Abstract

The petroleum sector contributes substantially to the Nigerian economy; however, the potential benefits are diminished because of the existence of significant subsidies on imports of petroleum products. Subsidies on imported petroleum products are considered to be an important instrument for keeping fuel prices, and hence the cost of living, low. The costs of these subsidies, however, have risen dramatically in recent years along with increased volatility in world petroleum and petroleum product prices and increased illegal exportation of subsidized petroleum products into neighboring countries. Removing the subsidy on fuel is one of the most contentious socioeconomic policy issues in Nigeria today. In this paper, an economy-wide framework is used to identify the impact of removing the fuel subsidy on the Nigerian economy and investigate how alternative policies might be used to meet socioeconomic objectives related to fuel subsidies. The results show that although a reduction in the subsidy generally results in an increase in Nigeria’s gross domestic product, it can have a detrimental impact on household income, and in particular on poor households. Accompanying the subsidy reduction with income transfers aimed at poor households or domestic production of petroleum products can alleviate the negative impacts on household income. Document type: Book

Abstract

Despite its rapid growth in recent decades, GDP per capita in India remains at a relatively low level by international standards, and the country continues to be marked by large subnational disparities in levels of well-being. These large disparities naturally lead to interest in India’s spatial landscape of potential for economic development. Against this backdrop, this paper presents the results of an analysis of underlying variations in economic potential across Indian districts, where economic potential is defined as the extent to which a district possesses factors that are important determinants of the ability to experience a high level of productivity. The analysis is based on a simple composite Economic Potential Index, which is constructed from variables for which robust evidence exists of their importance as determinants of local productivity. From the analysis, a picture emerges of a heterogeneous landscape of economic potential characterized by strong geographic clustering of districts. The paper also reveals particularly high levels of underperformance, relative to potential, for districts in Uttar Pradesh. Document type: Book