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Submitted by ishac on
This recipe had been floated before but has never been popular in Africa, or for that matter anywhere else than Alaska. Perhaps Alaskans rather live in Florida if they can, but most other people need to develop their country. In Africa, a key constraint to higher incomes remains the lack of infrastructure. Catching up requires massive investments, and governments will not only want to use fiscal revenue from natural resources for infrastructure investments, but they want also want to borrow against future flows to accelerate those investments. Of course, there are all sorts of constraints to the good utilization of these funds, and in countries where these cannot be solved, your proposed transfer scheme may make sense. But these should be the rare cases where one has given up on the possibility of the emergence of a good state. Also, the argument that these transfers can be taxed back is unrealistic – taxation is one of the most inefficient functions in poor states. Distributing some of the revenues can still be desirable, but should be evaluated on its own merit. For example, cash distribution for those that are not getting their fair share of development efforts, such as lagging regions or groups, until such efforts get to them can be a realistic way of keeping the country together while sequencing investments to more profitable ventures, initially.