The Resource Hope
Resource-rich developing countries' tax revenues have boomed in recent years, largely as a result of international rules that have improved financial transparency in the oil, gas, and mining industries. It is important to appreciate these efforts – and to ask for more.
WASHINGTON, DC – When a country quadruples its tax revenues in a single year, it is time to take notice. That is the scale of the revenue increase that Ghana achieved from 2010 to 2011, owing to receipts from its extractive industries.
Ghana is not alone. Resource-rich developing countries’ rising tax revenues reflect not only higher commodity prices, but also international rules that have improved financial transparency in the oil, gas, and mining industries, reducing opportunities for tax evasion significantly. Such rules also featured high on the agenda of the recent G-8 Summit in Northern Ireland. It is important to appreciate these efforts – and to demand more.
International commodity markets are under stress. Since 2000, prices have been on an upward trajectory, with soaring demand only briefly interrupted by the 2008 financial crisis. One apparent consequence is extreme price volatility. Simultaneously, incentives to enter illegal markets are becoming stronger: roughly 20% of the world market in coltan – a precious metal used in mobile communications – is illegally traded.