ABSTRACT
By relaxing budgetary and balance-of-payments constraints, extractive resources should be a blessing for producer states during price booms when they can draw substantial revenues from oil, gas, and mineral exports to finance development. Empirical studies display a mixed record, hinting to a negative impact of resource dependence on GDP growth and income per capita, in particular in so-called fragile states. This is a big challenge for resource-rich developing countries. While GDP remains the benchmark of choice for economic development, it does not say much about sustainability, which is critical in the case of exhaustible resources whose extraction is bound to peak and then shrink over time.
