Harnessing Natural Resources for Sustainable Development: An Alternative View

This study evaluates a possible alternative view on managing resource revenue for economic growth. Based on recent postulates that resource revenues should be primarily used to increase current consumption and capital stock through investments in the economy (van der ploeg and Venebles, 2009), we evaluate the implications of this policy on an economy plagued by low capital absorbtion, dysfunctional institutions and corruption. We established that the problems of corruption and dysfunctional institutions can potentially stymie any form of economic growth in the short term. This in turn crowds out needed investment and can deepen the problem of the popular natural resource curse. However, the paper introduces a form of international trade where by, resources are exchanged for needed capital investments as a possible alternative to managing resource booms. This alternative will boost economic growth even in the presence of corruption and guarantee increased consumption and capital stock but only in the short run.