Sevil ACAR

Natural Resource Abundance and Its Impact on Development Prospects

2011

(Supervisor: Fatma Doğruel)

ABSTRACT

The paradox that natural resources give rise to ill effects in most of the economies endowed with them has been proven for many countries when economic growth and other macroeconomic outcomes are considered. However, how resources affect human development and social well-being in a sustainability context has not attracted enough attention yet.
This study contributes to the literature on the links between human development and natural resources distinguishing between types of resources. Then, a panel of countries are examined in terms of the effects of their resources on genuine saving, which is a sustainability indicator that takes into account the welfare of future generations incorporating the changes in different kinds of capital. The main finding is that exportation of agricultural raw materials is associated with significant deterioration in human development, while extractive resource exports, such as energy and minerals, imply severe negative outcomes for sustainable savings. The different effects of resources are explained by various institutional frameworks such as political regimes, constitutional roots, colonial origins and quality of governance.
Finally, the scope of the thesis is extended to handle a two-country examination approach in order to demonstrate how an oil-rich economy can develop in comparison to a similar economy which lacks this resource. To that end, the development path of Norway before and after oil is examined with respect to that of Sweden. The two countries, which followed almost identical paths until the 1970s, are found to be significantly diverging in terms of per capita income after Norway found oil.