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

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