Bring out the significance of natural resource in econamic development
Answers
The wealth embodied in natural resources makes up a significant proportion of the wealth of
most nations, often more than the wealth embodied in produced capital, therefore making natural
resources management a key aspect of economic development (World Bank, 2006). Many
countries have seen significant rises in revenues from natural resources due to the rise in
commodity prices. Natural resources such as oil, gas, minerals and timber are expected to
continue to play a significant role in resource abundant economies, as demand from rapidly
growing economies increases, and as supplies of non-renewable resources decline and renewable
resource harvests approach maximum sustained yield levels. Not surprisingly, countries richly
endowed with natural capital have the potential to derive significant current income from
resources.
In addition to providing revenues to resources rich countries, natural resources can play a
central role in poverty reduction efforts. The poor generally depend upon natural resources
directly for their livelihoods, especially the rural poor. Consequently, policies that improve
natural resources management can have immediate and meaningful poverty reduction impacts.
Pro-poor natural resource management policies include, among others (OECD, 2008):
Projects that improve the capacity of community based organizations to manage
resources;
Assuring access to resources by providing clear land tenure and resource use rights;
Promoting tools such as participatory rural appraisal, strategic environmental
assessment, and poverty and social impact assessment.