[miningmx.com] — SECTIONS of the International Monetary Fund believe that natural resources can actually be an economic curse.
Still, an IMF “expert paper” does concede that sometimes it’s possible for some lucky country to be “stuck” with large reserves of natural resources and yet escape disaster.
Says the IMF: “For the past 30 years Botswana has experienced extraordinary growth. This has largely been attributable to an abundance of diamonds.” That looks to confirm what most people naturally assume. Resources are a blessing. So why the alleged “curse”?
Resources rich countries show minimal economic motivation
There are two key reasons: First, it’s true that many countries with great reserves of resources have fared dismally economically while others with no resources – Hong Kong and Singapore – have enjoyed enormous long-term booms.
The claim is that resources-rich countries show minimal economic motivation. However, those with minimal resources have to focus on hard work and good economic management.
Second, resource booms can bring about greatly overvalued currencies that badly damage manufacturing. SA definitely knows that. But those aren’t necessary consequences. Well-run economies with lots of resources have necessary advantages over countries without resources.
Ask Botswana.
