Testing the Dynamic Efficiency of Extraction of Nonrenewable Resources

Abstract This chapter examines whether non-renewable resources are extracted and managed e-ciently in Cameroon. The analysis is performed by empirically evaluating the consistency between the theoretical extraction path dictated by the Hotelling model and its various extensions and the actual extraction path. We tested the dynamic e-ciency of the theoretical path of the main non-renewable resources produced in Cameroon. Based on the empirical evidence, the results showed that the basic Hotelling model, which incorporates technological progress for petroleum (the most important mineral produced in Cameroon) and natural gas is consistent with data. For all other minerals, the test was inconclusive or failed. The theoretical extraction model known as the Hotelling model cannot explain the evolution of the observed price path of these resources.