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Natural Resources and Sustainable Development

Hiranya Nath

No 1409, Working Papers from Sam Houston State University, Department of Economics and International Business

Abstract: Empirical evidence suggests that countries abundant in natural resources grow slower than those with little or no such resources. This article briefly discusses this paradoxical phenomenon, known as the natural resource curse, and explores various channels through which this curse may operate. However, natural resources could also be a source of sustainable development if they are prudently used to create wealth. Thus, this paper further presents empirical data on wealth creation across the developing world to assess sustainable development since 1995. In particular, it makes an attempt to unveil a possible relationship between natural resource dependence and sustainable development as measured in terms of creating broadly defined wealth. There are several interesting findings. First, among various income groups, lower middle income countries have been creating wealth at the fastest pace. These countries are concentrated mainly in East Asia and the Pacific and South Asia and have low levels of per capita natural capital. Second, wealth accumulation has been slower in the natural resource-rich countries of Latin America and the Caribbean and Middle East and North Africa. In highly resource dependent countries, adjusted net saving (ANS) has also been low or negative. Finally, ANS in Sub-Saharan Africa has not only been falling but also been negative in most recent years. There has been depletion of natural resources in this region.

Date: 2014-06
New Economics Papers: this item is included in nep-env and nep-gro
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