EI Sourcebook | 2. Opportunities and Challenges

2. Opportunities and Challenges

Resource wealth has the potential to deliver significant development benefits. A number of countries have been successful in capturing these benefits. In Chapters 5 to 9, examples of successes are included in the discussion of Good Practice in the various activities. It enters some caveats however: a range of technical factors - revenue volatility and resource exhaustion - have contributed to the challenges that governments face. In this respect, political factors have proved to be at least as important as technical ones, and more difficult to address.

Oil, gas and mineral resource wealth is widespread in developing countries where it frequently accounts for a very high share of gross domestic product (GDP), export earnings and government revenues.^[1] This state of affairs offers enormous opportunities and widespread evidence suggests that these opportunities can be successfully seized if certain challenges can be successfully met. Subsequent chapters will show how some states (such as Ghana and Uganda in Sub-Saharan Africa, and India and Malaysia in South Asia) have taken action to achieve this.

Additional Reading:

Acemoglu, D., Johnson, S., & Robinson, J., 'An African Success Story: Botswana' in Rodrik, D., (ed.), Search of Prosperity: Analytical Narratives on Economic Growth, p. 80-119(Princeton NJ: Princeton University Press, 2003); link to summary document;

Auty R., Mining Enclave to Economic Catalyst: Large Mining Projects in Developing Countries, (Brown Journal of World Affairs, 13.1, 2006); link to summary document;

Crowson, P., The Resource Curse: A Modern Myth? in Mining, Society and a Sustainable World Richards, J. P., eds., (London: Springer, 2009); link to summary document;

Collier, P., The Natural Resource Trap, in The Bottom Billion: Why the Poorest Countries are Falling and What can be Done About it, (Oxford University Press, Oxford UK, 2007); link to summary document;

Davis, J. M., Ossowski, R., and Fedilino, A., Fiscal Challenges in Oil-Producing Countries: An Overview, in Fiscal Policy Formulation and Implementation in Oil Producing Countries (Davis, J.M., Ossowski, R., and Fedilino, A., (eds.) Washington D.C.: IMF 2003); link to summary document;

Davis, G. A., and Tilton J. E., “The Resource Curse,” Natural Resources Forum 29 (2005); link to summary document;

Dietsche, E., et al, The Challenge of Mineral Wealth: Using Resource Endowments to Foster Sustainable Development, in Minerals Taxation Regimes, a Review of Issues and Challenges in their Design and Application: Analysis and Observations, International Council on Mining and Metals (ICMM) Report 2009; link to summary document;

Focus on Mining in Africa - Interactive Investor website materials; link to website;

Humphreys, M., Sachs, J.D., and Stiglitz, J., eds., Escaping the Resource Curse (New York: Columbia University Press, 2007); link to summary document;

Humphreys, M., Sachs, J.D., and Stiglitz, J.E., “What Is the Problem with Natural Resource Wealth?” in Escaping the Resource Curse, Humphreys, M., Sachs, J.D., Stiglitz, J.E., eds. (New York, Columbia University Press, 2007); link to summary document;

Karl, Terry Lynn, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California, 1997); link to summary document;

Lederman, D., Maloney, W., F., (eds.) Natural Resources: Neither Curse Nor Destiny (Washington DC and Palo Alto, CA, United States of America: The World Bank and Stanford University Press, 2007); link to summary document;

Legal Remedies for the Resource Curse: A Digest of Experience in Using Law to Combat Natural Resource Corruption, (Open Society Initiative Report of September 6, 2005); link to summary document;

McPhail, K., The Challenge of Mineral Wealth: Using Resource Endowments to Foster Sustainable Development in Richards, J. P., Mining, Society and a Sustainable World (eds.) (London: Springer, 2009), p.61; link to summary document;

Rosser, A., The political Economy of the Resource Curse: A Literature Survey ( Brighton, United Kingdom: The Institute of Development Studies 2006); link to summary document;

Sachs, J., and Warner, A., Natural Resource Abundance and Economic Growth, (Harvard Institute of Economic Research Discussion Paper No. 517, Cambridge, Massachusetts, 1997); link to summary document;

Stevens, P., and Dietsche, E., 'Resource Curse: An Analysis of Causes, Experiences and Possible Ways Forward' (CEPMLP, University of Dundee, 2007); link to summary document; and

Weber-Fahr, M., Treasure or Trouble? Mining in Developing Countries, World Bank and IFC Mining and Development Series, 2002; link to summary document.

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roberto agostini: World Economic Forum (WEF) report states that hydrocarbons sector added 9% of all new American jobs in 2011, some 48k jobs in total, directly and indirectly (three quarters the former). The following quote comes from page 15 of the report: First,… read more