Natural Resources: a Blessing or a Curse? 
Environment and natural resources preservation are vital to the economic growth of any country but also susceptible to the extent that their utilization, management and sustainability can be affected by the various actions within the society. Natural resources are considered among the most important components of national wealth. However, in some countries such wealth may help raise living standards but failing to produce self-sustaining growth, while in others it may be lead to natural disasters . Yet, there has been a consistent correlation whereas resource- rich countries grew less rapidly than resource-poor countries . Therefore, there are two main questions need to be addressed: first, does the recourse curse really exist? Second, Could natural resources be a factor in causing natural disasters?
Question 1: What are the top 10 richest countries in natural resources in the world?

There are two types of natural resources on the basis of its regeneration. First, renewable resources which  can be restocked by natural process: water, land, and forests resources. Second, non-renewable resources which  cannot be regenerated: oil and minerals, etc.

Significant Highlights

Question 2: Is there a correlation between natural resources and economic development?
  • Natural resource abundance should be the basis for the creation of national wealth because of increased exports that allow more capital goods to be imported and because natural resource rents can also be used to make capital investments. However, in many cases the opposite has been true. The term "natural resource curse" refers to the counter-intuitive phenomenon wherein an abundance of resources has often been  associated with poor governance, irrational resource exploitation, and poor development outcomes.
  • The relationship between natural resources and economic development has been a topic of great debate among economists. As been observed from the percentage of exports of good and services, percentage of GDP growth per capita and inflation rates for the top 6 richest countries in oil reserves, there is a negative correlation between natural resource abundance and sustained economic growth. In other words, there is a negative relationship between GDP growth and the ratio of exports to GDP.
  • The top 6 countries with the biggest proven oil reserves, Venezuela (297.7 billion barrels), Saudi Arabia (268.4 bb), Canada (173.2 bb), Iran (157.3 bb), Iraq (140.3 bb) and U.S. (97.8 bb). Venezuela surpassed Saudi Arabia to become the holder of the largest oil reserves in the world. However, its annual total oil production is less than the Kingdom. We will observe the economy of the 6 richest countries, for the past 40 years.
  • Saudi Arabia has the biggest percentage of exports between the top 6 countries during the last 40 years. Saudi Arabia ranked as the largest exporter and producer of oil in the world, that due to its leading role for being the 2nd country in oil reserves after Venezuela.
  • Canada has a stable percentage of exports of goods and services during the last 40 years. Canada exports most of its oil to the US and Europe. Notably, it's the US largest foreign supplier of oil.
  • The average percentage of the United States exports is around 12% of GDP, despite that it is ranked number two on the list of the richest countries in natural resources; proving the negative correlation mentioned earlier.
  • Despite the increased percentage of Saudi Arabia exports, however it has a decreased percentage of GDP growth per capita among the last 40 years, its economy is affected by the resource curse.
  • Canada has a decreased percentage o f GDP growth per capita despite it is the 4 th richest countries in natural resources and the 3 rd  richest countries on proven oil reserves.
  • Iran and Iraq have very fluctuated percentages  due to their political disputes and applied international sanctions.
  • Venezuela  scored an enormous inflation percentage in 1996 and in 2016, reaching 99% and 254.9% respectively  however it failed in translating its natural wealth into GDP growth. Its economy is affected by the resource curse.
  • U.S. succeeded in having a low inflation percentage from 1986 to 2016 as it is considered the world's richest economy in 2018 and 2019.
  • Iraq is considered the 9 th  richest country in natural resources and the 5 th  richest county in proven oil reserves, however its economy is affected by the resource curse.
Question 3: Does the "Resource Curse" really exist?

causes of the resource curse are not fully understood, although several factors may be operative simultaneously to bring about economically undesirable consequences of natural resource exploitation including :

It is generally known that the natural resources will continue to play an important role in economic development , the resulting improvement of the overall technology level will diversify the economy and improve the country's economic development faster than if the country relies solely on exports of its natural resources. Yet, such changes are slow and take time to implement, and there is a risk of significant resource depletion and huge environmental damage which will cause massive  natural disasters before the change can occur. So the answers are "yes" on our both earlier addressed questions but there are always economic recovery and development plans to be suggested and ready for implementation taking into consideration China's case.

Natural  disasters and  China's  cas e will  be  discussed  in  the  next  issue....stay tuned!
Dubai Office:

Office No. N 415, North Tower, Emirates Financial Towers, DIFC, P.O Box 506726, Dubai, UAE.
Tel:  +97142820301

Cairo Office:

Z epter Office Building  S5-6,  Area 5, District 1, 5th Settlement,  New Cairo, Egypt.  P.O. Box:  1147

Please like and follow us: