Is there a resource curse in Timor-Leste? A critical review of recent evidence

Abstract

Shortly after oil production commenced in 2004, Timor-Leste became one of the most oil dependent countries in the world. The purpose of this piece is to assess whether Timor-Leste has been suffering from the typical political and economic ailments associated with the 'resource curse' hypothesis. The study critically analyses available evidence with reference to some of the common manifestations of the resource curse: conflict, rent-seeking behavior, Dutch disease and revenue volatility. It confirms that all of the examined mechanisms of the resource curse are present in Timor-Leste to varying degrees. This does not necessarily point to a causal relationship between mineral dependence and these socioeconomic problems. Many of these problems, common amongst developing countries, are attributed to a wide array of historical and political factors (which are likely to be associated with colonialism and inherited weak governance structures). While it might be tempting to attribute these problems to mineral discoveries and related income shocks, careful examination suggests that the extractive sector exacerbates pre-existing problems than necessarily causes them.

Environmental dilemma and sustainable development of resource-based cities: A case study from northeast china

“…(2019), Omolade et al (2019), Nel and Connelly. (2020), John and Tasciotti. (2020), Ogbonna et al (2020), andZhang J. et al (2022) by adopting the method of the case study.…”

“…Therefore, this paper also used case studies (Omolade et al, 2019;John and Tasciotti, 2020;Nel and Connelly, 2020) to expound on the typical RBCs and analyze their dilemma and solutions for reference, with the following two contribution. First, compared to Reid and Gartell.…”

Oiling the Rigs of State-building: A Political Settlements Analysis of Petroleum Revenue Management in Timor-Leste

“…A typical characteristic of political networks is rent-seeking behavior. Timor-Leste behaves as a rentier state, with minimal taxation, systemic petty corruption, and issues of transparency and accountability (John, Papyrakis, and Tasciotti 2020). Mega projects like Tasi Mane and the Oecusse economic zone have become political bargaining tools with real costly risks.…”

“…The remainder was sourced from taxes (7.6%), autonomous agencies collections (3.9%), and budget support provided by the European Union and the International Labour Organization (1%) RDTL 2020). This heavy dependence on oil (and gas) reserves has begun to show several symptoms of a "resource curse" (John, Papyrakis, and Tasciotti 2020), and the newly established governance institutions have been unsuccessful in addressing the causes of acute poverty in the country. What explains this governance failure?…”

Oil, export diversification and economic growth in Sudan: evidence from a VAR model

“…In other words, the lack of diversification is presented within this literature as a possible transmission channel of the so-called resource curse (i.e., the tendency of mineral-rich nations to underperform in long-term economic growth). A booming mineral sector often reduces export diversification through Dutch Disease effects (inflationary pressures, exchange rate appreciation, loss of competitiveness and wage premia in the extractive sector; see Corden and Neary 1982;Harding and Venables 2016;Ross 2019;John et al 2020). Export concentration then worsens the growth prospects of mineral-dependent economies by further exacerbating their vulnerability to external price shocks and international market volatility and discouraging foreign direct investment (van der Ploeg and Poelhekke 2009).…”