Resource Rents, Genuine Savings and Sustainable Development: Revisiting the Evidence

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The article is dedicated to a relevant topic. The research in the article ultimately concluded that "investment leads to higher future consumption, but not to the extent predicted by theory." The main explanation offered as the reason for this was that the World Bank's data were not comprehensive enough and did not reflect the full picture. Another explanation offered is that poor investment decisions may not theoretically lead to future income streams for the predicted country. We believe that, in addition to the reasons mentioned in the study, the fact that investment does not lead to higher future consumption may be due to the saturation limit of consumption.

Author Response

Comments1: [The article is dedicated to a relevant topic. The research in the article ultimately concluded that "investment leads to higher future consumption, but not to the extent predicted by theory." The main explanation offered as the reason for this was that the World Bank's data were not comprehensive enough and did not reflect the full picture. Another explanation offered is that poor investment decisions may not theoretically lead to future income streams for the predicted country. We believe that, in addition to the reasons mentioned in the study, the fact that investment does not lead to higher future consumption may be due to the saturation limit of consumption.]

Authors’ response: [Thank you for this suggestion, which is well taken. We now raise this possibility in the introduction, as well as in our discussion of the results for OECD countries – where this saturation would be expected to have the most impact – and in the concluding section. The richer countries do seem to be something of a special case in this analysis, and we suggest that exploring other welfare measures than material consumption could be useful for this subset of countries.]

Reviewer 2 Report

Comments and Suggestions for Authors

There is no Conclusion to draw important conclusions and future exploration

In 4.Discussion the authors have written : "Thus, countries’ levels of  investment are still not good predictions of their future consumption levels."

It is not clear their contribution -what new indicators they propose to increase accuracy of forecasting future consumption levels?

Author Response

Comments 1: [There is no Conclusion to draw important conclusions and future exploration]

Authors’ response 1: [We do not have a separate Conclusions section, but we have now expanded the concluding Discussion section considerably.]

Comments 2: [In 4.Discussion the authors have written : "Thus, countries’ levels of  investment are still not good predictions of their future consumption levels." It is not clear their contribution -what new indicators they propose to increase accuracy of forecasting future consumption levels?]

Authors’ response 2: [Thank you for this comment. Our main contribution was to highlight that the existing indicator(s) still do not predict future consumption well; we did not aim to develop any new indicators. However, in our expanded discussion section we now discuss possibilities for future empirical work in this area.]

Reviewer 3 Report

Comments and Suggestions for Authors

The authors examine empirical evidence from the World Bank’s genuine savings framework to evaluate whether updated models and data can better predict the relationship between a country’s investment in capital and its future consumption as theory would dictate.

 

The authors replicate two earlier studies with more accurate data and find little change in the outcome thus showing that the relationship holds, but only weakly. 

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Your paper is very well written, and the methods described clearly explain, in detail, steps taken to replicate the earlier studies. You do a splendid job of explaining the changes made, your rationale, and how your models are related to economic theory.

 

I found your paper interesting and easy to follow.

 

Author Response

Comments 1: [The authors examine empirical evidence from the World Bank’s genuine savings framework to evaluate whether updated models and data can better predict the relationship between a country’s investment in capital and its future consumption as theory would dictate.

The authors replicate two earlier studies with more accurate data and find little change in the outcome thus showing that the relationship holds, but only weakly. 

---- 

Your paper is very well written, and the methods described clearly explain, in detail, steps taken to replicate the earlier studies. You do a splendid job of explaining the changes made, your rationale, and how your models are related to economic theory.

I found your paper interesting and easy to follow.]

Authors’ response 1: [Thank you for your kind comments about our paper. We are glad that you liked it.]

Reviewer 4 Report

Comments and Suggestions for Authors

This paper revisits the issue and replicates the correlation between genuine savings and future consumption was weaker than theory predicted, at least when genuine savings were measured using the World Bank estimate to see whether the correlation has become stronger over time, on the back of policy changes in resource-rich countries and of revisions to the World Bank estimates. The results find the correlation between genuine savings and future consumption indeed appears to be weaker, especially in sub-Saharan Africa, when compared with other parts of the world. The paper demonstrates a robust theoretical and econometric approach, with comprehensive data presentation. However, there are still several outstanding questions that require elucidation:

1. The abstract dedicates approximately half of its length to the background of the study. It is my opinion that the abstract should provide a more comprehensive summary of the work presented in this paper. The limited scope of the work may have contributed to the lack of depth in the results, which appear to be more akin to an argument than an article.

2. A study that is revisited and replicated should have some scientific significance. Even if the conclusions drawn from earlier studies are not entirely accurate, the results obtained from the data remain valid. However, the study did not delve sufficiently into the subject to identify any significant reasons. As with failed experiments that are justified by complete data, readers require further clarification.

3. The results section requires greater clarity, with the values and significance of Tables 1-3 explained in greater detail. Instead of requiring the reader to consult the tables directly, this information should be presented in a more accessible format.

4. A comparison of the results with those of previous studies in the discussion may reveal the significance of the added, more complete data. Rather than simply stating that the results are similar, this approach could provide a more nuanced understanding of the findings.

5. I am uncertain as to the temporal scope of this paper study. If the most recent data is being considered, it is possible that there may be a discrepancy in the time period. Conversely, if the original study is being referenced, it would be beneficial to incorporate the most recent data.

6. The section numbers are also confusing.

7. The existing literature is somewhat dated and requires updating to reflect the latest research findings.

Author Response

Comments 1: [ This paper revisits the issue and replicates the correlation between genuine savings and future consumption was weaker than theory predicted, at least when genuine savings were measured using the World Bank estimate to see whether the correlation has become stronger over time, on the back of policy changes in resource-rich countries and of revisions to the World Bank estimates. The results find the correlation between genuine savings and future consumption indeed appears to be weaker, especially in sub-Saharan Africa, when compared with other parts of the world. The paper demonstrates a robust theoretical and econometric approach, with comprehensive data presentation. However, there are still several outstanding questions that require elucidation:

The abstract dedicates approximately half of its length to the background of the study. It is my opinion that the abstract should provide a more comprehensive summary of the work presented in this paper. The limited scope of the work may have contributed to the lack of depth in the results, which appear to be more akin to an argument than an article.]

Authors’ response 1: [Your point is well taken, and we have revised the abstract considerably to make our own contribution clearer.]

Comments 2: [A study that is revisited and replicated should have some scientific significance. Even if the conclusions drawn from earlier studies are not entirely accurate, the results obtained from the data remain valid. However, the study did not delve sufficiently into the subject to identify any significant reasons. As with failed experiments that are justified by complete data, readers require further clarification.]

Authors’ response 2: [The earlier studies that we replicate were seminal contributions to the literature, so the fact that their results generally hold up twenty years later with new and better data is (we think) worth highlighting. However, we have now expanded the discussion of those points where our results deviate from those in these earlier studies.]

Comments 3: [The results section requires greater clarity, with the values and significance of Tables 1-3 explained in greater detail. Instead of requiring the reader to consult the tables directly, this information should be presented in a more accessible format.]

Authors’ response 3: [You are quite right. We have expanded the discussion in the text considerably, and although the reader will still have to look at the tables for details, the text can now be read on its own for the main findings.]

Comments 4: [A comparison of the results with those of previous studies in the discussion may reveal the significance of the added, more complete data. Rather than simply stating that the results are similar, this approach could provide a more nuanced understanding of the findings.]

Authors’ response 4: [See our response to your point 3 above. We hope that the expanded discussion helps provide the nuance that you ask for.]

Comments 5: [I am uncertain as to the temporal scope of this paper study. If the most recent data is being considered, it is possible that there may be a discrepancy in the time period. Conversely, if the original study is being referenced, it would be beneficial to incorporate the most recent data.]

Authors’ response 5: [We do both, and hope that the revised version makes this clearer. We replicate the analysis with the same countries and time spans as the original analysis, but with the updated data for those countries and years; we then also replicate the analysis with the more comprehensive dataset (with more countries and additional years) that is now available.]

Comments 6: [The section numbers are also confusing.]

Authors’ response 6: [Thank you for pointing this out – something appears to have gone wrong with Word’s automatic section numbering. We have now fixed this.]

Comments 7: [The existing literature is somewhat dated and requires updating to reflect the latest research findings.]

Authors’ response 7: [We have added a number of more recent references and now have some twenty references from the past decade, of which about ten from the past five years.]

Round 2

Reviewer 4 Report

Comments and Suggestions for Authors

The article has been subjected to a rigorous process of revision in accordance with the recommendations set forth by the reviewer. This process has resulted in a notable enhancement of the article, characterised by a more comprehensive and nuanced discussion of the study's significance and content. This has led to an overall improvement in the article's scientific rigour and quality.