|Managing Resource Revenues|
What should countries do with their resource revenues? At its simplest the choice is between consuming and saving, savings going either into domestic investment or accumulation of foreign assets. In practice, governments face multiple decisions of how to channel funds into different investment vehicles, through tax measures and into government spending. Choices are dependent on country circumstances. Developing countries have urgent spending needs, and also need to invest domestically to grow their economies. High income countries may prefer to build up long-run investment funds for future generations. Absorptive capacity limits the extent to which spending can be efficiently increased, and volatility of resource revenues dictates the need for prudence in all these choices. The research being undertaken includes theoretical, empirical, and case study work.