How Do Natural Resources Affect Economic Growth? Essay

4448 Words Apr 14th, 2013 18 Pages
Sommario

ABSTRACT 3
NATURAL RESOURCES COURSE 3
Volatility 4
Corruption 4
Weak Government 4
Unaccountable government 4
Dutch disease 5
RUSSIA AND THE DUTCH DESEASE 5
Growth and oil price 6
Appreciation of Real Exchange Rate 7
Manufacturing and services sector 7
Growth of real wage 8
LESSON FROM NORWAY 8
Benefits from the management of the natural resources 9
The separation of power 10
Diversification growth 10
CONCLUSION 10
REFERENCES 11

ABSTRACT

Despite common opinion, having natural resources could not be always a bless for a country. With this paper we want to provide an overall idea of the influence of natural resources wealth on the economic growth. Starting from an initial explanation of
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Corruption
There is strong evidence that when a government gets more of its revenue from oil, minerals, and timber, it is more likely to be corrupt. Part of this problem is due to the volume of resource revenues: governments can only absorb, and effectively track, limited amounts of money. Resource wealth often floods governments with more revenue than they can effectively manage. Resource revenues also tend to be collected by governments in ways that are unusually difficult for citizens to track; hence some of it winds up in off budget accounts or the pockets of government officials, and is never heard of again. There are, unfortunately, many examples of resource-linked corruption. One of the most egregious cases is Angola. According to an IMF report, almost $1 billion disappeared from the Angolan government’s accounts in 2001 alone due to corruption.
Weak Government
Natural resource revenues can, ironically, weaken governments – making them less likely to resolve social conflicts and provide public goods, like health care and education. There are two ways this can happen. One way is by retarding the effectiveness of a state’s bureaucracy. A second route is by weakening the state’s territorial control. If a country has resources that are highly valuable, and can be mined with little training or investment, it will be

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