Beyond the Curse: Policies to Harness the Power of Natural Resources

Abstract

Resource rich countries need to look beyond the so-called resource curse and put into action innovative policies and institutions to confront their many challenges and reap the benefits of widely shared natural resource wealth. There is a broad consensus in academic and policy circles that the presence of natural resources poses a number of potential challenges in resource rich countries: A loss of competitiveness in potentially dynamic, non-natural resource sectors leading to a narrowing of the production base, Excessive government reliance on revenues derived from commodities and export earnings, Too much macroeconomic and financial volatility, and Rent-seeking behavior that can undermine governance and exacerbate the difficulty of building robust, growth-enabling institutions. Our recent edited book (Arezki, Gylfason and Sy, 2012) assembles contributions from several authors discussing the fiscal, monetary and exchange rate policy options confronting resource rich countries, savings policies, suitable institutional arrangements to safeguard the economy against volatility, economic as well as political diversification, and institution building.

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