No, I don't agree as one usually needs technology to efficiently harness these natural resources. Perhaps, it's a technology-transfer policy issue that's hampering progress and not necessarily the environment.

Best regards,

Debra

The idea that abundance in natural resources feeds poor performance in resource-rich economies harks back to what is known as the "Dutch Disease". The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of the large Groningen natural gas field in 1959. Iran and Nigeria are two countries that subsequently experienced similar problems in their agriculture sectors. In the oil sector, the two main transmission channels for the propagation of the Dutch Disease are the resource movement effect and the spending effect. Notwithstanding the obvious differences between the oil sector and the (unspecified) field of technology cum innovation, it would be of interest to compare and contrast the transmission channels for possible effects, if attribution is not too difficult.

Many thanks for these replayes. however, one can have a quike look at Global Competitiveness Index or even the Global innovation Index to make the negative relationship between the capacy to innovate and resource abundance.

For example: the majority of Arab economies, which are exessivelly abundant in hydrocarbones and many other mineral resources, are classified at the final list ( let us say the last 40 countries) in the 2015 GII report.

 Yes, we know that resource abundance was and still attract academic researches, and we know that developing resource rich economies face resource curse phenomenon ( which is more harmful than the Dutch disease---I prefer use Mineral Disease and not Dutch--- there are tendencies to more corruption, clientilism, rent seeking, civil conflict, white elephants and many other symptoms.

But there are, in my best knowledge, few researches that focuse on the relation between resource abundance and technology and innovation progress ( or let us say the emplimentation of knowledge-based economy).

"Necessity is the mother of invention/innovation. Once a nation is mineral/resource rich, its necessity is fulfilled by the revenue earned through the minerals. Nations like Japan, who have scarce mineral resource depend on technology and innovation. They become the epitome of productivity. Technology and innovation progresses in such economies faster.

It does while it should not. In fact the wealth should enhance  capability to innovate if there is a proper use of it. If not used effectively it will distract and will lead to easier path of buying innovation instead of performing.

Dear Zafar,

I agree that it should not matter but it does matter. Look at Israel. With no resources, it is so innovative!

USA is, perhaps, only country which has reasonable amount of both natural resources and innovation.

The answer of this question can be found in works of institutional economics.

I fully agree, natural resources misplace entrepreneurial and innovative energies in the economic structures of countries. For example, a lot of African countries are resource rich but one fails to see significant innovations coming out of these countries. The abundance leads to the reliance of rents and dependency on natural resources. Consequently, this limits the creation of innovation, productivity and technological advancement. Ideally, a pragmatic management of natural resources and an effective coordination of the wealth generated from natural resources could be mobilised to complement innovation and technological advancement.

Norway is with its large petroleum fund a form of rentier nation and more than 90% of the export is related to natural resources - oil, gas, hydropower and fish. The innovativeness has been reduced during the last ten years and Norway is ranked as the 13th most innovative nation clearly lagging behind Sweden and Finland. The surplus has not been invested in innovation and research, but is invested either in the foreign pteroleum fund or general welfare.

you may want to look at the latest government initiative in the UAE. More than 300 bn AED (around 80 bn US) allocated as investment in alternative sectors (other than oil).

Although we tend to generalize but in most Arab countries you will find an imbalance between human and natural resources, i.e. having more of one rather than the other. This situation, among other factors, has hindered sustainable development until recently when more attention was given to improving local capabilities and capacity. huge investment in advanced technology is showing signs of an emerging trend where a more sustainable development is tenable.  

There appears to be such a pattern, for example, in Canada.

Though, it is true in certain cases as countries like Israel and Japan has done much better than others, the same cannot be generalized for all countries. It will vary from case to case.

I am not sure whether there is any empirical evidence or research done this line but nonetheless the argument seems true in general. 

To innovate, we need people well trained, healthy, well-fed and free. In oil-rich countries of Central Africa who are almost all oil producers, the school seems to be a mere formality and delivers just Visa for unemployment, food deficiency in pregnant women and in children under five years are important, the head of state are allergic to democratic debate and the "traditional" medecine is used by more and more people. Embezzlement of public property is at the highest level. But can we really link this dark landscape to the fact that those countries are oil producers? The answer can be yes or no. However, since the fall in oil prices, the speeches are more compliant with a particular emphasis on education and health, and even actions to try to catch up failures and strengthen the resilience of the economy. The question of whether these efforts to stimulate economies do not have the sole aim of producing the wealth that can be collected through tax can be asked.

This can lead to the middle income trap; see the enclosed article. Regards, MV