From natural resource dependence to diversified economies: an agenda for future research

From natural resource dependence to diversified economies: an agenda for future research

This policy note aims to outline potential future directions for research on natural resource governance in Africa, with specific focus on the extraction of minerals and hydrocarbons.

The document highlights that the correlation between resource abundance and poor social indicators, despite economic growth, remains a development puzzle in Africa. However, it notes that Africa’s recent growth episode is, on average, strongly associated with a growth in resource rents.

The paper suggests that part of the explanation for this puzzle lies in the relationship between resource dependence and weak institutional quality. Moreover, it suggests that finite resources are being depleted and renewable resources are being extracted beyond their maximum sustainable yield.

Nevertheless, the author points that demand for mineral and hydrocarbon resources is likely to remain strong, and profits generated from extractive activities could still contribute significantly to inclusive and sustainable development. Consequently, he concludes that improved governance of finite extractives is a critical research goal, and suggests that future research should consider the following:

  • how can resource wealth be more efficiently allocated towards investments in human capital and the adoption of new technologies
  • how to minimise the opportunity costs of natural resource extraction, especially in light of climate change debates
  • how to improve the institutions responsible for governing natural resources

 

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