Working Paper: CEPR ID: DP11038
Authors: Anthony J. Venables
Abstract: Developing economies have found it hard to use natural resource wealth to improve their economic performance. Utilising resource endowments is a multi-stage economic and political problem that requires private investment to discover and extract the resource, fiscal regimes to capture revenue, judicious spending and investment decisions, and policies to manage volatility and mitigate adverse impacts on the rest of the economy. Experience is mixed, with some successes (such as Botswana and Malaysia) and more failures. This paper reviews the challenges that are faced in successfully managing resource wealth, the evidence on country performance, and the reasons for disappointing results.
Keywords: depletion; diversification; dutch disease; genuine saving; natural resources; nonrenewable resource curse; revenue management
JEL Codes: Q3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Effective management of resource wealth (Q33) | Sustainable economic growth (O44) |
| Resource dependence (Q21) | Lower GDP growth (F62) |
| Weak governance (H11) | Challenges in managing resource wealth (Q33) |
| Resource exports (Q37) | Adverse economic structural changes (L16) |
| Volatility of resource revenues (Q33) | Destabilization of macroeconomic conditions (F41) |
| Destabilization of macroeconomic conditions (F41) | Poor economic outcomes (F69) |