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Fossil Fuel Subsidy Reform, Rent Management and Political Fragmentation in Developing Countries

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Over the last decade, pressure to reduce subsidies for energy (especially fossil fuels) in developing countries has mounted, but reform is politically controversial. The debate on reform is dominated by a liberal narrative that employs an understanding of energy subsidies as political rent, based on public choice theory. Here, it is argued that this approach takes too static and limited a view of rent, and that engagement with theories of the state in the development process suggests a more dynamic view. The degree of centralisation of political power is also argued to be a key factor in the use and reform of subsidy. This application of the framework is then illustrated in the case of Indonesia. Finally, implications for reform strategies are drawn out.
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Keywords: development; economic reform; energy; political; rent-seeking; subsidy; theory

Document Type: Research Article

Affiliations: Energy Policy Group, University of Exeter, Peter Lanyon House, Treliever Road, Penryn, Cornwall, TR10 9EZ, UK

Publication date: July 4, 2015

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