Managing the revenue from natural resources—what’s a Finance Minister to do?


By Sanjeev Gupta and Enrique Flores

(Versions in Español)

The Finance Minister answers her mobile. On the line is the Minister of Energy, who informs her that the country has struck oil and that he expects revenues from its sale to start flowing into the budget in the coming four years. While excited by the prospects of higher revenues—indeed the average resource-rich country gets more than 15 percent of GDP in resource revenues—she starts to ponder how to use these revenues for her country’s development. She is aware that only in rare cases have natural resources served as a catalyst for development; too often they have led to economic instability, corruption, and conflict or what has been termed as “the resource curse.”

SDN on Resource Wealth.Chart1

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Today’s Bounty, Tomorrow’s Promise: Better Policies to Manage Natural Resources


By Leslie Lipschitz

(Version in Español | Français | عربي )

Countries rich in natural resources are often looked at with envy: they face few financial constraints and that should speed their development path. But the reality is less rosy.
Countries with an abundance of natural resources—typically oil, gas or minerals—have, on average, performed less well than comparable non-resource rich countries.

That raises one of the perennial questions in economic policymaking. How to manage the economic and social challenges that stem from resource wealth? Or, to borrow the words of Professor Thorvaldur Gylfason (University of Iceland), how to prevent “nature’s bounty” from “becoming the curse of the common people”? Continue reading

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