Some analysts are predicting that the commodity price boom of the new millennium is something that has played itself out. Except for shale gas and its downward pressure on U.S. natural gas prices, however, natural resource-based commodity prices have remained high by historical records in the last few years, despite the feebleness of the recent global economic recovery.
The decision last week by the Swiss government to sign the OECD’s somewhat lengthily named Convention on Mutual Administrative Assistance in Tax Matters is the latest of a series of developments that have radically increased the amount and quality of tax information available to governments.
With oil in Niger and Uganda, natural gas in Mozambique and Tanzania, iron ore in Guinea and Sierra Leone―African countries are increasingly finding rich new deposits of oil, gas, or minerals and just as quickly, attracting the courtship of international companies that are drawn to Africa’s new bonanza in extractives wealth.
Ten years ago, the World Bank and the government of Norway launched an ambitious project to drastically reduce greenhouse gas emissions from a source few people thought much about. If you’ve driven past oil fields at night, you’ve seen the flames from gas flaring. But you might not have realized just how much greenhouse gas was being pumped into the dark – and how much of a natural energy resource was being wasted in the process.
Half a dozen major oil companies joined us in 2002 in creating the public-private Global Gas Flaring Reduction partnership, and we began working together to reduce the flaring. More than 30 government and industry partners are on board today.
Together, we have achieved a great deal in just the first decade.
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A few weeks ago a rare storm event known as "Derecho" ravaged the Washington, DC area, claiming many lives and leaving 1.3 million homes and business without electricity. My house was unfortunately among those hit hard by the power outage and in an attempt to cope with the 90F+ temperatures unleashed by the storm, we moved down to the basement -- generally, the coolest part of the house.
For the first few days the novelty was fun for the kids, but as the days wore on, frustration grew, in part because we had no idea when the power would come back on.
When I moved from Norway to Washington with my family almost seven years ago, I went from paying more than $8 per gallon for gasoline in Oslo, to around $3 per gallon in the U.S. Our house is close to a bus stop for getting to the Metro, but the bus service is unreliable. Here is a first-hand illustration of how the price of gasoline affects people’s behavior. It is inexpensive to drive, so relatively few people are strongly dependent on bus service; with limited ridership there is less call for more reliable bus service and less money available to provide it. Where it is more expensive to drive, there is greater demand for higher-quality service and lower demand for more fuel-intensive cars. And fewer people want to live far away from their jobs or schools, or in very large dwellings that are costly to heat and cool. Our work in energy and environmental economics confirms how economically sound energy pricing is crucial for inducing more efficient behavior.
These are some of the views and reports relevant to our readers that caught our attention this week.
"How do you stop corrupt regimes from stashing their money in your jurisdiction? That is the question a joint initiative by the World Bank and United Nations answers in a recent report.
The Barriers to Asset Recovery report, by the Stolen Asset Recovery Initiative (StAR), gives policymakers a ‘how to’ guide on implementing laws and mechanisms needed to freeze and repatriate stolen assets." READ MORE
The Netherlands’ discovery of large natural gas deposits in the North Sea in the 1960s had serious repercussions on important segments of its economy, as the Dutch guilder became stronger, making Dutch non-oil exports less competitive. This has come to be known as "Dutch disease" or “resource curse.” Although generally associated with a natural resource discovery, it can arise from any large inflow of foreign currency--foreign assistance, foreign direct investment and remittances, among others. A surge in remittances can be expected to result in appreciation of the currency in the receiving country with all its attendant consequences of crowding out exports, crowding in imports, and induce movement of resources into the production of non-traded goods.
Bangladesh has experienced a remittance boom since FY01—with annual flows rising from $1.9 billion to $9.7 billion in FY09—growing at a compounded annual rate of 22.6 percent for eight years and still counting! As a result, remittance has now reached nearly 11 percent of GDP and is now the single largest source of foreign exchange earnings.
Co-authored with FARRIA NAEEM
Remittances have emerged as a key driver of economic growth and poverty reduction in Bangladesh, increasing at an average annual rate of 19 percent in the last 30 years (1979-2008).
Revenues from remittances now exceed various types of foreign exchange inflows, particularly official development assistance and net earnings from exports. The bulk of the remittances are sent by Bangladeshi migrant workers rather than members of the Bangladeshi Diaspora. Currently, 64 percent of annual remittance inflows originate from Middle Eastern nations.
Robust remittance inflows in recent years (annual average growth of 27 percent in FY06-FY08) have been instrumental in maintaining the current account surplus despite widening a trade deficit. This in turn has enabled Bangladesh to maintain a growing level of foreign exchange reserves.
Over the past year the world has experienced unstable prices in more ways than we could have imagined not that long ago. Just as turbulent as international stock exchanges and food prices? Crude oil.