StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Does Having Natural Resources Necessarily Lead To Economic Growth and Development - Essay Example

Cite this document
Summary
The researcher of this essay will make an earnest attempt to explain whether a country which is well endowed with natural resources gains in terms of economic growth and development or if it has a negative impact commonly known as a natural resource curse…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.8% of users find it useful
Does Having Natural Resources Necessarily Lead To Economic Growth and Development
Read Text Preview

Extract of sample "Does Having Natural Resources Necessarily Lead To Economic Growth and Development"

Does Having Natural Resources Necessarily Lead To Economic Growth and Development?This paper explains whether a country which is well endowed with natural resources gains in terms of economic growth and development or if it has a negative impact commonly known as a natural resource curse. It is important to understand keywords such as natural resources, economic growth, economic development and gross domestic product (GDP). Natural resources are useful materials such as oil and gas usually found on the earth’s surface.

Economic development is the sustainable increase in the people`s standard of living and measured using per capita income while economic growth is the increase in the capacity of a given country to produce goods and services over time and is reflected by the GDP (Harrison 3). Past decades have proved that valuable natural resources such as natural gas, oil deposits and minerals do not necessarily lead to economic growth. This is evidenced by oil rich African countries such as Angola, Nigeria, Congo and Sudan.

These countries earn several millions of dollars annually through oil exports yet the foreign exchange or the riches gained over the years has never been converted into a noticeable increase in GDP. In comparison, Asian countries such as Japan, South Korea and Taiwan have experienced economic growth which can rival those of western countries. It is important to note that such countries do not have meaningful natural resources (Frankel 3). The explosion of the car manufacturing industry in the twentieth century led to an increase in the demand of natural resources such as rubber and copper.

Minerals were abundantly extracted in several countries like the Netherlands and in time replaced manufacturing as the dominant sector of the economy. With time, the Dutch economy and other similar ones suffered due to the specialization of production and processing of the main resource extracted. The discovery of natural resources did have a positive impact on economic growth but over time, such economies as Netherland became stagnant. The common trend of availability of natural resources combined with slow or stagnant economic growth has been termed the Dutch Disease type of economy (Bailey, Hartarska & Elliot 3).

Natural resources can also be a blessing to a country’s economy. A good example of this is Norway, which is the second largest oil exporter. Norway’s oil exports have surpassed other sectors and its foreign direct investment increased to 8% of GDP as of 1998. The manufacturing sector declined in relation to GDP since oil was discovered in the 1970s. The proportion of exports from the manufacturing sector reduced from 60% in 1974 to 22% in 2002. Norway employed a strategy of using income from oil to invest in social welfare such as education.

College entry rose from 26% to 62% between 1980 and 1997 (Zoega & Gylfason 10). An important characteristic of Norway which separates it from other OPEC countries is the fact that it was developed before it discovered oil. Its social and financial institutions were fairly mature. This advantage facilitated the efficient management of the oil wealth. Other economies such as Saudi Arabia have seen an increase in GDP since the discovery of oil deposits. This paper therefore finds that natural resources lead to accumulation of wealth by various resource rich countries.

The natural resources owned by a country do not however necessarily lead to a prosperous economy. Some of the world’s richest economies such as Japan, Hong Kong and Singapore gained their success without natural resources, but by exploiting other sectors of the economy (Zoega & Gylfason 1). Some countries on the other hand built their economies due to efficient and prudent use of natural resources (Barbier 10). Countries such as Saudi Arabia and Qatar have enormous GDP singularly due to natural resources.

Works CitedBarbier, Edward. The Role of Natural Resources in Economic Development, 2003. University of Adelaide: Blackwell Publishing Ltd. Print. Elliott, Vaughn, Hartarska, Valentina and Bailey, Conner. Natural Resources Endowment and Economic Growth in the Southeastern United States, 2007. Auburn University: American Agricultural Economics Association Annual Meeting. Print. Frankel, Jeffrey. The Natural Resource Curse: A Survey, 2010. Harvard University: University of Pennsylvania Press. Print. Harrison, Fidelis Ezeala.

Economic Development: Theory and Policy Applications,1996. Westport: Greenwood publishing group. Print. Zoega, Gylfi and Gylfason, Thorvadur. Natural Resources and Economic Growth: The Role of Investment, 2001. University of Iceland: Center for Business and Policy Studies. Print.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Does Having Natural Resources Necessarily Lead To Economic Growth and Essay”, n.d.)
Does Having Natural Resources Necessarily Lead To Economic Growth and Essay. Retrieved from https://studentshare.org/business/1636374-does-having-natural-resources-necessarily-lead-to-economic-growth-and-development
(Does Having Natural Resources Necessarily Lead To Economic Growth and Essay)
Does Having Natural Resources Necessarily Lead To Economic Growth and Essay. https://studentshare.org/business/1636374-does-having-natural-resources-necessarily-lead-to-economic-growth-and-development.
“Does Having Natural Resources Necessarily Lead To Economic Growth and Essay”, n.d. https://studentshare.org/business/1636374-does-having-natural-resources-necessarily-lead-to-economic-growth-and-development.
  • Cited: 1 times

CHECK THESE SAMPLES OF Does Having Natural Resources Necessarily Lead To Economic Growth and Development

Free Trade in the Modern World

Many countries have understood the importance of free-trade's necessity in terms of efficient consumption and production, economic growth and other economic benefits that are brought about by the trading between two or more countries. … Many people consider free-trade leads to efficiency and their claim can be assessed by seeing the affect of tariff or import tax on imports.... Although it might be beneficial on the global basis, it should be discourage in the developing economies which are seeking to maximize employment rate and implementing policies for the growth of local industries....
7 Pages (1750 words) Essay

Threat of Economic Development in Ireland

Instead, economic theory tells us to examine costs and benefits in order to determine whether resources are allocated in a manner that increases or decreases economic growth,” Adding further down in his commentary that, “Other forms of government spending have a less desirable impact on economic activity.... And if the program actually undermines work, saving, and investment or encourages misallocation of resources, then the overall adverse impact on economic growth will be particularly pronounced....
2 Pages (500 words) Essay

Inversely Related Variables in Economics

There are many inversely related variables in economics, for example rate of interest and borrowing, economic growth and balance of payment, unemployment and inflation etc, that is an increase in the rate of interest, an increase in the economic growth and an increase in the unemployment will cause a fall in borrowing, balance of payment and unemployment respectively.... economic theories categorize the market structure in to four models namely perfect competition, monopolistic competition, oligopoly and monopoly....
10 Pages (2500 words) Essay

Development and underdevelopmint issues of measurment and defintion

This paper seeks to discuss development and underdevelopment issues that affect developing countries Economics development entails the study of macroeconomics and microeconomics factors that leads to an economic growth.... In order to address these problems,… this paper covers major theories that policy makers and economists should take into account in order to steer development in their respective countries.... Harrod-Domar theory, Neoclassical Growth theory, Theory of surplus labor as well as The concept of Human development Index (HDI) is also covered in order to guide the developing countries on the essential factors that they should consider during the measurement of human development....
8 Pages (2000 words) Research Paper

Economics in one lesson

The book gives an analysis of economic fallacies that determines how governments formulate their policies.... The book discusses in details several fallacies such as high taxes, evils that take place in the public projects, minimum wage rate, effects of bailout, price control, tariffs on imports, rent control, trade union activities, regulations and economic effects of government actions.... Hazlitt does not object public program spending but rejects the use of public projects as a plan of injecting money into the economy....
5 Pages (1250 words) Essay

Obstacles to Development of Poorer Nations

According to Wei the constraints to development in these countries can be divided into four categories: natural resources, Human Capital, Poor Infrastructure, and institutional factors.... Most of the Sub Saharan African countries have vast natural resources that include oil and gold.... This paper has used different theories of development to explain the obstacle to development experienced by poor countries.... According to the Exogenous growth theory lack of technology makes it hard for a country to develop....
6 Pages (1500 words) Essay

Assumptions of Classical Economics which Do Green Critics

As the natural resources are scarce, we can not use them wastefully, thus, our use of them should be noted.... Green economics broadly encompasses the natural environment too while talking about social justice and other economic matters and has questioned some of the assumptions made by classical economics.... It believes that resources are limited and one can not extract uses from them unlimitedly.... These decisions usually come about after consumers or individuals make utility-maximizing and rational decisions despite a limited income and after firms employ the maximum use of resources, information within the budget constraints....
8 Pages (2000 words) Assignment

Energy and Natural Resources

According to the following paper, Australia is ranked as one of the best regions to reside in the world by an index ranging from income, healthcare, human development to civil rights.... This paper seeks to explore Australia's energy policy spanning from a historical perspective, energy markets, principal sources of energy, energy security, governance, energy and economic development to sustainability (IEA, 2012).... Nevertheless, in several ways, Australia has been a key leader as far as democracy development is concerned in the modern world (Economou & Ghazarian, 2010)....
12 Pages (3000 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us