Conference: IGC South Sudan Growth Forum

The IGC and C-SAR hosted a Growth Forum on 10th December 2012 at Home and Away in Juba. The forum was focused on “Building State Capabilities” and brought two leading economists from the United States to present policy relevant research to an audience that included both senior policy-makers and key members of the international and donor community in South Sudan. The Honourable Priscilla Nyangang Kuch, Deputy Minister of Gender and Social Welfare, welcomed everyone to the public event. In her opening remarks, the Honourable Deputy Minister touched on many of the challenges South Sudan is currently facing, including, importantly, the need to build institutions and human capital.

Policy notes and presentations are available for download below.

Sessions

Building State Capabilities: Latest Research and Policy

Lant Pritchett, Professor of the Practice of International Development at Harvard’s Kennedy School of Government and former lead Socio-Economist in the Social Development group of the South Asia region of the World Bank, argued that the ideas which are widely shared and propagated by the international community about how to build state capabilities in developing countries are, in fact, wrong. Nada Eissa, Professor at Georgetown University and former Deputy Assistant Secretary of the Treasury for Economic Policy in the United States, concentrated her talk on labour markets. Drawing from recent research, Eissa highlighted the policy implications of the unique characteristics of labour in South Sudan.

Macroeconomic Policy Issues in South Sudan

Keith Jefferis, Managing Director at Econsult Botswana produced a policy note on the macroeconomic policy issues faced by South Sudan. Choosing an appropriate exchange rate policy is one of the most contentious and challenging macroeconomic policy decisions currently facing the newly independent state.

Macroeconomic Management in a Mineral-Rich Economy

This note authored by Keith Jefferis considers some of the macroeconomic challenges and choices that face mineral economies, and explain how they can go well or badly. It draws on the experience of Botswana, which has been one of the more successful economies in Africa, to a large extent because of the way in which mineral wealth has been used and invested, and makes some suggestions as to how some of the challenges facing mineral economies could be resolved in the case of South Sudan. The focus is on ways of minimising the adverse impact of exogenous shocks and achieving sustained, high and equitable growth rates of living standards. This entails coordinated sets of policy instruments: fiscal policy, monetary policy and exchange rate policy.

Monetary and Exchange Rate Management

Keith Jefferis presented his thoughts on monetary and exchange rate management at the forum.

Managing Oil Rents from Scarcity to Abundance in South Sudan

Alan Gelb, former World Bank Chief Economist for Africa and now Senior Fellow at the Center for Global Development, distinguished three key phases for resource management in South Sudan. With many examples drawn from his experience in other countries, he characterized in detail the three phases as managing without oil, transitioning to oil flows and post-oil management and development. A lively discussion with the audience elaborated many issues and also touched upon inclusive governance, corruption, national identity, migration and reform. The Presidential Advisor concluded the discussion with an emphasis on opportunities resulting from the current crisis. The Minister for Culture, Youth and Sports, Dr. Cirino Hiteng Ofuho, closed the workshop with insightful comments on the presentations and discussions.

Resources

How Much Does Natural Resource Extraction Really Diminish National Wealth?

The paper considers the process of discovery for subsoil resources, including both hard minerals and hydrocarbons and estimates its magnitude in recent years, as derived from the sum of extraction and changes in proven reserves. Spurred on by technology change and strong market conditions, discovery has been substantial for most minerals. The value of discovered reserves is high relative to the costs of exploration, particularly when low social discount rates are used to value potential production in the future. Discovery is therefore valuable and should be considered as adding to national wealth through increases in proven reserves. Many countries can continue to generate resource rents far longer than indicated by current reserve estimates and this has implications for decisions on how to plan to spend or save rents. With the high response of discovery to prices and technology, environmental constraints (climate change, water) are more likely than the actual exhaustion of resource deposits to limit resource-based development.

The divergence between private and social valuation of discoveries may also justify measures taken by countries to encourage exploration, including through the provision of geo-scientific data to increase interest in discovery as well as competition among mining companies. More information is needed on the payoff to such investments, some of which are supported by donors. However, exploration is, of course, only a slice of the resource value chain. Many countries will need to improve management along the entire chain if resource wealth is to benefit their development.