Journal Article

IDS Bulletin Vol. 45 Nos. 5

Distributing the Wealth from the Earth

Published on 8 September 2014

This article explains different criteria and mechanisms for distributing Extractive Industries (EI) revenues between central and local governments across countries and territories. It reveals that institutional or systemic predictors of distribution are not enough to explain different shares of revenue sharing.

The proportion of EI revenues effectively transferred to subnational governments is neither related to the level of fiscal decentralisation of the countries nor to their federal or unitary nature. We suggest that the relative strength of the subnational governments vis-a-vis the central government as well as the relative alignment of preferences between local and national governments have a significant impact on transferring EI-revenues. We conclude that administrative or fiscal decentralisation alone are not sufficient to ensure an effective distribution of natural resource revenues. Effective political decentralisation can reduce vertical asymmetries and ensure a more equitable distribution of wealth across all jurisdictions.

Related Content

This article comes from the IDS Bulletin 45.5 (2014) Distributing the Wealth from the Earth

Cite this publication

Arellano Yanguas, J. and Mejía Acosta, A. (2014) Distributing the Wealth from the Earth. IDS Bulletin 45(5): 58-68


Javier Arellano Yanguas

Publication details

published by
Institute of Development Studies


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