ABSTRACT

The exploitation of natural resources (eg petroleum) by a capitalist or dependent capitalist state involves two major processes: surplus extraction and surplus transfer. In a federated state surplus transfer implies the mutual movement of resources among the component regions, for example, between the oil producing and non-oil producing regions. Advocates of federalism argue that this will enhance efficient allocation of scarce resources and at the same time fulfil some of the major fundamental objectives of federalism: spatial equity and social justice.