Ethics & International Affairs Volume 18.1 (Winter 2004): Articles: Sharing the Riches of the Earth: Democratizing Natural Resource-Led Development [Abstract]

Feb 3, 2004

Many developing countries are attempting to use their natural resource endowments -- notably oil, natural gas, and minerals such as gold -- as the basis for economic growth and development. Recent history, however, indicates that countries that depend heavily on resource extraction do more poorly on a variety of economic indicators, including growth rates, education levels, and income inequality. This is due in significant part to the way in which wealth derived from resource extraction is concentrated in the hands of a small elite, which often misuses these revenues through corruption, poorly planned investments, and other means. This contrasts with other kinds of economic activity, such as agriculture, in which benefits are distributed more widely. Thus, a key to increasing the development and poverty reduction benefit value of resource extraction is breaking elite control of these revenues and increasing public involvement in decision-making related to their use. Doing so would enhance the likelihood that these funds would be employed with greater concern for the needs of the populace. The experiences of Ecuador, Peru, and Bolivia highlight the importance of increasing distributive justice and public participation in resource revenue distribution and provide insights into how this could be implemented in resource-dependent economies.

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