Natural Resources and the Resource Curse

Natural resources are materials from the environment that people use, divided into renewable resources such as forests, fish and sunlight, and non-renewable ones such as oil, coal and metal ores that form over geological time. Resources are unevenly distributed, which creates trade, wealth and sometimes conflict. Surprisingly, countries rich in a single valuable resource have often grown more slowly or governed less well than resource-poor ones, a pattern the economist Richard Auty named the 'resource curse' in 1993.

Explanations include 'Dutch disease', a term coined by The Economist in 1977 after natural gas exports made the Dutch currency rise and hurt manufacturing, as well as price swings and weak institutions that let elites capture resource income. The curse is not inevitable. Norway saved its oil revenue in a sovereign wealth fund, and Botswana used diamond income to fund schools and roads, showing that governance shapes outcomes.