Overcoming the twin challenge to sound natural resources management

A country that is blessed with valuable natural resources faces many exciting opportunities, but also some demanding challenges.

Several surveys have been conducted comparing the economic and democratic development in countries with significant deposits of natural resources with countries that have no or limited amounts of such resources. Surprisingly enough, these surveys show that countries without natural resources tend to have a better economic growth compared to countries with abundant natural resources.

This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates and other variables.