| Publication |
2011.
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| Summary/Abstract |
Price volatility is a major problem for all commodity exporters because it translates into direct or indirect volatility of government revenue. Should a developing country's state be responsible for isolating the domestic economy from the consequences of fluctuating international commodity prices? This article argues that this is an essential function of the state and a crucial component of its legitimacy. Recently, the establishment of stabilization funds has been regarded as an essential component of good governance, notwithstanding the persistence of major problems. As an alternative, this article proposes the use of resource revenue for establishing endowments of autonomous public institutions with well-defined developmental goals, or furnishing the equity for strategically important commercial corporations. The latter opens the door to an interesting perspective on the potential path toward progressive democratization of the rentier states.
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