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Natural Resources in Developing Countries

            The "paradox of plenty," also referred to as the "resource curse", is meant to represent the notion that states with an abundance in natural resources, such as crude oil, tend to be accompanied by rising levels of poverty. Countries that are more dependent on natural resource wealth, like Nigeria, Sierra Leone and Saudi Arabia, grow more slowly than those that are resource-poor, like Taiwan and Korea, and are more likely to suffer through unstable leadership and institutions, poor social capital, and an increased likelihood of conflict. This study will focus on the role of institutions and their arrangements in regards to the "paradox of plenty." The "resource curse" vanishes for countries with stable administration and better institutions, like Norway, due to how the resource rents, which is to say the returns from the investment of the extractions are being distributed, while countries rich in resources, like Iran and Saudi Arabia, are still developing and are accompanied by a rising level of poverty. .
             Developed countries with a dependence on natural resources, like Canada and Norway, go against the notion of the "paradox of plenty", because of the way the institutions complement rent-seeking and production, attracting entrepreneurs into manufacturing and stimulating higher growth. For instance, Norway was one of Europe's poorest country in 1900, but similarly to what the United States did following the 1850s, they started exploiting natural resources heavily, such as timber and fish and more recently oil and natural gas, thus making them one of the richest European country today. On the other hand, developing countries with an abundance in natural resources compete rents and production rather than complement one another. For example, in the Congo the "enormous natural resource wealth including 15% of the world's copper deposit, vast amounts of diamonds, zinc, gold, silver, oil and many other resources gave Mobutu a constant flow of income to help sustain his power.

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