One would expect that a place that is rich in natural resources is also rich in cash. However, experience shows one who is asset rich is often cash poor. In this commentary for the publication “Dialogues”, Brian Lee Crowley examines the fate of resource rich countries, and points out they are not often the world’s economic leaders. As he explains: “Even countries that should benefit from huge increases in the value of their natural resources often find their blessings extremely well disguised. Mexico and Nigeria both went bust in the 1980s after oil price rises hugely increased the value of their resources. Jeffrey Sachs, one of the world’s leading economists, notes that it is a generally accepted fact of economic development that “resource abundant economies [tend] to lag behind resource scarce ones.” What these states and countries find – like many lottery winners – is that it is hard to spend a windfall wisely.” And Crowley suggests how governments can spend the resource revenue wisely to benefit generations to come.
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