same time showing the higher economic growth when the countries like Bolivia, Venezuela are other way around.
Source: World Development Indicator database (World Bank), Primary exports consist of agricultural raw materials exports, fuel exports, ores and metals, and food exports. [2]
This phenomenon, where we see negative correlation between resource abundance and economic growth, is so called "Natural resource curse". It has been studied by many economists during the time. Richard Auty was the first, who described that resource-rich countries not only fail to benefit from a favorable endowment, they may actually perform worse than less-endowed countries. This counter-intuitive outcome is the basis of the resource curse thesis. [3] Also, Jeffrey Sachs and Andrew Warner, showed that countries with huge mineral wealth grow slower than those recourse-poor countries. So, it is certain that there is negative correlation between the natural resource abundance and economic growth, but it is inconclusive when we see countries like Norway, which has huge natural resource and tremendous economic achievement at the same time. From the various numbers of studies, we can see that natural resource curse is not applying to the every case. The some countries, which have efficient economic policy and transparent, democratic political institutions, have performed excellent in long term economic development with the help of their wealth. Norway, Australia, Chile, Argentina, United Arab Emirates are examples of that how resource could be avoidable. From here, question is coming to what to do and what are the possible solutions, if the curse is unavoidable, if it happens to the state, which doesn't have effective institutions.
The list of costs to the resource rich countries speaks for itself: slower than expected growth, barriers to economic diversification, poor social welfare indicators, high level of poverty, inequality and unemployment, higher than average corruption, poor governance, outright authoritarian rule or its omnipresent threat, weak rule of law, a culture of rent seeking, often devastating environmental damage, human rights violation, and greater risk of conflict and war. [4]
The some of those costs are economical, but some are related to the political concerns and those are more destructive in nature. The four different types of players come into play: international (mining/oil etc) corporations, the companies in the national level, the government and real people. Once, George Soros [5] had explained the natural resource curse as principal-agent problem. In this case, principal is the people of the country, since they have the ownership of the natural resource and agent is the government. The problem arises, when agent doesn't do his job properly. Domestic and international corporations encounter only with the rulers of the country, (but they not the principals), in order to obtain concessions to exploit natural recourses. The rulers started to be financed by the companies, not from the taxes of the people, who are principals. That is why natural resource cursed countries are less democratic and its economic as well as political institutions perform worse. Answer to the "what to do" question is the form of government quality. They would solve the principal and agent problem and it would eventually help the country stand up on its foot and start to make real use of
