James Cust

Research

Working papers, publications, books, and policy outputs on natural resources, the presource curse, critical minerals, and industrial policy in developing countries.

Papers

Working papers and publications listed together. Filter by status to separate them.

Status

Topic

Published ResourcesEnvironment 2023

Public Governance versus Corporate Governance: Evidence from Oil Drilling in Forests

James Cust, Torfinn Harding, Hanna Krings, Alexis Rivera-Ballesteros

satellite dataspatial analysis

Oil extraction in tropical forests raises critical questions about environmental governance. Using satellite data on forest cover combined with the locations of oil wells, we compare the deforestation impacts of oil drilling across countries with different levels of public governance and across firms with different corporate governance standards. We find that public governance quality is the primary determinant of whether oil drilling leads to deforestation — corporate commitments matter less when state regulation is weak.

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Working Paper GrowthConvergence 2023

Are the Poorest Catching Up?

James Cust, Paul Collier, Alexis Rivera-Ballesteros

cross countrypanel data

Are global incomes converging or diverging? Despite recent evidence supporting unconditional beta convergence, this paper argues that such findings overlook the stark reality facing the world's poorest people. Many lower-income countries, including those among the 'Bottom Billion,' continue to slip further behind the rest of the world, while the numbers living in extreme poverty are beginning to rise again after decades of decline. The paper identifies three confusions that can arise when analysing income convergence trends: unconditional convergence tests can coexist with a significant group of countries slipping ever further behind; average trends can be distorted by compositional effects — notably China's trajectory through the global income distribution; and data availability limitations, correlated with lower incomes, can bias empirical findings.

View paper WB PRWP ↗

Working Paper ResourcesGrowth 2022

The Dog that Didn't Bark: The Missed Opportunity of Africa's Resource Boom

James Cust, Alexis Rivera Ballesteros, Albert Zeufack

cross countrypanel data

The commodity super-cycle of the 2000s and 2010s delivered a massive windfall to resource-rich Africa. Yet the expected structural transformation did not materialise. We document that, despite record resource revenues, most African resource exporters failed to diversify their economies, invest in human capital, or build the institutional foundations for sustained growth. The boom was a missed opportunity — the dog that didn't bark.

View paper WB PRWP ↗

Published ResourcesDutch Disease 2022

Dutch Disease and the Public Sector: How Natural Resources Can Undermine Competitiveness in Africa

James Cust, Shantayanan Devarajan, Pierre Mandon

panel datacross country

We extend the analysis of Dutch Disease to examine the role of the public sector. Using cross-country data, we show that government spending patterns during resource booms amplify Dutch Disease effects. Public sector wage increases and non-tradable spending crowd out the private sector, reinforcing the mechanisms through which resource wealth undermines manufacturing competitiveness.

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Working Paper ResourcesFiscal Policy 2022

Resource-Backed Loans in Sub-Saharan Africa

David Mihalyi, Jyhjong Hwang, Diego Rivetti, James Cust

case studycross country

Resource-backed loans — where future resource revenues serve as collateral for sovereign borrowing — have become an important source of finance for resource-rich developing countries. We document the scale and structure of these arrangements in Sub-Saharan Africa and assess their implications for fiscal sustainability, transparency, and debt management.

View paper WB PRWP ↗

Working Paper ResourcesPresource Curse 2020

Natural Resource Discoveries, Citizen Expectations and Household Decisions

James Cust, Justice Tei Mensah

diff in diffsurvey data

Major oil and gas discoveries are often associated with excitement and jubilation among citizens and government officials. This paper examines the extent to which discoveries alter citizen expectations about economic conditions, combining survey data on household expectations with announcements of oil and gas discoveries across Africa. We find that discoveries increase expectations regarding economic conditions by 35 percent and living standards by 52 percent, with effects concentrated in countries with weaker institutions. We also show that households incorporate these expectations into decisions about migration and fertility — with fewer US green card lottery applications and increased childbirth following discovery announcements.

View paper WB PRWP ↗

Published ResourcesInstitutions 2020

Institutions and the Location of Oil Exploration

James Cust, Torfinn Harding

spatial analysisborder discontinuity

We investigate the role of institutions in determining where oil exploration takes place. Using a global dataset of oil wells and a border-discontinuity design, we show that institutional quality strongly influences the location of exploration activity. Countries with weaker institutions explore less of their territory, missing potential discoveries. The results suggest that the resource curse may begin before extraction — with institutional quality determining whether resources are even found.

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Published ResourcesDutch Disease 2019

Dutch Disease Resistance: Evidence from Indonesian Firms

James Cust, Torfinn Harding, Pierre-Louis Vezina

firm level datapanel data

Oil and gas windfalls may lead to Dutch disease — the crowding out of the manufacturing sector due to rising wages when labour is drawn to expanding sectors. We exploit the fact that oil and gas discoveries contain an element of luck, as well as oil price fluctuations, to identify exogenous variation in windfalls across Indonesia and their effects on manufacturing firms. We find that oil and gas windfalls on average cause wages as well as firms' labour productivity, output, and employment to increase, while product unit values and exit rates are unaffected. Heterogeneity analysis reveals that the least productive firms are more likely to exit, surviving low-productivity firms see relatively large expansions in output and labour productivity, while high-productivity firms see relatively high expansions in employment.

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Working Paper ResourcesPresource Curse 2017

Evidence for a Presource Curse? Oil Discoveries, Elevated Expectations, and Growth Disappointments

James Cust, David Mihalyi

diff in diffevent study

Oil discoveries can constitute a major positive shock to economic activity, but may also be detrimental to growth over the long run. This paper utilises a new methodology for estimating growth underperformance to examine the extent to which discoveries depress the growth path of a country following a discovery and prior to production starting. We find causal evidence of a significant negative effect on short-run growth in countries with weak institutions, creating growth disappointments prior to resource windfalls — an effect termed the presource curse. For a giant oil or gas discovery in 1988–2010, we estimate an average growth disappointment of 0.83 percentage points annually over the five years following discovery, rising to 1.77 percentage points for super-giant discoveries. The effect is inversely related to institutional quality, driven by countries with below-threshold institutions; there is no measured growth disappointment for countries with strong institutions.

View paper WB PRWP ↗

Working Paper ResourcesClimate 2017

Stranded Nations? The Climate Policy Implications for Fossil Fuel-Rich Developing Countries

David Manley, James Cust, Giorgia Cecchinato

scenario analysis

Climate policies aimed at limiting global warming to 2°C imply that a significant share of the world's fossil fuel reserves must remain unburned. We examine the implications for fossil fuel-rich developing countries — potential 'stranded nations' — whose subsoil assets may become commercially unviable. We estimate the scale of stranded asset risk by country and discuss policy options for managing the transition.

View paper SSRN ↗

Published ResourcesInfrastructure 2015

Investing in Africa's Infrastructure: Financing and Policy Options

Paul Collier, James Cust

policy analysis

Africa faces a large and growing infrastructure deficit that constrains economic growth. We examine the financing options available to African governments, including natural resource revenues, sovereign borrowing, and public-private partnerships. We argue that resource-rich countries have a unique opportunity to use anticipated natural resource revenues to finance infrastructure investment, but that institutional safeguards are essential to prevent waste and corruption.

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Published ResourcesLocal Development 2015

The Local Economic Impacts of Natural Resource Extraction

James Cust, Steven Poelhekke

literature review

We review the growing literature on the subnational economic impacts of natural resource extraction. While much of the resource curse literature focuses on cross-country comparisons, a newer body of work examines impacts at the local level — including employment, income, migration, and public service provision in communities near extraction sites. We synthesise the evidence and identify key mechanisms through which local economies are affected.

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Published ClimatePolicy 2009

Using Intermediate Indicators: Lessons for Climate Policy

James Cust

policy analysis

Climate policy relies on measurable indicators to track progress toward emission reduction targets. This paper examines the use of intermediate indicators — metrics that capture progress along the causal chain between policy implementation and final outcomes. Drawing on examples from energy and environmental policy, I discuss how intermediate indicators can improve policy design and evaluation.

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Published EnergyClimate 2008

Space and Time: Wind in an Investment Planning Model

Karsten Neuhoff, Andreas Ehrenmann, Lucy Butler, James Cust, Harvey Hoexter, Kim Keats, Adam Kreczko, Graham Sinden

simulation model

We develop an investment planning model that incorporates the spatial and temporal variability of wind power. The model captures the costs of intermittency and transmission constraints, allowing planners to evaluate the optimal mix of wind capacity across locations. Our results show that geographic diversification of wind farms significantly reduces integration costs.

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Books & Chapters

Books, edited volumes, and book chapters.

Book Critical MineralsResources 2025

Mineral Resources of Africa

James Cust, World Bank Group

World Bank Group

Examines Africa's mineral wealth and its significance in the global clean energy transition, assessing the continent's rich endowment of twenty-six key minerals, the role of AI in exploration, the need for stronger geoscientific data systems, and opportunities for attracting responsible investment through balanced regulatory frameworks.

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Edited Volume ResourcesIndustrial Policy 2023

Africa's Resource Future: Harnessing Natural Resources for Economic Transformation during the Low-Carbon Transition

James Cust, Albert Zeufack

World Bank Group

This edited volume brings together leading researchers and practitioners to examine how African countries can harness their natural resource wealth for sustainable economic transformation. Spanning fiscal policy, governance, local content, environmental management, and the energy transition, the book provides evidence-based guidance for policymakers navigating the dual challenge of resource management and low-carbon development.

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Edited Volume ResourcesWealth Accounting 2021

The Changing Wealth of Nations 2021: Managing Assets for the Future

Glenn-Marie Lange, James Cust, Diego Herrera, Esther Naikal, Grzegorz Peszko

World Bank Group

The flagship World Bank report on comprehensive wealth accounting across countries. This edition introduces updated measures of natural capital, produced capital, human capital, and net foreign assets for 146 countries. It reveals that many nations — particularly in Sub-Saharan Africa — are depleting natural capital faster than they are accumulating other forms of wealth, raising fundamental questions about the sustainability of current growth paths.

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Policy Work

Policy briefs, reports, and background notes.

Policy Brief World Bank Blogs Resources 2025

Africa's Natural Resources: Engine for Economic Transformation

Blog post examining how Africa's untapped natural resource potential could drive economic transformation, drawing on evidence from the World Bank's Africa's Resource Future report. Discusses the policy conditions under which resource wealth can support rather than undermine diversification and long-run growth.

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Policy Brief World Bank Blogs CEoG 2022

Advice in the Time of COVID-19

Blog post on how African chief economic advisors used the Chief Economists of Government (CEoG) network to share responses to the pandemic. Launched in 2019 by the World Bank's Africa Office of the Chief Economist, CEoG convenes advisors from more than 40 Sub-Saharan African countries to exchange approaches on crisis response and economic recovery, and to strengthen knowledge-based policymaking.

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Policy Brief World Bank Blogs Natural Capital 2022

Managing Nature's Assets is Key to Sustainable Growth in Africa: Insights from the Changing Wealth of Nations 2021

Blog post drawing on the Changing Wealth of Nations 2021 report. Sub-Saharan Africa holds close to 20 percent of its total wealth in natural assets, and the 2004-2014 commodity boom left many resource-rich economies with declining wealth per capita once prices fell. Argues that Africa's future prosperity depends on converting finite natural resource revenues into human and physical capital rather than consumption.

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Policy Brief IMF Finance & Development Resources 2017

The Presource Curse

An accessible explanation of the presource curse — how countries can suffer economic damage from oil and gas discoveries years before any revenues arrive. Published in the IMF's flagship policy magazine, the article draws on cross-country evidence to show how elevated expectations, premature borrowing, and real exchange rate appreciation can undermine growth prospects.

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Report Natural Resource Governance Institute Resources 2014

Natural Resource Charter (Second Edition)

A comprehensive framework for good governance of natural resource wealth, structured around twelve precepts covering the full decision chain from the decision to extract through to the sustainable use of revenues. Developed as a practical tool for policymakers, parliamentarians, and civil society in resource-rich countries.

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