How to Escape the Trap of Resource-Based Development: Contrasting Experiences

Abstract

Most recent discussion on resource-based development has been in terms of a burden of resource abundance (Auty, 2001). Though the measurement of resource abundance is not self-evident at all, there is indeed much empirical evidence that resource-rich countries tend to perform badly both in terms of welfare levels and economic growth. Externally, resource abundance tends to contribute to high inequality. The society at large therefore tends to equate trade with the interests of the rich. There is therefore much ground for populism and – more recently – to antiglobalism as a variant thereof. There is also a tendency towards the Dutch Disease, where large revenue and perhaps investment flows lead to a real exchange rate which is detrimentally high for the competitiveness of the non-resource based part of the economy. A skewed production and export structure tends to associate with volatile export prices, contributing to economic and policy instability.