Human well-being is dependent on natural resources. Our survival without clean air, plants, and drinkable water is simply impossible. At the same time, some natural resources that are not vital in the way that water is, are still highly important for our survival. Oil, coal, and copper are just a few of the commodities that planet Earth offers us.
As these resources are unevenly spread across the planet, some states have plenty, while their neighbors have less or even lack them completely. If we had lived a thousand years ago, we would probably need to conquer those neighbors in order to access the desired commodity but thanks to the ability to trade, we can avoid such wars (in most cases).
However, the economic development of states that are rich in resources and those who lack these differs greatly. Surprisingly, lacking resources is not a precursor to poverty or stagnation. In this article, you will find how natural resources may both offer a competitive advantage and be a limiting factor at the same time.
What are natural resources?
Natural resources are those resources derived from nature that people can utilize and which exist irrespective of human actions.
Natural resource values are frequently influenced by scarcity as well as their importance to the modern economy. In today’s consumer-oriented globalization era, industries must find a balance between serving consumer needs while ensuring company success and avoiding overexploitation.
Nevertheless, even though natural resources are so valuable, and the economies of many nations are heavily reliant on these, most nations put little thought into the social, environmental, and economic management of these resources.
Types of natural resources
Natural resources can also be classified as renewable or non-renewable:
Renewable resources
- Oxygen, wind, freshwater, sunlight, and forests. These are not depleted indefinitely when consumed or used.
Non-renewable resources
- Fossil fuels, metal ores, groundwater (occasionally), and numerous Earth minerals. Most often, these resources require millions of years for the planet to restore them.
- Because their availability is limited, this type of natural resource cannot be relied upon for consistent economic advantage.
Source: StudyNLearn
Countries with the most natural resources (2021)
Source: Statista
Russia
As of 2021, the country possessed natural resources (coal, oil, natural gas, gold, timber, and rare earth metals) worth an estimated US$75 trillion.
United States
The second country on the list, the United States has an overall natural resource value of US$45 trillion. Coal, lumber, natural gas, gold, and copper are the key contributors to the worth of the country’s natural resources.
Saudi Arabia
The nation’s total worth of natural resources reached US$34.4 trillion. Its spectacular economic development has been powered mostly by oil and gas extraction which has transformed the once underdeveloped nation into a contemporary state.
Natural resources and economic growth
The impact of natural resources on economic progress is still a hotly debated topic in scientific circles. The significance of the political regime plays an important role in the link between economic development and the use of natural resources.
Many researchers believe that natural resource dependence, in the long term, will harm a nation’s economic development. Such a phenomenon has its own name – the “paradox of plenty” (aka the “resource curse”).
According to the latest data based on the Human Development Index (HDI) – a summarized assessment of average accomplishment in important areas of human development, including enjoying a long and healthy life, being educated, and having a good standard of living, the top 10 most developed countries are
*For the years 2021 and 2022 the HDI has not yet provided any data.
Source: UNDP
Natural resource dependency has a detrimental impact in many resource-rich nations and the average growth rates in those countries are slower than in countries with poor resources.
However, if the resource-rich countries created strong regulatory institutions, they could then better administer their resources and invest more in other sectors such as education.
