NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Political Economy of Government Revenues in Postconflict Resource-Rich Africa: Liberia and Sierra Leone

Victor A. B. Davies, Sylvain Dessy

Chapter in NBER book African Successes, Volume I: Government and Institutions (2016), Sebastian Edwards, Simon Johnson, and David N. Weil, editors (p. 33 - 55)
Published in September 2016 by University of Chicago Press
© 2016 by the National Bureau of Economic Research
in Research on Africa

This paper examines the post-war strategies of Liberia and Sierra Leone to generate revenues from their natural resources. We document the challenges faced by the government of the two countries, contrasting measures taken to address these challenges as well as the outcomes. We complement the analysis with an analytical model which explores the implications of exploiting natural resources in the aftermath of a civil conflict before public management institutions are developed, as observed in Liberia and Sierra Leone. The key lesson is that resource-rich countries emerging from conflict face a difficult trade-off between relatively large longer-term gains which accrue when institutional capacity is developed prior to exploiting the resources, and smaller short-term revenues that come with immediate exploitation of the resources. The findings call attention to the potential role of the international community in developing post-conflict countries' natural resource and revenue institutional capacity, as well as transparent corporate and government institutions for resource management.

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This chapter first appeared as NBER working paper w18539, The Political Economy of Government Revenues in Post-Conflict Resource-Rich Africa: Liberia and Sierra Leone, Victor A.B. Davies, Sylvain Dessy
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