Journal Article
Fiscal dependence on extractive revenues

This study proposes a new measure of Fiscal Dependence on Extractive revenues: FDE. The FDE estimates, simply, the extent to which extractive-producing countries can fund day-to-day government spending with non-extractive revenues.

By focusing specifically on the fiscal aspect of dependency - and tying the earning of extractive revenues to government expenditure needs—the FDE allows us to better understand those contexts where countries are dependent on the revenue from extractive industries to fund the day-to-day spending of government, versus those where extractive revenues are more likely to represent a boon, or a stream that can be invested in the future wellbeing of a country's citizens.

Whilst fairly strongly correlated with existing measures of extractive dependence, the FDE ultimately tells a different story regarding countries' fiscal positions and resulting vulnerability to shocks to revenue or government spending. Amongst extractive-producing countries, fiscal dependency is correlated with lower growth, human development and levels of democracy, on average.