Revenues Sharing in Mineral Exploration: Local Authorities’ Incentives towards Economic Diversification in Romania

The proper management of exhaustible natural resources requires the responsible management of the revenues generated from the exploitation of these resources and addressing a broad set of political and economic challenges. This paper is intended to demonstrate that understanding the positive effects of natural resource revenues on economic diversification in extractive regions plays a significant role in economic development when considering the contribution of extractive industries. Using national and sectoral data, this paper, on the one hand, examines how mining revenues are managed and spent in relation to the Romanian tax structure and regime and, on the other hand, how the diversification of the local economy can be achieved. The case study presented herein X-rays the complex realities faced by those regions in Romania, where the predominant economic activity is the extractive industry. The results provided by this analysis led us to the conclusion that although the distribution systems related to the extractive revenues give precedence mostly to the producing territories and seek, in particular, to transfer the benefits to the impacted areas, in the case of Romania, we are witnessing a failure in determining local economic diversification