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Reverse the curse: Maximizing the potential of resource-driven economies

by Investment Manager at Kuwait Finance House ( KFH ) on Dec 11, 2013

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Rising resource prices and expanded production have raised the number of countries where the resource sector represents a major share of the economy, from 58 in 1995 to 81 in 2011. That number will ...

Rising resource prices and expanded production have raised the number of countries where the resource sector represents a major share of the economy, from 58 in 1995 to 81 in 2011. That number will rise: to meet soaring demand for resources and replace rapidly depleting supply, the world should invest a total of up to $17 trillion in oil and gas and in minerals by 2030, double the historical rate. In 20 years, almost half of the world’s countries could depend on their resource endowments for growth.

Economies with natural-resource endowments have a huge opportunity to transform their prospects. But history suggests that they could all too easily squander the windfall.

To date, resource-driven countries have tended to underperform those without significant resources: almost 80 percent of the former have a per-capita income below the global average. Since 1995, more than half of these countries have failed to match the average growth rate of all countries. Only one-third have maintained growth beyond the resource boom. Recent McKinsey research lays out a new model that could help countries capture the coming resource windfall.

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Reverse the curse: Maximizing the potential of resource-driven economies Reverse the curse: Maximizing the potential of resource-driven economies Document Transcript