has historically hindered diversification efforts and fostered 4|PROSPERITY UNEARTHEDdependence on oil and gas exports.In addition,as t

98、he global energy transition continues to accelerate,the region must not only manage its existing oil and gas wealth but also convert that wealth into new sources of growthwhile addressing and adapting to climate change.Some countries(for example,Qatar,Saudi Arabia,and the United Arab Emirates)have i

99、mplemented major policy initiatives over the years that are focused on diversification and innovation to build an economy of the future that is more diversified and greenand less dependent on oil and gas.In addition to accelerating their own development,hydrocarbon-rich MENA countriesespecially Gulf

100、 Cooperation Council(GCC)member stateshave contributed to regional growth by creating economic opportunities for migrants and generating large-scale remittances and foreign investment inflows.For middle-and low-income countries in MENA,remittances have long represented the largest source of external

101、 resources,exceeding official development assistance,foreign direct investment,portfolio equity,and debt flows.In 2023,remittances contributed approximately 6 percent to GDP in the Arab Republic of Egypt,10 percent in Jordan,and 18 percent in the Republic of Yemen(KNOMAD 2024).The size of these flow

102、s is linked to economic conditions and growth in major remittance-source markets,which include GCC countries and the European Union.The distribution of labor and capital endowments in the region creates a consistent demand for expatriate workers in capital-extensive but labor-scarce countries,especi

103、ally GCC member states.1FIGURE 1.1Real GDP per capita in oil-rich and non-oil-rich MENA countries,constant 2015 US$02,0004,0006,0008,00010,00012,00014,00016,00018,00020,000201320142015201620172018201920202021GDP per capita(US$)Oil-rich countries in MENANon-oil-rich countries in MENASource:World Deve

104、lopment Indicators.Note:In this figure,oil-rich countries in MENA include Algeria,Bahrain,the Arab Republic of Egypt,the Islamic Republic of Iran,Iraq,Kuwait,Libya,Oman,Qatar,Saudi Arabia,the Syrian Arab Republic,the United Arab Emirates,and the Republic of Yemen.Non-oil-rich countries/economies inc

105、lude Djibouti,Jordan,Lebanon,Morocco,Tunisia,and the WestBank and Gaza.Wealth,Geography,and Prosperity in the Middle East and North Africa|5continuedCHALLENGES AND CONSTRAINTSWhile oil and gas have contributed to overall economic growth,development outcomes fall short of the potentials.Globally,hydr

106、ocarbon-rich countries tend to have lower Human Capital Index(HCI)scores and higher child mortality than their income levels would suggest(table 1.2,figure 1.2).Most hydrocarbon-rich MENA countries underperform not only their non-hydrocarbon-rich global counterparts but also the global trend for hyd

107、rocarbon-rich countries,albeit with notable exceptions.Understandably,hydrocarbon-rich and FCV-affected MENA countries exhibit particularly weak human development outcomes.Patterns of growth have also varied widely as evidenced by the growth incidence curves,with overall growth patterns favoring the

108、 nonpoor.2TABLE 1.2 Development outcomes in selected hydrocarbon-rich and non-rich MENA countries and economiesCOUNTRY/ECONOMYGNI PER CAPITA,ATLAS METHOD(CURRENT US$)LOWER-MIDDLE-INCOME POVERTY RATE(US$3.65 A DAY IN 2017 PPP)HUMAN CAPITAL INDEX(HCI)GINI INDEXSaudi Arabia28,690n.a.0.58n.a.Iraq5,6002.

109、4i0.4129.5iIran,Islamic Rep.4,6803.8a0.5934.8aUnited Arab Emirates53,2900d0.6726.4dKuwait46,140n.a.0.56n.a.Qatar70,070a0e0.6435.1eLibya7,570n.a.n.a.n.a.Algeria4,9604.3j0.5327.6jOman21,540n.a.0.61n.a.Egypt,Arab Rep.3,90017.6c0.4931.9cBahrain28,280n.a.0.65n.a.Syrian Arab Republic560b67an.a.26.6aTunisi

110、a3,7702b0.5233.7bYemen,Rep.820d54.4g0.3736.7gMorocco3,7009.8h0.5039.5hJordan4,4600.4k0.5533.7kDjibouti3,45043.8en.a.41.6eLebanon4,410a0.1j0.5231.8jWest Bank and Gaza4,2203.1f0.5833.7f6|PROSPERITY UNEARTHEDTABLE 1.2,continuedCOUNTRY/ECONOMYGNI PER CAPITA,ATLAS METHOD(CURRENT US$)LOWER-MIDDLE-INCOME P

111、OVERTY RATE(US$3.65 A DAY IN 2017 PPP)HUMAN CAPITAL INDEX(HCI)GINI INDEXOil-rich countries in MENA21,23818.70.5631.1Non-oil-rich countries in MENA4,0029.90.5335.7MENA15,79514.90.5533.0World13,21222.4a0.5636.4Source:World Development Indicators(WDI)database.Note:The actual year for the GNI per capita

112、 data is 2023.The lower-middle-income poverty rate(US$3.65 a day in 2017 PPP)for average,oil-rich countries,and non-oil-rich countries in MENA was calculated using the most recent data available.Bahrain,Kuwait,Libya,Oman,and Saudi Arabia have been excluded because of missing data.The HCI is calculat

113、ed on a scale from 0 to 1;the actual year for the HCI is 2020.Djibouti,Libya,and the Syrian Arab Republic were not included in the HCI MENA average because of missing data.The Gini index for the average,oil-rich,and non-oil-rich countries in MENA and the world average were calculated using the most

114、recent data available for all countries and all MENA countries,including oil-rich and non-oil-rich countries.Bahrain,Kuwait,Libya,Oman,and Saudi Arabia were excluded for lack of data.The countries are listed in descending order based on oil production(see table 1.1).Research indicates that household

115、 surveys in MENA and the Gini coefficient calculated on that basis do not capture income inequality,especially with respect to top incomes.When complementary data are used,inequality estimates increase(see Van der Weide,Lakner,and Lanchovichina 2018).GNI=gross national income;n.a.=not applicable;PPP

116、=purchasing power parity.Most recent value:a.2022.b.2021.c.2019.d.2018.e.2017.f.2016.g.2014.h.2013.i.2012.j.2011.k.2010.Significant inequalities in the spatial distribution of resource wealth and the modest and inefficient redistribution of revenues have limited their impact on human development out

117、comes(figure 1.2).Empirical studies find that countries that have achieved higher levels of development have typically had lower levels of inequality.That has been achieved through stronger redistributive mechanisms that foster more equitable human development and reinforce social cohesion and trust

118、 among citizens and subnational communities.Inequality is a function of context and government policies and institutions that can be improved with the right mix of policies.These challenges are relevant in hydrocarbon-rich countries(figure 1.3).Wealth,Geography,and Prosperity in the Middle East and

119、North Africa|7FIGURE 1.2Development outcomes in oil-and gas-rich MENA countries,Human Capital Index and poverty rate,201024Trend:oil-/gas-richTrend:oil-/gas-poorGDP per capita(US$)GDP per capita(US$)a.Human Capital Indexb.Poverty ratePoverty rate(US$3.65 per day)BahrainEgypt,Arab Rep.Iran,Islamic Re

120、p.IraqJordanKuwaitLebanonMoroccoOmanWB&GQatarSaudi ArabiaTunisiaUnited Arab EmiratesYemen,Rep.00.20.40.60.81.0020,00040,00060,00080,000100,000120,000AlgeriaDjiboutiEgypt,Arab Rep.Iran,Islamic Rep.IraqJordanLebanonMoroccoWB>unisiaUnited Arab Emirates Yemen,Rep.4020020406080100020,00040,00060,00080,

121、000100,000120,000Source:World Development Indicators.Note:The sample covers 174 countries,including 46 countries labeled“oil-/gas-rich”that have oil and gas rents above 2 percent of GDP.Trend lines are estimated via fractional polynomials for the respective subsets of countries.FIGURE 1.3Development

122、 outcomes in oil-and gas-rich MENA countries,child mortality and Gini index,201024Trend:oil-/gas-richTrend:oil-/gas-poorGDP per capita(US$)GDP per capita(US$)a.Child mortalityb.Gini index020,00040,00060,00080,000100,000120,000020406080100020,00040,00060,00080,000100,000120,000AlgeriaBahrainDjiboutiE

123、gypt,Arab Rep.Iran,Islamic Rep.IraqJordanKuwaitLebanonLibyaMoroccoOmanWB&GQatarSaudi ArabiaTunisiaUnited ArabEmirates Yemen,Rep.50250255075100125150AlgeriaDjiboutiEgypt,Arab Rep.Iran,Islamic Rep.IraqLebanonMoroccoWB&GQatarTunisiaJordanUnited Arab Emirates Yemen,Rep.Source:World Development Indicator

124、s.Note:The sample covers 174 countries,including 46 countries labeled“oil-/gas-rich”that have oil and gas rents above 2 percent of GDP.Trend lines are estimated via fractional polynomials for the respective subsets of countries.8|PROSPERITY UNEARTHEDThe middle-income trap and MENA countriesThe World

125、 Banks 2024 World Development Report(WDR)concludes that escaping the middle-income trap requires an effective policy mix that generates“increasingly dynamic enterprises,an increasingly productive workforce,and an increasingly energy-efficient economy.”To this end,economies need a mix of economic cre

126、ation,preservation,and destruction,as well as abundant energy capacity.In MENA,key issues include a low-carbon transition,diversification,technology infusion(for middle-income countries),and innovation(for high-income countries).The WDR emphasizes strategies for decoupling greenhouse gas emissions f

127、rom economic growth by disciplining incumbency,rewarding merit,and de-risking investments in low-carbon energy.Some hydrocarbon-rich MENA countries,such as high-income Saudi Arabia,have timed their policy interventions to coincide with high commodity prices in an effort to boost investment and spur

128、technological uptake.In the Arab Republic of Egypt,low rates of female labor force participation and concerns around the sustainability of investment flows pose challenges.But the countrys potential for manufacturing green products is high by the standards of middle-income countries(World Bank 2024b

129、,226).Successfully transitioning to a low-carbon economy requires considerable up-front investment and low-cost capital to make green technologies more affordable,which may be difficult for middle-income countries.Moreover,lower-middle-income countries tend to be highly exposed to the effects of cli

130、mate change,making climate adaptation and mitigation especially costly(World Bank 2024b,77).The WDR offers several lessons that MENA countries can draw on to avoid the middle-income trap.Countries need to create better economic conditions for environmentally friendly foreign investment by creating a

131、 favorable investment climate,enhancing the ease of doing business,and fostering a predictable,credible,and efficient judicial system with integrity.As energy-transition technologies are among the largest investment gaps across lower-middle-income countries,MENA countries will benefit from enabling

132、such investments to thrive.A strong enabling environment is important to foster technology transfer and promote innovation,with a focus on the low-carbon transition.Source:World Bank 2024b.Many countries across the MENA region are at risk of being caught in the middle-income trap.While the oil-and g

133、as-rich GCC countries are now high income;oil-/gas-rich countries like Algeria,Egypt,the Islamic Republic of Iran,Iraq,and Libya are middle income.The World Banks latest World Development Report(WDR)notes that“as countries grow wealthier,they usually hit a trap at about 10 percent of annual US GDP p

134、er personthe equivalent of$8,000 today”(World Bank 2024b).Based on an in-depth study of the global experience in recent decades,the report concludes that over 100 countries are struggling to progress from middle-income to high-income status.Based on the relatively few countries that have managed to

135、reach high-income status,the report proposes a three-pronged strategy that balances investment,infusion of foreign technologies,and innovation,highlighting examples such as Chile and the Republic of Korea(box 1.1).Box 1.1Wealth,Geography,and Prosperity in the Middle East and North Africa|9The empiri

136、cal relationship between inequality and economic developmentSchools of thought on inequality and economic developmentAn extensive body of research has examined the complex relationship between inequality and economic development,highlighting effects in both directions.This literature can be divided

137、into three primary schools of thought:the Kuznets hypothesis,the negative-impact perspective,and the nuanced,context-dependent view.Kuznets(1955)postulated an inverted U-shaped relationship between inequality and development,where inequality increases in the early stages of development and decreases

138、 as countries become wealthier.While some empirical support exists for this hypothesis,particularly historical data from early industrializing nations,the patterns universality is debated because the anticipated decline in inequality is not consistently observed in many contemporary developing count

139、ries.A substantial body of research suggests that high levels of inequality can hinder economic development.Inequality may foster political instability and social unrest,deterring economic activity(Persson and Tabellini 1994;Perotti 1996),and may contribute to credit constraints that limit the abili

140、ty of large segments of the population to invest in education,healthcare,and entrepreneurship,thereby diminishing overall human capital and productivity(Banerjee and Newman 1993;Alesina and Rodrik 1994;Aghion,Caroli,and Garcia-Penalosa 1999;Galor and Moav 2004).Recent literature emphasizes that the

141、relationship between inequality and economic development is not straightforward and is highly context dependent.Factors such as the nature of inequality(wealth-versus-income disparities),the level of institutional capacity,the presence or absence of redistributive policies,and the countrys stage of

142、economic development are all crucial(Forbes 2000;Van der Ploeg 2011;Berg etal.2018).Inequality and economic development in oil-rich MENA countriesSignificant natural resource wealth often leads to economic structures that are heavily reliant on extractive industries,exacerbating inequality and creat

143、ing developmental challenges.Box 1.2continuedA variety of reforms can promote the equitable distribution of resource revenues.Effective policies include focusing on enhancing macroeconomic stability,the absorptive capacity of public institutions,and intergenerational equity.Because fiscal volatility

144、 and procyclicality can hamper private economic activity and constrain growth,managing hydrocarbon revenues often requires stabilization mechanisms like fiscal buffers(savings)underpinned by fiscal rules.Independent of macroeconomic stabilization,countries may need to set aside fiscal resources that

145、 exceed their institutional capacity for efficient public spending,further underscoring the importance of savings mechanisms.Investing in physical and human capital is vital to transferring resource wealth to future generations,but such investments may be limited by the macroeconomic and absorptive-

146、capacity constraints noted in box 1.1.In the face of high inequality,redistributive policies and longer-term structural reforms can foster more inclusive development outcomes,diversification,and productivity growth(box 1.2).10|PROSPERITY UNEARTHEDResource wealth tends to concentrate economic activit

147、y within specific sectors and regions,leading to significant disparities across different parts of thecountry.This spatial inequality often translates into territorial disparities and causes tensions that undermine the provision of public goods.It can also fuel civil conflicts(Fearon and Laitin 2003

148、;Malik and Awadallah 2013).High resource revenues can foster rent-seeking behavior and corruption,with elites capturing resource wealth at the expense of the public(Caselli and Cunningham 2009;Arezki and Brckner 2011).This dynamic can weaken institutional development if resource rents supplant broad

149、-based taxation,making governments less accountable to their citizens.Research suggests that oil wealth can also negatively impact democratic development,leading to lower levels of social spending which exacerbates inequality(Ross 2012).Finally,there is evidence that household surveys may fail to ca

150、pture the extent of inequality,especially regarding top incomes(Vander Weide,Lakner,and Ianchovichina 2018).Policy implications for the Middle East and North Africa1.Equitable distribution of resources.Implementing policies that fairly distribute resource revenues across society,including through pr

151、ivate sector growth,access to social safety nets,infrastructure,and public services,can prevent marginalization of communities.2.Regional development programs.Targeted investments to improve the business environment,infrastructure,education,and healthcare in underserved areas can reduce regional ine

152、qualities and prevent conflict.3.Economic diversification.Reducing dependency on oil and gas by diversifying the economy can mitigate economic volatility and create more equitable economic opportunities.For instance,countries can adopt policies that provide incentives for private sector development

153、in non-oil industries such as manufacturing,agriculture,and technology,and support small and medium enterprises(SMEs).Box 1.2,continuedGEOSPATIAL INEQUALITY AND THE REDISTRIBUTION OF OIL AND GAS WEALTHAlthough hydrocarbon-rich MENA countries tend to have higher average per capita income levels,they

154、do not always effectively convert their resource wealth into inclusive growth and shared prosperity.Saudi Arabia is a prime example of oil-driven development,with its abundant oil resources forming the backbone of its economy.The country has invested heavily in infrastructure,education,and diversifi

155、cation efforts that have created substantial economic development and a high standard of living for its citizens.Iraq,in contrast,possesses vast oil reserves but has faced significant challenges in translating its oil wealth into broader development outcomes(figure 1.4).Years of conflict,sectarian v

156、iolence,political instability,and governance issues have hindered Iraqs ability to harness its oil resources effectively for the benefit of its population.Libya and the Republic of Yemen have experienced similar trajectories,as detailed in chapter 4.Wealth,Geography,and Prosperity in the Middle East

157、 and North Africa|11FIGURE 1.4Human capital in oil-rich and non-oil-rich MENA countries,201024AlgeriaBahrainEgypt,Arab Rep.IraqJordanKuwaitLebanonMoroccoOmanWB&GQatarSaudi ArabiaTunisiaUnited Arab EmiratesYemen,Rep.00.20.40.60.81.0GDP per capita(US$)020,00040,00060,00080,000100,000120,000Iran,Islami

158、c Rep.Oil/gas poorOil/gas richMedian(world)Source:Human Capital Index data are available at https:/www.worldbank.org/en/publication/human-capital.Note:The depicted median values were calculated from a sample covering 173countries.Oil and gas revenues in the MENA region have long been subject to cont

159、estation,conflict,and geopolitical tensions,which continue to shape the regions political landscape and influence global energy markets.Disputes over control of oil resources have driven conflicts within and between MENA countries.Regional conflicts,such as the IranIraq War and the Gulf War,have bee

160、n partly fueled by disputes over oil-rich territories and geopolitical dynamics,while oil revenues continue to be among the factors influencing factional violence in Libya,the Syrian Arab Republic,and the Republic of Yemen(WorldBank 2022,2023,2024a,2024c,2024d).However,oil revenues are not the only

161、factor in any of these cases,and other issues have played equal or more important roles,as discussed in chapter 4.Within countries,hydrocarbon-rich areas do not necessarily have lower poverty rates.This is shown on the maps of subnational poverty levels that are available for a few countries in the

162、region:The positive oil wealth-development relationship is not necessarily found at subnational levels.The centralized management of oil and gas revenues does not necessarily benefit hydrocarbon-producing areas or poorer parts of a country,and oil and gas revenues do not significantly cascade to reg

163、ions and areas in need 12|PROSPERITY UNEARTHED(Courant,Gramlich,and Rubinfeld 1979).This is especially true in FCV settings.The disconnect between hydrocarbon production and fiscal spending undermines trust between central and subnational governments and breeds grievances,tensions,and even conflict.

164、Many countries lack effective redistributive policies and policies for inclusive growth,and non-oil revenues are often insufficient to compensate for the centralization of oil revenues.It is essential to create or expand redistributive policies and policies for inclusive growth,as well as to promote

165、 more efficient governance to ensure that oil revenue contributes to poverty alleviation,social cohesion,and shared prosperity.Social welfare programs do not always benefit the poor.A fiscal-incidence analysis using the commitment-to-equity approach(Lustig 2023)shows that some hydrocarbon-rich MENA

166、countries have used their oil and gas revenues to finance extensive social welfare programs and explicit budgetary energy subsidies,but the coverage of these initiatives and their ability to target poor households remain limited.Fiscal spending on healthcare,education,and pensions represents an aver

167、age of 510 percent of total government spending in developing countries in MENA(figure 1.5).About 37 percent of the population of these countries received no transfers;42 percent were covered only by social assistance programs;and 6 percent were covered only by social insurance programs that were of

168、ten concentrated in the public sector(World Bank 2024b).As a result,poverty remains pervasive outside the GCC,even in hydrocarbon-rich countries,and especially in FCV-affected countries such as Syria and the Republic of Yemen(see table 1.2),while a large share of households above the poverty line re

169、mains vulnerable.In 2022,global fossil fuel subsidies amounted to 7 percent of global GDP,a share that is in double digits in many MENA countries.These subsidies are calculated as the difference between market price and cost and represent total subsidies,including any explicit and implicit subsidies

170、.The subsidies tend to be regressive and narrow the available fiscal space.Nominal spending on fuel subsidies in MENA countries is high compared with other oil-and gas-producing countries worldwide(figure 1.6).The extent to which these subsidies benefit poor and vulnerable households depends on thei

171、r structure,but while energy represents a large share of spending for poor households,the most well-off often spend more on fossil fuels than the poor and therefore tend to benefit more from energy subsidies.Subsidy regimes vary by country,but in most cases replacing energy subsidies with social pro

172、tection programs could better support poverty alleviation while also creating incentives for efficiency and climate mitigation.Currently,explicit energy subsidies exceed spending on social assistance and cash transfers in almost all MENA countries except Morocco.Reforming these subsidies could boost

173、 fiscal space across the region.Wealth,Geography,and Prosperity in the Middle East and North Africa|13FIGURE 1.5Spending on direct transfers and explicit budgetary energy subsidies in the MENA region01.52.02.5%GDP1.00.55.56.18.410.010.911.011.512.423.8Egypt,Arab Rep.(2018)Morocco(2019)Djibouti(2017)

174、Jordan(2018)West Bank andGaza(2016)Iran,Islamic Rep.(2011)Tunisia(2019)Iraq(2018)Saudi Arabia(2018)Contributory pensionsHealthcareEducationOther direct transfersIndirect subsidiesSources:CEQ Data Center on Fiscal Redistribution;General Authority for Statistics for Saudi Arabia;Amjad et al.(2023);Mar

175、zo and Younger(2023);Rodriguez and Wai-Poi(2021);Malaeb et al.(2023);Amjad et al.(forthcoming).FIGURE 1.6Top 25 countries by value of fossil-fuel subsidies,2022010203040050100150200Russian FederationIran,Islamic Rep.ChinaSaudi ArabiaEgypt,Arab Rep.IndiaAlgeriaIndonesiaUnited Arab EmiratesKazakhstanV

176、iet NamPakistanBangladeshUzbekistanIraqKuwaitArgentinaUkraineNigeriaMalaysiaTurkmenistanVenezuelaLibyaAzerbaijanQatar%GDPUS$billionsOilCoalGasElectricityTotal subsidies as%of GDP(market exchange rate)Source:International Energy Agency(IEA).Graph and data available at https:/www.iea.org/data-and-stat

177、istics/charts/value-of-fossil-fuel-subsidies-by-fuel-in-the-top-25-countries-2022.14|PROSPERITY UNEARTHEDDirect transfers,in contrast,are the most effective type of government transfers for reducing poverty and inequality.A fiscal-incidence analysis of eight regional economiesEgypt,the Islamic Repub

178、lic of Iran,Iraq,Jordan,Morocco,SaudiArabia,Tunisia,and the West Bank and Gazashows that direct conditional or unconditional cash transfers contribute the most to poverty alleviation(figure1.7).The positive effect of direct transfers is particularly strong in Morocco where they lower the poverty rat

179、e by approximately 8 percentage points.In comparison,indirect subsidies reduce the poverty rate by just 1percentage point in all eight countries except the Islamic Republic of Iran,thus confirming the effectiveness of cash transfers for reducing poverty and improving equity.FOSTERING AN EQUITABLE TR

180、ANSITION TO ALOW-CARBON ECONOMYThe green energy transition can support sustainable prosperity,notably by promoting job-rich economic diversification.Along with technology transfer,managing the low-carbon transition is key to escaping the middle-income trap,as explained in box 1.3.Green sustainabilit

181、y metrics can be linked to certain fiscal expenditures to ensure that additional revenue is generated from sustainable sources(for example,by quantifying,monitoring,and reducing carbon-intensive tax expenditures,increasing fuel excises,and/or introducing an explicit carbon tax)and to ensure that exp

182、enditure cuts are limited to nonsustainable expenditures(for example,unproductive current and capital FIGURE 1.7Effect of government transfers on poverty reductionPercentage points62468240Direct taxesIndirect taxesIndirect subsidiesDirect transfersIraq(2017)Egypt,Arab Rep.(2018)West Bank and Gaza(20

183、17)Morocco(2019)Tunisia(2019)Iran,Islamic Rep.(2021)Djibouti(2017)Sources:CEQ Data Center on Fiscal Redistribution;General Authority for Statistics for Saudi Arabia;Amjad et al.(2023);Marzo and Younger(2023);Rodriguez and Wai-Poi(2021);Malaeb et al.(2023);Amjad et al.(forthcoming).Wealth,Geography,a

184、nd Prosperity in the Middle East and North Africa|15Energy transition,trade,and labor in MENAClimate change vulnerability The MENA region is highly vulnerable to climate change.An estimated 60 percent of the regions population lives in areas facing severe water stress,and the situation is expected t

185、o worsen.Climate change may reduce rainfed crop yields by 30percent,threatening food security and increasing dependence on imports.Rising temperatures and sea levels put coastal cities at risk of population displacement and economic loss,while more frequent and intense climate-related disasters such

186、 as droughts and floods exacerbate the regions challenges.The global shift to green energy and the pressure to reduce carbon emissions are reshaping trade dynamics and labor markets in MENA,presenting unique challenges and opportunities.Trade and environmental provisions:A double-edged swordAs count

187、ries aim to align their trade policies with global environmental standards,trade agreements with environmental provisions(EPs)are becoming more common,but their impact on trade has been mixed.Regional trade agreements(RTAs)generally increase trade by reducing barriers,and have been shown to boost gl

188、obal trade with a significant positive coefficient of 0.235.However,when EPs are included the marginal effect is negative(0.118),indicating a reduction in trade flows due to increased compliance costs and regulatory burdens.However,certain types of EPs can promote trade growth.For example,Category I

189、 EPs,which focus on general environmental goals,show a continuedspending,extrabudgetary spending,and excessive guarantee-driven public investment).In addition,changing how public investments are prepared,selected,and designed can facilitate a green transition,including by reflecting climate adaptati

190、on and mitigation in the investment project pipeline,as well as providing guidance on investment project design,appraisal,and selection.This would go hand in hand with improving the overall capacity for investment project design and implementation,and thereby government absorptive capacity,as discus

191、sed in subsequent chapters of this report.In addition to its positive effects on poverty and equity,moving away from untargeted subsidies toward more direct redistribution via cash transfers could accelerate the low-carbon transition.Repurposing energy subsidies would increase fiscal space and help

192、mitigate climate effects by encouraging energy efficiency.Cash transfers can also help ensure that the transition does not harm poor households,women,and other vulnerable groups.The mining of materials critical for the transition to a low-carbon economy also represents an opportunity for the region

193、to diversify its revenue sources while contributing to global climate-mitigation efforts.Box 1.316|PROSPERITY UNEARTHEDpositive impact with a coefficient of 0.067.Category III EPs,centered on judicial enforcement mechanisms,also have a positive effect with a coefficient of 0.083.In contrast,Category

194、 V EPs,which involve stringent environmental regulations like pollution controls,have a significant negative impact with a coefficient of 0.266.Although MENA countries generally benefit less than other regions from RTAs,the impact of EPs is positive.The inclusion of EPs in RTAs enhances trade flows

195、in MENA with a regional EP coefficient of 0.492.This suggests that stricter environmental standards could help MENA improve its global trade profile by enhancing its environmental performance.Achieving energy sustainability is expected to lead to a net increase in jobs worldwide by 2030 compared to

196、a business-as-usual counterfactual,largely due to renewable energys greater labor intensity relative to fossil fuels.However,these gains will not be evenly distributed:While regions such as the Americas,Asia,and Europe are expected to experience net job creation,MENA may face net job losses estimate

197、d at 0.48 percent and 0.04 percent,respectively,if their economic structures remain unchanged.Policy interventions are thus essential to mitigate potential job losses and address negative impacts.For MENA countries,adopting policies to encourage the transition to a low-carbon economy is necessary to

198、 ensure sustainable employment growth and reduce reliance on fossil fuels.Well-designed EPs and carbon-pricing mechanisms can balance environmental sustainability with economic and social objectives,ensuring that a low-carbon transition does not disproportionately affect vulnerable workers and that

199、opportunities for retraining and reskilling foster a more inclusive green economy.Several MENA countries are successfully implementing policies to accelerate the green transition.Under its Vision 2030 plan,Saudi Arabia aims to achieve net zero greenhouse gas emissions by 2030 by sourcing at least 50

200、 percent of its total power generation from renewable energy and reducing its carbon dioxide equivalent emissions by 278 million tons each year.The plan includes projects under the Saudi Green Initiative that aims to facilitate the low-carbon transition across much of the public sector.In the United

201、 Arab Emirates,Dubai is advancing its transition by implementing sustainable policies and is on track to reach 27percent clean energy by 2030,surpassing its short-term goal of 25 percent.These examples provide important lessons for other countries in the MENA region as they strive to align their pol

202、icies while sustainably transitioning to a low-carbon economy.Sources:Robertson and Lopez Acevedo 2024;Islam and Ali 2024.NOTES1.Besides oil and gas,countries like Algeria,Egypt,and Morocco have significant mineral resources such as phosphates,iron ore,gold,zinc,and copper.During the low-carbon tran

203、sition,demand for critical minerals such as copper,lithium,nickel,and cobalt will increase and could represent an opportunity for the MENA region.Oman and the Islamic Republic of Iran are already exploiting their significant copper reserves and will likely be followed by Egypt and Saudi Arabia(lithi

204、um),Algeria and the Islamic Republic of Iran(copper),and Morocco(cobalt).The scope for diversification is discussed in this chapter,in the section titled“Fostering an Equitable Transition to a Low-Carbon Economy.”2.See growth incidence curves for MENA countries in the World Banks Poverty and Shared

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216、rmful for Growth?”American Economic Review 84:60021.Robertson,R.,and G.Lopez Acevedo.2024.“Decarbonization in MENA:Energy Transition,Trade,and Labor Markets.”Policy Research Working Paper 11005.World Bank,Washington,DC.https:/openknowledge.worldbank.org/entities/publication/e51797ab-0884-4f89-b1ca-f

217、7f174fba3eb.Rodriguez,L.,and M.Wai-Poi.2021.Fiscal Policy,Poverty and Inequality in Jordan:The Role of Taxes and Public Spending.Washington,DC:World Bank.Ross,M.L.2012.The Oil Curse:How Petroleum Wealth Shapes the Development of Nations.Princeton:Princeton University Press.Van der Ploeg,F.2011.“Natu

218、ral Resources:Curse or Blessing?”Journal of Economic Literature 49(2):366420.Van der Weide,R.,C.Lakner,and E.Ianchovichina.2018.“Is Inequality Underestimated in Egypt?”Review of Income and Wealth 64:s5579.World Bank.2022.“Iraq Economic Monitor:New Opportunity to Reform.”WorldBank,Washington,DC.World

219、 Bank.2023.“Yemen Country Economic Memorandum:Glimmers of Hope in Dark Times.”World Bank,Washington,DC.World Bank.2024a.“Syria Economic Monitor(Spring):Conflict,Crises and the Collapse of Household Welfare.”World Bank,Washington,DC.World Bank.2024b.World Development Report:Middle-Income Trap.Washing

220、ton,DC:World Bank.World Bank.2024c.“Yemen Economic Monitor(Spring):Navigating Increased Hardship and Growing Fragmentation.”World Bank,Washington,DC.World Bank.2024d.“Libya Economic Monitor(Fall):Stabilizing Growth and Boosting Productivity.”World Bank,Washington,DC.192Sharing Wealth Across TimeNatu

221、ral resources can either be a curse or a blessing,depending on the policies in place.Poor fiscal management can lead to rent seeking,political violence,institutional decay,and economic stagnationoutcomes commonly associated with the“resource curse.”With effective policies in place,resource revenues

222、can drive a nations transformation,funding investments in infrastructure,human capital,and the modernization of public institutions.This chapter explores how these policies can turn natural resource windfalls into engines for growth and development.Decoupling fiscal spending from resource revenues i

223、s key to transforming natural wealth into positive development outcomes.As oil flows from the ground and fiscal revenues pour into official coffers,policy makers face important questions:How much of its revenues should the government spend and how much should it save?How should spending be allocated

224、?What institutional mechanisms can guide sound fiscal decisions?Because the answers to these questions are driven by national development objectives and the effectiveness of different approaches is shaped by a range of factors,the optimal policy mix is country specific.This chapter reviews the main

225、objectives of resource-related fiscal policy and the factors that influence its effectiveness in countries in the Middle East and North Africa(MENA).MANAGING RESOURCE REVENUES FOR STABILIZATIONANDSAVINGFiscal revenues from nonrenewable natural resources are often volatile,and managing them effective

226、ly requires medium-to-long-term planning.Fiscal decisions around resource revenues are often driven by two major policy considerations:stabilization and saving.Volatile and/or procyclical fiscal policy can hamper private economic activity and constrain growth.Managing fluctuations in hydrocarbon rev

227、enues often requires stabilization mechanisms 20|PROSPERITY UNEARTHEDlike fiscal buffers and fiscal rules.In addition,public institutions and public investment management systems have limited capacity to absorb and deploy funds effectively,and revenues that exceed their capacity may need to be held

228、in reserve until impactful and well-managed projects can be developed and implemented.Moreover,near-term investments may not transfer wealth effectively across generations,thus making saving crucial for achieving intergenerational equity.StabilizationHydrocarbon revenues are notoriously volatile.Mos

229、t commodity prices are prone to significant fluctuations over time but hydrocarbons are among the most volatile(figure 2.1).Since 1990,on average,crude oil prices in Dubai have increased by about 0.8 percent per month.While this rate exceeds the average for gold and copper,both at 0.5 percent per mo

230、nth,it comes with a significantly wider spread(figure 2.2).The standard deviation of monthly oil price changes is much greater for oil(9.0)than for gold(3.5)or copper(5.9).A thought experiment can help put these differences in perspective.Assuming a normal distribution for simplicity,the probability

231、 of a 10 percent price collapse in a given month would be 11.3 percent for oil versus 0.1 percent for gold and 3.8 percent for copper:Oil is a much riskier asset.However,for many MENA countries,oil accounts for a major part of government revenues,exports,and even GDP.As a result,oil price volatility

232、 isamajor source of macroeconomic volatility.FIGURE 2.1Commodity price index,monthly,19902024050100150200250300350IndexCopperCrude oilGoldJan.1990Jan.1994Jan.1998Jan.2002Jan.2006Jan.2010Jan.2014Jan.2018Jan.2022Source:IMF 2024a.Sharing Wealth Across Time|21FIGURE 2.2Distribution of monthly price chan

233、ges for key commodities,19902024051015202530Crude oil(Av.=0.8,St.dev.=9.0)Copper(Av.=0.5,St.dev.=5.9)Gold(Av.=0.5,St.dev.=3.5)3020100102030Probablity density,percentPercent change,monthlySource:IMF 2024a.Note:Av.=average;St.dev.=standard deviation.If channeled directly into fiscal spending,the volat

234、ility of resource revenues can destabilize the economy,with sizeable long-term effects.While macroeconomic volatility can create arbitrage opportunities for speculative financial flows,it also suppresses economic activity by depressing greenfield investment,among other things.While macroeconomic sta

235、bility is a necessary but insufficient condition for growth,all other things being equal,the opportunity costs that come with risk aversion amid macroeconomic volatility can be substantial.Inapolicy experiment for resource-rich countries,Van der Ploeg and Poelhekke(2009)estimated that reducing macro

236、economic volatility tothe levels observed in the East Asian“tiger economies”wouldgeneratean average 3 percentage-point gain in annual growthrates.Most oil-rich MENA countries have adopted a countercyclical stance against oil price dynamics,but countercyclicality is much weaker when measured against

237、the broader business cycle.An analysis of the correlation between the cyclical components of fiscal spending and oil prices in MENA over the last two decades shows that most countries exhibit a countercyclical stance,with high oil prices coinciding with low public spending and vice versa(figure 2.3)

238、.The two outliers are the Republic of Yemen and the Arab Republic of Egypt,where fiscal spending patterns have been procyclical with respect to oil prices.22|PROSPERITY UNEARTHEDFIGURE 2.3Expenditure cyclicality of oil prices in oil-rich MENA countries,2000221.00.50.00.51.0Correlation between the cy

239、clical components of fiscal expenditure and oil price0.830.740.650.51 0.500.470.440.360.230.130.000.130.54QatarOmanSyrian Arab RepublicSaudi ArabiaKuwaitBahrainUnited Arab EmiratesAlgeriaIraqIran,Islamic Rep.LibyaEgypt,Arab Rep.Yemen,Rep.Sources:Data on general government total expenditure from the

240、WorldEconomic Outlook(International Monetary Fund);oil price(US$per barrel)from the US Energy Information Administration.In contrast,more MENA countries exhibit fiscal procyclicality with respect to the business cycle(figure 2.4).These include conflict and post-conflict countries with relatively wea

241、k fiscal institutions and low levels of budget transparency such as Iraq,Lebanon,and the Republic of Yemen.This pattern suggests that while some degree of procyclicality is driven by structural factors such as fiscal rigidity(for example,large public sector wage bills and fossil fuel subsidies)and t

242、he absence of automatic stabilizers(for example,unemployment insurance),procyclicality is at least partially driven by policy and institutional factors.In oil-rich MENA countries,policy and institutional weaknesses undermine efforts at fiscal stabilization.Discretionary countercyclical fiscal polici

243、es require an accurate understanding of the economys cyclical position in real timea challenging task.Figure 2.5 displays the discrepancy between two series across all countries between 1991 and 2023:(1)short-term GDP forecasts(vertical axis),which often correspond to the information available at th

244、e time of budget preparation,and(2)actual GDP growth(horizontal axis).If the predictions were good,scatterplot points would lie along the diagonal because predicted values would closely align with actual values.However,as the figure shows,the dispersion is very large.This is especially true for oil-

245、rich MENA countries,which overestimate their GDP growth potential by an average of 1.06 percent per year.These countries have much larger forecast errors than non-MENA countries,with standard deviations of 9.26 versus 5.45,respectively.By comparison,non-oil-rich MENA countries outperform the rest of

246、 the world and overestimate GDP growth more modestly(0.52 percent versus 0.61 percent,respectively)and with smaller dispersions(standard deviation of 4.41).Sharing Wealth Across Time|23FIGURE 2.4Expenditure cyclicality over the business cycle in oil-rich and non-oil-rich MENA countries/economies,200

247、0221.00.500.51.0Correlation between the cyclical components of fiscal expenditures and GDP0.490.480.450.380.330.140.130.130.060.030.110.140.250.460.590.64 0.65MoroccoBahrainUnited Arab EmiratesKuwaitSaudi ArabiaAlgeriaTunisiaWest Bank and GazaOmanJordanEgypt,Arab Rep.QatarIraqIran,Islamic Rep.Lebano

248、nYemen,Rep.LibyaNon-oil-richOil-richSource:World Bank using the methodology from Bogeti and Naeher(2024),data on total general government expenditure from the World Economic Outlook(International Monetary Fund),and data on GDP from World Development Indicators database(World Bank).FIGURE 2.5GDP grow

249、th forecasting errors,1991202350403020100505040300102050GDP growth forecast,percentActual GDP growth,percent,st.dev.4030201020103040OthersMENA oil-richMENA other45 degreeForecast errors MeanSt.dev.MENA oil-rich1.069.26MENA other0.524.41Others0.615.45Sources:World Economic Outlook,Fall Vintages(Inter

250、national Monetary Fund);WorldBank staff calculations.Note:St.dev.=standard deviation.24|PROSPERITY UNEARTHEDSavingWith volatile and finite resource-based revenue streams,oil-rich economies cannot solely rely on conventional fiscal targets such as balanced budgets.High levels of volatility resulting

251、from large swings in oil prices and uncertainty regarding future resource revenues complicate implementation of sound macroeconomic policies in resource-rich economies.Aiming for a balanced budget cannot truly anchor the discretionary elements of fiscal policy because the level of expenditures neede

252、d to balance the budget would have to track a moving target(revenues)and aligning with them would transmit oil price volatility directly to the domestic economy.Moreover,although balancing the budget can keep debt dynamics under control,it can also lead to wasteful spending and inadequate intergener

253、ational saving.The growth impact of spending over the business cycle.Fiscal multipliers tend to be greater during recessions and smaller during expansions.1 For this reason,saving a portion of resource revenues to finance spending during subsequent downturns can increase their growth impact.Investme

254、nt management and capacity constraints.With limited public investment management capacity,most developing countries cannot immediately allocate a sudden surge in revenues and maintain strong economic returns.Instead,a share of the revenues may be held in reserve until cost-effective projects can be

255、developed and implemented.Dutch disease.Rapid and sizeable resource-revenue inflows can cause the misallocation of productive factors.As rising incomes drive an increase in domestic demand,the relative prices of nontradable sectors spike with wages,pulling labor and capital from other sectors.Public

256、 wages may also be adjusted to match the higher cost of living and reinforce the trend.This dynamic can erode competitiveness in tradable goods and Dutch disease can outlast the short-term resource windfall,leaving an economy dominated by nontradables in place for decades.Intergenerational inequity.

257、Resource revenues can be used to build physical and human capital benefiting both current and future generations,and contributing to sustaining long-term growth.In practice,however,absorptive capacity constraints can result in wasteful spending.These constraints and investment needs influence the sh

258、are of resources that are saved for the future.Resource-rich countries require a forward-looking fiscal framework aimed at ensuring macroeconomic stability,adequate savings,and long-term growth.How much of its resource revenues each country should spend or save depends on a large number of country-s

259、pecific factors.However,several useful benchmarks can guide policy makers:Permanent income.This approach hinges on identifying a sustainable level oflong-term spending,which in resource-rich countries is equal to the permanent income annuity implied by the present value of resource wealth.Sharing We

260、alth Across Time|25Consistent spending supports macroeconomic stability;saving resources that exceed the sustainable level helps increase intergenerational equity.Bird-in-hand.In this approach,all resource revenues are saved and only the interest from those savings(or returns on foreign investments)

261、are used to finance fiscal spending.For many developing countries,which often face large short-term investment needs,this approach may be too stringent.However,it may be appropriate for very-oil-rich countries with high levels of per capita income.Modified rule:This approach is based on either perma

262、nent income or bird-in-hand but adjusts the spending path based on certain considerations such as immediate infrastructure gaps.A modified rule can promote long-term stability without excessively restricting public spending.Figure 2.6 presents an example of hypothetical revenue flows and implied spe

263、nding patterns under each rule,with the modified rule reflecting a permanent income approach with limited front-loading.Spending in most oil-rich MENA countries significantly exceeds their respective permanent income benchmarks.Table 2.1 shows the non-oil fiscal deficits that would be consistent wit

264、h spending benchmarks under the permanent income approach in oil-rich MENA countries.These were computed based on the permanent income annuity implied by each countrys hydrocarbon wealth as of 2022.In most countries,the actual non-oil fiscal balances are wider than these estimates,with the notable e

265、xception of the Islamic Republic of Iran where the actual non-oil fiscal deficit(5.7 percent of GDP)is significantly smaller than the permanent income benchmark(11.5 percent of GDP).In the United Arab Emirates,the actual gap is only 0.2 percentage points wider than the permanent income benchmark(7.7

266、 percent versus 7.5 percent).Libya and Kuwait exhibit the largest gaps between the actual and benchmark deficits at 21percentage points and 25.5 percentage points,respectively.The permanent income approach is a conservative fiscal rule allowing less spending in the current period in order to leave m

267、ore for future periods;the approach does not show the only sustainable fiscal positions for these countries in the medium to long term.However,the wide gaps observed cast doubt on the sustainability of their fiscal spending over the very long term.While the indicative sustainability gap for oil-rich

268、 MENA countries has persisted over time,recent improvements are evident in the Gulf Cooperation Council(GCC).In recent decades,most oil-rich MENA countries have exhibited a substantial gap between their actual non-oil fiscal deficits and their permanent income benchmarks.In most GCC countries,howeve

269、r,there have been sizable improvements since the beginning of the COVID-19 pandemic.Omans gap decreased from about 16 percentage points in 2019 to about 7 points in 2022,Saudi Arabias from 11 percentage points to 4,and the United Arab Emirates from 9percentage points to 0.2.These improvements have b

270、een facilitated by a broad set of fiscal reforms,which have helped many GCC countries move from aprocyclical to a countercyclical fiscal stance(Bogeti and Naeher 2024).26|PROSPERITY UNEARTHEDcontinuedFIGURE 2.6Revenue and expenditure flows under different rules:A hypothetical exampleBillions,US$0123

271、4110568792020207520252030203520402045205020552060206520702020207520252030203520402045205020552060206520701012341056879Billions,US$a.Balanced budgetb.Permanent incomeBorrowingUse of interestearningsOil revenuesPIH annuityOil20202075202520302035204020452050205520602065207020202075202520302035204020452

272、050205520602065207001234110568790123411056879c.Bird-in-handd.Modified ruleBillions,US$Billions,US$Use of interestearningsUse of interestearnings andother resourcesBIH annuityOil revenuesOil revenuesSavingsSavingsBorrowingSource:World Bank.Note:BIH=bird-in-hand;PIH=permanent income hypothesis.TABLE 2

273、.1 Fiscal balances in selected MENA countries:Actual versus permanent income benchmark,2022COUNTRY OIL AND GAS WEALTHPERMANENT INCOME BENCHMARK NON-OIL FISCAL BALANCEACTUAL NON-OIL FISCAL BALANCECONSTANT 2022 US$,BILLIONS%GDPCONSTANT 2022 US$,BILLIONS%GDP%GDPAlgeria55424616.17.218.6Bahrain881972.65.

274、816.0Iran,Islamic Rep.1,62839447.411.55.7Iraq1,59755746.516.225.7Sharing Wealth Across Time|27TABLE 2.1 continuedCOUNTRY OIL AND GAS WEALTHPERMANENT INCOME BENCHMARK NON-OIL FISCAL BALANCEACTUAL NON-OIL FISCAL BALANCECONSTANT 2022 US$,BILLIONS%GDPCONSTANT 2022 US$,BILLIONS%GDP%GDPKuwait1,01455529.51

275、6.241.7Libya45481213.223.744.7Oman43237612.610.917.8Qatar68829220.08.517.2Saudi Arabia3,723336108.49.813.4United Arab Emirates1,30725838.17.57.7Source:World Bank,based on data from the US Energy Information Administration,World Bank Commodity Price Data,World Development Indicators(World Bank),World

276、 Bank Macroeconomic and Fiscal Model,World Economic Outlook(International Monetary Fund),and the statistical offices of Bahrain,the Islamic Republic of Iran,Kuwait,and Oman.Note:The calculations are based on the methodology detailed and previously applied to the Russian Federation.Anon-oil fiscal ba

277、lance consistent with a“permanent income”from a countrys oil assets is calculated so that the country only spends as much of its oil income as it earns on its assets,leaving intact the asset value to ensure sustainability.A fiscal rule requiring more stable spending would also reduce the pressures o

278、n real exchange rate appreciation in oil-rich countries.See Bogeti etal.(2010).Adopting a sustainable policy for managing resource revenues is necessary but insufficient:Following the right process is equally important.Experience has shown that the goodwill of policy makers and setting fiscal target

279、s at the correct benchmark levels are not enough for a country to achieve its economic potential.Without strong institutions to support these processes,public policies can lack credibility.When policy makers cannot commit to a publicly known strategy that provides the required transparency and predi

280、ctability,the voracity effectcompetition to appropriate windfall revenues before other power groups docan deepen.2INSTITUTIONAL ARRANGEMENTS FOR MANAGING RESOURCE REVENUES ACROSS TIMETo effectively promote stabilization and saving,resource-rich countries could consider developing specialized mechani

281、sms that govern the flow of funds.These mechanisms include sovereign wealth funds(SWFs),financial instruments that are owned by the state but managed by independent experts,and fiscal rules.SWFs receive and manage resource revenues,using them as buffers for macroeconomic stabilization,including by i

282、nvesting in foreign assets to avoid Dutch disease,as discussed previously,or saving them for future investments.SWFs are underpinned by a set of rules that govern the flow of revenues between the resource sector,the fiscal budget,and the fund itself.While these rules can allow for discretion,transpa

283、rency and predictability are essential to preempt the voracity effect.28|PROSPERITY UNEARTHEDSovereign wealth fundsSWFs in MENA generally focus on intergenerational wealth accumulation and less on fiscal stabilization.As these two functions reflect different objectives,risk and return profiles vary

284、accordingly.Stabilization funds tend to be very liquid and accessible to the government for countercyclical interventions.Governments thus invest in low-risk assets and aim for a reasonable commercial return in the short to medium term.Savings or intergenerational funds tend to invest abroad and for

285、 the longer term,offering higher returns.SWFs require transparency,oversight,and coordination with macroeconomic policies to be aligned with the countrys development trajectory.In the absence of clear rules and strong governance frameworks as summarized in the Santiago Principles(box 2.1),SWF operat

286、ions can quickly suffer from mission creep and fail to improve economic and fiscal outcomes because they are not typically subject to the checks and balances of the budget process.According to the Santiago Principles,SWFs are expected to disclose relevant information about their investment strategie

287、s,performance,and governance structures.This includes publishing annual reports,financial statements,and details about their investments.Clear lines of accountability can be established within each funds governance framework,with robust risk-management mechanisms to identify,assess,and mitigate the

288、risks associated with the investments.Several SWFs in MENA are among the largest and oldest in the world.Six of the top 20 SWFs are in hydrocarbon-rich MENA countries,mostly in GCC states and the Islamic Republic of Iran.These SWFs are used to accumulate surplus oil and gas revenues and perform stab

289、ilization,saving,and investment functions.Smaller producers in the region either lack the excess revenues for a substantial SWF or their oil and gas production has been severely disrupted by conflict,as in the case of the Republic of Yemen.Some GCC SWFs were among the worlds first,including the Kuwa

290、it Investment Authority(1953),the Saudi Public Investment Fund(1971),and the Abu Dhabi Investment Authority(1976).While GCC SWFs have exhibited good governance practices,few SWFs elsewhere in MENA have performed well in terms of coordinating with macroeconomic policies.SWFs in GCC countries like Qat

291、ar and the United Arab Emirates have relatively high levels of transparency and sound institutional frameworks.They often publish detailed annual reports,provide information about their investment strategies,and have established governance structures.Fragile countries such as Libya,however,face sign

292、ificant challenges in meeting transparency and governance requirements.Political instability,weak institutions,and lack of capacity can hinder efforts to establish transparent and accountable SWFs.Moreover,not all SWFs are well coordinated with the countrys fiscal budget.In several cases,discretiona

293、ry domestic SWF investments(better known as strategic investment funds)have crowded out private and public investments,complicated public investment management,and undermined the role of the budget as the key instrument for public spending.Sharing Wealth Across Time|29Fiscal rulesIn MENA,the managem

294、ent of resource revenues over time has been discretionary.In most cases,budgets in the hydrocarbon-rich countries have not been anchored by fiscal rules,reflecting a strong preference for discretion and flexibility.Also,while the internal governance of some SWFs has been transparent,policy decisions

295、 that determine the flow of funds between the resource sector,budget,and the SWF are discretionary.This approach allows for adaptation in response to changing business conditions but reduces predictability and transparency.SWFs have been more successful in countries with sound records of responsible

296、 macroeconomic management and strong commitment to fiscal discipline,for example,Norway(Fasano-Filho 2000).The lack of a legal and regulatory framework that clearly defines the conditions under which revenues can flow in and out of the fund can render an SWF vulnerable to pressures to underwrite unj

297、ustified projects.When effectively implemented by a government with adequate institutional capacity,well-designed fiscal rules can help promote efficient medium-and long-term fiscal positions in resource-rich MENA countries.Fiscal rules can help align a countrys fiscal position with its long-term ma

298、croeconomic The Santiago PrinciplesThe Santiago Principles are a set of voluntary guidelines for sovereign wealth funds(SWFs)developed by the International Working Group of Sovereign Wealth Funds and agreed on in Santiago,Chile,in October 2008.The Santiago Principles aim to(1)promote a stable global

299、 financial system by ensuring that SWFs operate transparently and accountably,(2)ensure compliance with regulatory requirements in the countries where they invest,(3)promote sound investment practices based on economic and financial considerations,and(4)enhance transparency and accountability by enc

300、ouraging public disclosure of governance,objectives,investment policies,and risk management practices.The principles cover three key areas:Legal framework,objectives,and coordination with macroeconomic policiesEmphasize the importance of a sound legal framework for SWFsClearly define policy purposes

301、Coordinate with domestic fiscal and mone-tary authoritiesInstitutional framework and governance structureSound governance frameworkClearly divided roles and responsibilitiesOperational independence and accountabilityInvestment and risk management frameworkClear investment policyRisk-adjusted financi

302、al returnsRobust risk-management frameworkSource:“The Santiago Principles,”International Forum of Sovereign Wealth Funds,https:/www.ifswf.org/santiago-principles-landing/santiago-principles.Box 2.130|PROSPERITY UNEARTHEDdynamics by setting self-imposed and explicit limits to fiscal aggregates.These

303、rules can establish parameters for expenditures,revenues,budget balances,or aggregate debt levels.They can specify the share of hydrocarbon revenues that can be spent,saved,or invested,as well as how those revenues should be allocated across geographic areas.Well-designed fiscal rules reflect the co

304、untrys ability to effectively utilize funds,avoid waste and misuse,and track expenditures.International experience has shown that effective fiscal rules share several characteristics.A useful framework for the desirable characteristics of fiscal rules(Kopits and Symansky 1998)emphasizes the followin

305、g principles:Clarity.The target instrument,coverage of the rule,and institutional responsibilities should be well-defined and explicit.In oil-rich countries,the amount of oil revenue transferred to the fiscal budget can provide a good target instrument.The rule should clearly set the trajectory of t

306、ransfers,independent of short-term price movements.Moreover,a legal framework that defines the flow of funds between government agencies,responsibilities,and decision-making criteria should be in place.Transparency.Operations and actions to ensure compliance with the rule should be transparent,inclu

307、ding by means of disclosure.The public should be able to understand the rules in broad terms and the relevant decision-making criteriaand should be informed about the flow of funds.Simplicity.Related to transparency,the rule should be easily understood,and its implementation should be straightforwar

308、d.Fixed-transfer rules,such as those based on backward-looking benchmarks,are relatively simple to communicate.Adequacy.The fiscal rule should be sufficient to achieve the designated targets.If the rule aims to accumulate savings and promote macroeconomic stabilization,then transfers to the budget s

309、hould be disconnected from short-term fluctuations in oil prices.Rules based on permanent income can perform these functions as long as they are not frequently reevaluated.Consistency.The rule should be consistent with designated targets and aligned with other economic policies.The chosen mechanisms

310、 should avoid conflicts between stabilizing the fiscal rule and the sustainability targets.This can be accomplished by anchoring the reference oil prices to more stable indicators,such as long-term moving averages(structural prices).Flexibility.A fiscal rule can include contingency provisions to fac

311、ilitate long-term compliance without causing a breach.The fiscal rule should allow for a degree of flexibility to cope with extraordinary circumstances such as the 2008 global financial crisis or the 201415 oil price collapse.However,this flexibility should be limited to rare events,with the procedu

312、res that trigger and terminate such escape clauses clearly defined.Enforceability.Clear mechanisms are needed to enforce compliance with the fiscal rule.Conflicts of interest among the implementing agencies should be identified and political and economic pressures minimized.Sharing Wealth Across Tim

313、e|31MENA countries have very few explicit fiscal rules:Fiscal discretion is the norm.In that sense,the region does not score well on rules-based fiscal management,including these criteria,to help macroeconomic stability and longer-term saving.As discussed in more detail in the broad international ov

314、erview of revenue-sharing mechanisms in chapter 3,MENA countries,especially those that are hydrocarbon-rich,could benefit from greater use of explicit fiscal rules based on the principles outlined above.POLICY IMPLICATIONSOptimal saving and spending decisions are shaped by country-specific factors.F

315、or example,absorptive capacity constraints can limit the scope for converting resource wealth into physical and human capital in the nearterm.Likewise,saving a share of resource revenues can mitigate the risk of Dutch disease.Conversely,factors that amplify fiscal multipliers such as a cyclical down

316、turn or a large infrastructure gap may favor increased spending.There is often a trade-off between the management of natural resource wealth over time and its allocative management.This trade-off is similar to the efficiencyequity balance observed in other economic decisions.For example,immediate sp

317、ending to address social grievances may increase current equity but reduce economic efficiency over time.This trade-off does not always apply,however:When immediate spending helps reduce the voracity effect or prevents conflict,it can increase the resources available for future savings.In such cases

318、,efficiency and equity are complementaryrather than conflictingobjectives.This analysis yields several conclusions for MENA policy makers:Expanding the use of fiscal rules and countercyclical policy mechanisms can improve the impact of resource revenues on long-term growth.In oil-rich MENA countries

319、,the ability to manage natural resource revenues effectively over time has been limited,both in terms of stabilization and of saving.Countries with lower institutional quality have largely followed procyclical policies and overspent resource revenues.Expanding the use of fiscal rules and countercycl

320、ical policy mechanisms can improve the impact of resource revenues on long-term growth.In recent years,GCC countries have enhanced their ability to counter volatility and more closely aligned fiscal spending with the long-term dynamics of resource revenues.They have also governed SWFs better.Other M

321、ENA countries could strengthen their fiscal frameworks so that they promote fiscal stability and saving by following GCCs example and also learning from other countries.In most MENA resource-rich countries,resource revenue management is highly discretionary and poorly coordinated with macroeconomic

322、policies.Introducing explicit and transparent frameworks to govern the flow of revenues between the resource sector,budget,and SWFs would help strengthen fiscal management.32|PROSPERITY UNEARTHEDREFERENCESAuerbach,A.J.,and Y.Gorodnichenko.2011.“Fiscal Multipliers in Recession and Expansion,”Working

323、Paper 17447,National Bureau of Economic Research,Cambridge,MA.Bogeti,.,N.Budina,K.Smits,and S.Van Wijnbergen.2010.“Long-Term Fiscal Risks and Sustainability in an Oil-Rich Country:The Case of Russia.”World Bank Policy Research Working Paper 5240.World Bank,Washington,DC.Bogeti,.,and D.Naeher.2024.“I

324、s Escaping the Fiscal Pro-Cyclicality Trap Possible?Evidence from the Middle East and North Africa.”World Bank Policy Research Paper Series,No.10959(October).World Bank,Washington,DC.Fasano-Filho,U.2000.“Review of the Experience with Mineral Stabilization and Savings Funds in Selected Countries.”IMF

325、 Working Paper WP/00/112.International Monetary Fund,Washington,DC.IMF.2024a.Primary Commodity Price System.International Monetary Fund,Washington,DC.https:/www.imf.org/en/Research/commodity-prices.IMF.2024b.Historical WEO Forecasts Database.International Monetary Fund,Washington,DC.Kopits,M.G.,and

326、M.S.A.Symansky.1998.Fiscal Policy Rules.Washington,DC:International Monetary Fund.Van der Ploeg,F.,and S.Poelhekke.2009.“The Volatility Curse:Revising the Paradox of Plenty.”CESIfo Working Paper 2616(April).Center for Economic Studies and ifo Institute for Economic Research,Munich.NOTES1.See Auerbac

327、h and Gorodnichenko(2011)for a technical analysis.2.The voracity effect is a concept in economic theory that describes the phenomenon of powerful interest groups or factions in a country that aggressively compete for a share of windfall gains,such as those from natural resource discoveries or other

328、sudden increases in national wealth.This competition often leads to the inefficient and excessive appropriation of resources,which can harm the countrys overall economic growth and stability.333Sharing Wealth Across SpaceThis chapter examines how hydrocarbon-rich countries across the world and in th

329、e Middle East and North Africa(MENA)distribute their resource wealth across geographical space;that is,among subnational territories and levels of government.The chapter includes a review of the international literature and an assessment of current practices in MENA and draws lessons for improving t

330、he developmental impact of wealth sharing.REVENUE SHARING AROUND THE WORLDIn most hydrocarbon-rich countries,the central government controls subsoil resources and related revenues.In these countries,the central authorities are responsible for the legal,planning,and fiscal aspects of resource managem

331、ent.The government often establishes one or more state-owned enterprises(SEOs)to implement sectoral development plans,operate oil and gas fields,and sell hydrocarbon products.The central government also collects and distributes resource revenues among different stakeholders.In federal systems,the ce

332、ntral government usually retains direct ownership rights over offshore assets and resources on federal land,while subnational governments may have some degree of control over resources within their jurisdictions.The policy and regulatory frameworks governing resource management are often complex,inv

333、olving both national and subnational laws and institutions.While central governments typically control resources,the ways in which resource revenues are shared varies widely across countries and is closely linked with intergovernmental fiscal relations:They include fiscal decentralization,devolution,and deconcentration.In some countries,the central government distributes resource revenues by chann