The Natural Resources Trap: Private Investment without Public Commitment - Tapa dura

Experts discuss the contractual instability resulting from commodity price volatility and its effect on private investment and public involvement. Volatility in commodity prices has been accompanied by perpetual renegotiation of contracts between private investors in natural resource production and the governments of states with mineral and energy wealth. When prices skyrocket, governments want a larger share of revenues, sometimes to the point of nationalization or expropriation; when prices fall, larger state participation becomes a burden and the private sector is called back in. Recent and newsworthy changes in the price of oil (which fell from an all-time high of $147 in mid-2008 to $40 by year's end) are notable for their speed and the steepness of their rise and fall, but the up-and-down pattern itself is not unusual. If the unpredictability of commodity prices is so predictable, why do contracts not allow for this with mechanisms that would provide a more stable commercial framework? In The Natural Resources Trap, top scholars address this question in terms of both theory and practice. Theoretical contributions range across a number of fields, from contract theory to public finance, and treat topics that include taxation, royalties, and expropriation cycles. Case studies examine experiences in the U.K., Bolivia, Argentina, Venezuela, and other parts of the world. Contributors Philippe Aghion, George-Marios Angeletos, Fernando Candia Castillo, Rafael di Tella, Juan Dubra, Eduardo Engel, Ramon Espinasa, Ronald Fischer, Jeffrey Frankel, Nicolas Gadano, Dieter Helm, William Hogan, Robert MacCulloch, Osmel Manzano, Francisco Monaldi, Bijan Mossavar-Rahmani, Erich Muehlegger, Fernando Navajas, Robert Pindyck, Lucia Quesada, Roberto Rigobon, Eduardo S. Schwartz, Federico Sturzenegger, Lawrence Summers, Laurence Tai, Michael Tomz, Anders B. Trolle, Louis T. Wells, Nils Wernerfelt, Mark L. J. Wright, Richard Zeckhauser, Jeromin Zettelmeyer

William Hogan is Raymond Plank Professor of Global Energy Policy at Harvard's Kennedy School of Government. Federico Sturzenegger is President of the Banco Ciudad de Buenos Aires. He is the coauthor, with Jeromin Zettelmeyer, of Debt Defaults and Lessons from a Decade of Crises (MIT Press, 2007). Philippe Aghion is a Professor at the College de France and at the London School of Economics. Aghion is coauthor (with Peter Howitt) of Endogenous Growth Theory (MIT Press). Lawrence H. Summers is Charles W. Eliot Professor and President Emeritus at Harvard University. He served as Secretary of the Treasury in the Clinton administration and as Director of the National Economic Council in the Obama administration. Jeromin Zettelmeyer is Assistant to the Director of the Western Hemisphere Department at the International Monetary Fund. Richard Zeckhauser is Frank P. Ramsey Professor of Political Economy at the John F. Kennedy School of Government, Harvard University. Eduardo S. Schwartz is the California Professor of Real Estate and Professor of Finance, Anderson Graduate School of Management, the University of California, Los Angeles. Jeffrey A. Frankel is James W. Harpel Professor of Capital Formation and Economic Growth at Harvard University's John F. Kennedy School of Government and a Research Associate at the National Bureau of Economic Research. Louis T. Wells, Jr., is Herbert F. Johnson Professor of International Management, Harvard Business School. William Hogan is Raymond Plank Professor of Global Energy Policy at Harvard's Kennedy School of Government. Federico Sturzenegger is President of the Banco Ciudad de Buenos Aires. He is the coauthor, with Jeromin Zettelmeyer, of Debt Defaults and Lessons from a Decade of Crises (MIT Press, 2007).