Devil’s Excrement or Manna from Heaven? A Survey of Strategies in Natural Resource Wealth Management

44 Pages Posted: 26 Apr 2012

See all articles by Ronald U. Mendoza

Ronald U. Mendoza

Ateneo De Manila University - Ateneo School of Government

Harold McArthor

affiliation not provided to SSRN

Anne Ong Lopez

Asian Institute of Management

Date Written: April 25, 2012

Abstract

Case studies and multi-country empirical analyses paint a mixed picture as far as the general link between extractive industries and inclusive growth and development. On the one hand this relates to the significant risks commonly associated with the natural resource curse, faced by countries who wish to tap this wealth for development. Indeed only a few countries seem to have managed this effectively. On the other hand, the mixed results also suggest that the many challenges related to expanding extractive industries are not necessarily unavoidable. Some countries that have taken important steps to improve the governance of their wealth as well as channel these toward productive investments — notably human capital — appear to have transformed the natural resource curse into a boon for development. This paper synthesizes the main lessons drawn from an extensive review of literature on this topic. It outlines the risks attached to the natural resource curse as well as the associated solutions, as demonstrated by empirical evidence and policy experience. Innovative financing mechanisms that reflect good public finance management as well as a prioritization of investments to promote inclusive growth — such as a proposal for an “inclusive growth trust fund” — are also explored in this paper.

Keywords: mining, extractive industries, human capital, sovereign wealth funds, human development

JEL Classification: L72, O15, Q32

Suggested Citation

Mendoza, Ronald U. and McArthur, Harold and Ong Lopez, Anne, Devil’s Excrement or Manna from Heaven? A Survey of Strategies in Natural Resource Wealth Management (April 25, 2012). Available at SSRN: https://ssrn.com/abstract=2044723 or http://dx.doi.org/10.2139/ssrn.2044723

Ronald U. Mendoza (Contact Author)

Ateneo De Manila University - Ateneo School of Government ( email )

Katipunan Road
Loyola Heights
Quezon City, 1108
Philippines

Harold McArthur

affiliation not provided to SSRN ( email )

Anne Ong Lopez

Asian Institute of Management ( email )

123 Paseo de Roxas
Makati City, Metro Manila
Philippines

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