By establishing targeted fiscal policies and allocating sufficient economic resources, government’s can ensure that they deliver effective solutions that benefit all citizens.
Ascertaining and then managing resource wealth is one of the few areas of economic policy which can impact the economic growth and development of a country for generations. Many countries have significant natural resource endowments but often require specialist skills to design ways in which to tax the resource, and to administer and manage the resulting wealth.
The skills challenge is compounded by the fact that companies operating within extractive resource industries such as the oil and gas sector are often working in an environment remote from the rest of the economy, and with minimal linkages to the non-resource sector. They use their own technical and fiscal experts to create wealth from resource extraction but do not transfer the knowledge required to explain how that wealth is generated, or what proportion of it should be reasonably shared.
The challenge for governments wishing to understand how the extractive resource sector can be utilised to create long-term economic benefit is to develop a level of institutional capacity capable of matching that of the industry itself. Achieving this can then enable a government to derive policies that generate a proportionate share of the revenues, and that contribute to sustainable development, stabilize the economy as required, add value to the non-resource sector, and ultimately utilize the wealth as a source of permanent income.
Ae is an independent company that provides support to governments to tax and administer their resource sector by developing the necessary economic and fiscal skills, and by using advanced tools and techniques to help harness natural assets for transformative development.
The question for owners of natural resources is not one of production but one of depletion.