Beyond the Resource Curse: How Strong Institutions, Democracy and Responsible Investment can Help Countries Succeed

Resource-rich countries often struggle with autocratic leadership, low economic growth, and inequality. The dependence on raw materials can hinder economic development and lead to conflicts, as seen in countries like Libya, Angola, and Sudan. Despite their resource wealth, countries like Iran and Russia are examples of how a small elite benefits from the wealth generated by natural resources while the general population struggles. These countries are subject to international sanctions and face economic challenges due to political instability and corruption.

To make the exceptions the rule, strong institutions, a functioning democracy, and responsible investment of resource revenues are key factors that can help countries escape the resource curse and achieve broad prosperity. Civil society plays a crucial role in demanding transparency and accountability from political leaders. By investing in diversification of the economy and ensuring that resource revenues benefit the entire population, countries can build a more stable and prosperous future.

For example, Norway has demonstrated that resource wealth can lead to prosperity and democracy if it is managed responsibly. Countries like Australia, Canada, Chile, Botswana also show that with proper management of natural resources they have been able to achieve stability and growth without falling into the pitfalls of autocratic leadership or inequality.

It’s important for countries like Russia and Iran to address issues related to political institutions, corruption, and the diversion of resource revenues towards long-term prosperity if they want to break free from the cycle of poverty that comes with being overly dependent on commodities. By doing so they will be able to build a better future for themselves