Objectives/Scope: The objective of this work is to evaluate the management of revenues from royalties (and special participations fees) by the Brazilian public administration, through the construction of a dependency index to the petroleum sector, to propose new forms of management in the light of international examples and well succeeded theories of public management.
Methods, Procedures, Process: The proposed methodology of the petroleum sector dependence was done through the introduction of an indicator in the form of a composite Index that captures a region's aggregate dependence on its nonrenewable oil and gas resources. The three indicators that make up the Index are the share of export earnings from oil and gas in total export earnings; the share of revenue from petroleum in total fiscal revenue; and the oil and gas industry added value to GDP. Our approach goes beyond the application of an existing index, through an investigation of welfare indicators and further analysis of municipal public data.
Results, Observations, Conclusions: The developed index is useful as a monitoring tool for the management of revenues from royalties and special participations fees. We found that oil fees revenues growth did not generate the same proportion of welfare gains for a local population. Finally, the results drove us to conclude that there is an urgent need for a review of public management regarding the use of these revenues, given the strong dependence of Brazilian municipalities, as well as the known finiteness of natural resources.
Novel/Additive Information: The paper's original contribution is therefore through the introduction of an indicator in the form of a composite Index that accurately captures a region's aggregate dependence on its nonrenewable oil and gas resources. The novelty is the index itself, as well as its analysis and application to municipalities, which will serve as a tool for monitoring and decision making on revenue management, and the elaboration of proposals to better manage natural resources.