The sustainability of non-renewable resources use at regional level: a case study on allocation of oil royalties

The aim of this work was to assess the socioeconomic impact derived from the oil royalty allocation on regional development, using a multi-sector model based on a Social Accounting Matrix (SAM), appropriately implemented for Basilicata region (Italy), the typical case of a region lagging behind in a developed economy. Our focus was on how political decisions have influenced the economic development of the region and how a different set of choices can be more effective in transforming public receipts into long-term benefits. Results show clearly that in the past the allocation of oil royalties to the regional Government (as a whole 990 million euros) generated a much lower impact than expected, in terms of economic growth and employment. Given the structure of the regional economy, much of the impact of investments and running expenses financed by royalties has maybe been lost outside the regional boundaries. A greater effect on income and employment will not be possible unless resources are redirected towards greater competitiveness of the regional economic system. Better balancing the use of royalties between social expenditure and production investments would probably be the first step towards a strategy of sustainable development of the regional economy.