Does Having Natural Resources Necessarily Lead To Economic Growth and Essay

Does Having Natural Resources Necessarily Lead To Economic Growth and Development - Essay Example The paper tells that economic development is the sustainable increase in the people`s standard of living and measured using per capita income while economic growth is the increase in the capacity of a given country to produce goods and services over time and is reflected by the GDP. Past decades have proved that valuable natural resources such as natural gas, oil deposits and minerals do not necessarily lead to economic growth. This is evidenced by oil-rich African countries such as Angola, Nigeria, Congo, and Sudan. These countries earn several millions of dollars annually from oil exports yet the foreign exchange or the riches gained over the years has never been converted into a noticeable increase in GDP. In comparison, Asian countries such as Japan, South Korea, and Taiwan have experienced economic growth which can rival those of western countries. It is important to note that such countries do not have meaningful natural resources. The explosion of the car manufacturing industr y in the twentieth century led to an increase in the demand for natural resources such as rubber and copper. Minerals were abundantly extracted in several countries like the Netherlands and in time replaced manufacturing as the dominant sector of the economy. With time, the Dutch economy and other similar ones suffered due to the specialization of production and processing of the main resource extracted. The discovery of natural resources did have a positive impact on economic growth but over time, such economies as Netherland became stagnant. The common trend of availability of natural resources combined with slow or stagnant economic growth has been termed the Dutch Disease type of economy. Natural resources can also be a blessing to a country’s economy. A good example of this is Norway, which is the second largest oil exporter. Norway’s oil exports have surpassed other sectors and its foreign direct investment increased to 8% of GDP as of 1998. The manufacturing sec tor declined in relation to GDP since oil was discovered in the 1970s.