[TimorLesteStudies] Thesis: Petroleum Revenue Management in Timor-Leste

Jennifer Drysdale jenster at cres10.anu.edu.au
Mon Oct 8 14:30:38 EST 2007

My apologies to anyone who has tried to access the thesis today - it 
is now available.

Please start by accessing this web-page: 

I have inserted further information about each of the chapters, as follows:

Drysdale, J. (2007). Sustainable development or resource cursed? An 
exploration of Timor-Leste's institutional choices. PhD Thesis, 
Australian National University, Canberra, Australia.*

The thesis is divided into two parts. The first part explores the 
academic and grey literature, and is dedicated to understanding the 
problem of the resource curse and its potential and relevance to 
Timor-Leste. Part Two is dedicated to the explanation and results of 
the empirical component of this research. You can download the thesis 
in its entirety. But I encourage you to save a few trees by reading 
it on your computer, or alternatively print the chapters you think 
will be useful to you separately:

<http://cres.anu.edu.au/~jenster/Cover.pdf>Cover Pages
This document includes the Acknowledgments, Abstract (also provided 
in full at the bottom of this web-page), Acronyms, Non-English Terms, 
Lists of Figures and the Table of Contents.
<http://cres.anu.edu.au/~jenster/ChapterOne.pdf>Chapter One
Introduction - This chapter provides an outline of the thesis (and 
each of the chapters), the research questions, the scope of the 
thesis, and the research contribution.


<http://cres.anu.edu.au/~jenster/ChapterTwo.pdf>Chapter Two
The Challenges of Managing Natural Resource Wealth - This chapter 
provides an exploration of the challenges of managing natural 
resource wealth. The literature on the resource curse is reviewed and 
the relationship between institutions and resource revenue management 
is discussed. Throughout the evaluation a framework for understanding 
that relationship is developed. This framework distinguishes three 
possible outcomes when a state exploits its natural resource wealth; 
a state is either cursed, resource cursed, or enables sustainable 
development. Social and human capital (the 'two caps') are 
fundamental to institutional quality, and therefore fundamental to 
the outcome under this framework. Thus, the empirical component of 
the research is designed cognisant of the need to enhance 
participation in making decisions about petroleum revenue management.

<http://cres.anu.edu.au/~jenster/ChapterThree.pdf>Chapter Three
Timor-Leste's Institutional Landscape - This chapter describes 
Timor-Leste's institutional landscape in terms of the framework 
developed in Chapter Two. Timor-Leste's history is central to an 
understanding of its institutions today, and the state of its 
institutions today provide an indication of the potential outcomes of 
Timor-Leste's natural resource revenue boom. This chapter also 
provides an overview of Timor-Leste's potential petroleum wealth and 
illustrates the enormity of its contribution to the future of 
Timor-Leste as a sustainable state.

<http://cres.anu.edu.au/~jenster/ChapterFour.pdf>Chapter Four
Managing Timor-Leste's Petroleum Revenue - This chapter describes the 
Government of Timor-Leste's plans for managing its petroleum revenue. 
The Petroleum Fund Law is central to the Government's plans but it is 
not the only institution responsible for managing petroleum revenue. 
Managing Timor-Leste's petroleum revenue includes saving, spending 
and monitoring it. Thus, petroleum revenue management in Timor-Leste 
is everyone's responsibility; the President, the Parliament, the 
Bureaucracy, the Courts, and civil society. This chapter provides a 
comprehensive analysis of the details of the Petroleum Fund Law and 
other mechanisms that govern the management of petroleum revenue.


<http://cres.anu.edu.au/~jenster/ChapterFive.pdf>Chapter Five
Research Design - This chapter explains the methods for both 
collecting and analysing the data, and reflects on the efficacy of 
the chosen methods. The data comes from 28 semi-structured interviews 
(conducted in 2004) and 47 interviews (conducted in 2005) using 
multi-criteria decision analysis software called 1000minds (then 
called Point*Wizard). The methods were designed to elicit opinions 
about key decisions in managing Timor-Leste's petroleum revenue. The 
sample was designed to include decision-makers and people outside of 
government, both East Timorese and foreign advisers. The objective 
was to seek a broad range of opinions to broaden and illuminate the 
discussion about petroleum revenue management in Timor-Leste. The 
data is presented in three chapters which each focus on a different 
aspect of petroleum revenue management.

<http://cres.anu.edu.au/~jenster/ChapterSix.pdf>Chapter Six
Saving and Investing Timor-Leste's Petroleum Revenue - This chapter 
explores how participants think Timor-Leste's petroleum revenue 
should be saved and invested. Point*Wizard software was used to 
generate a ranking of which aspects of saving and investing 
Timor-Leste's petroleum revenue were most important to participants. 
The method also generated discussion themes, which include choices 
about Timor-Leste's revenue potential (in terms of whether the 
Government uses its petroleum revenue or seeks international finance, 
and how soon petroleum fields should be exploited), whether 
expenditure of natural resource wealth is sustainable (in terms of 
the amount that is withdrawn from the petroleum fund), and three 
aspects of petroleum revenue investment (the level of risk, where 
revenue is invested and in what currency).

<http://cres.anu.edu.au/~jenster/ChapterSeven.pdf>Chapter Seven
Spending Timor-Leste's Petroleum Revenue - This chapter is concerned 
with how participants think Timor-Leste's petroleum revenue should be 
spent. The semi-structured interviews generated a vision for 
Timor-Leste expressed by the participants and this, in turn, informed 
the design of the Point*Wizard research which asked participants to 
choose how petroleum revenue should be spent. One part of the 
Point*Wizard research elicited a ranking of the choice between 
spending on social services, infrastructure, individual payments and 
consumable capital. Another component of the Point*Wizard research 
asked participants to rank 14 budget sectors in terms of their 
priority to increase budget expenditure. The results of the research 
in this chapter provide an understanding of the links between sectors 
in terms of budget priorities, and the ultimate goal of sustainable 

<http://cres.anu.edu.au/~jenster/ChapterEight>Chapter Eight
Timor-Leste's Petroleum Pevenue Management Challenges - This chapter 
draws the discussion throughout the thesis together. Further findings 
from the field research underpin the basis of the framework from 
Chapter Two. Participants' comments about Timor-Leste's institutions 
and the themes of accountability and responsibility are discussed. 
Social and human capital are essential to wise petroleum revenue 
management and, ultimately, Timor-Leste's sustainable development. 
This chapter explores the 'two caps' in terms of their role in 
enhancing accountability and responsibility. Finally, this chapter 
looks to the way forward for Timor-Leste and highlights three aspects 
of petroleum revenue management that will require attention if 
Timor-Leste is to avoid the resource curse.

<http://cres.anu.edu.au/~jenster/ChapterNine.pdf>Chapter Nine
Conclusion - This chapter concludes the thesis by highlighting the 
contributions that the thesis has made to understanding the problem 
of managing natural resource wealth in Timor-Leste.

<http://cres.anu.edu.au/~jenster/References.pdf>References A list of 
the references referred to in the thesis
<http://cres.anu.edu.au/~jenster/Appendices.pdf>Appendices These 
documents (including the Petroleum Fund Law and excerpts from 
interviews) are referred to in the thesis

Thesis abstract

My PhD thesis explores the institutional choices available to 
Timor-Leste to manage their natural resource wealth wisely and avoid 
the resource curse. Timor-Leste is a poor country and its challenge 
is to use its large per capita resource wealth to alleviate poverty 
and enable sustainable development. This research examines the 
Petroleum Fund Law, and other mechanisms to manage petroleum revenue 
that the Government of Timor-Leste has established. These mechanisms 
appear to be resilient, but remain untested. Based on field 
interviews in Timor-Leste, the study offers insights into the 
opinions of East Timorese and foreign advisers about how 
Timor-Leste's petroleum revenue should be managed, and how a poor 
country can raise the living standards of its people.

A framework that identifies human and social capital as essential to 
the quality of institutions is developed in this research, which 
proposes that the pre-condition of institutions affects the 
management of natural resource revenue. As a result of history (not 
its natural resource wealth) Timor-Leste's productive institutions 
are weak and destructive institutions, such as corruption, are 
strong. The preferences of the research participants, identified 
using semi-structured interviews and multi-criteria decision 
analysis, revealed that what petroleum revenue is spent on is the 
most important petroleum revenue management decision. Further, health 
and education were regarded the highest spending priorities. 
Petroleum revenue management decisions that may affect Timor-Leste's 
economic, social and political independence were also important to 

Timor-Leste's sustainable development depends on continued assistance 
in the form of foreign advisers to address its lack of human capital. 
A commitment to transparency should counteract the lack of trust 
between government and civil society. Timor-Leste will also need to 
invest more in people, and recognise that the wise management of its 
petroleum revenue depends as much on good governance as the 
mechanisms designed to manage it. The people of Timor-Leste's fierce 
determination to overcome the challenges they face, against all odds, 
may help Timor-Leste to avoid the resource curse.

* Please include all reference details when quoting text or ideas 
from this research.

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Jenny Drysdale
Moderator, Timor-Leste Studies Association List
Mobile 0407 230 772
Email Jennifer.Drysdale at anu.edu.au
Personal Website http://cres.anu.edu.au/~jenster
East Timor Studies www.etstudies-aust.org  

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