structural:expansion, information:highlighting
Economic consequences

There has been an ongoing debate among scholars and researchers on the economic implications of dependence on natural resources. Natural resources yield economic rents that can be allocated towards public welfare initiatives and other projects beneficial to local communities. However, in the long term, uncertainties linked to potentially unstable terms of trade for commodities might lead to decline in public finances and deter investment. For instance, if oil prices decline, it may lead to fiscal unease in significant petroleum-producing countries such as Russia, Qatar, and Saudi Arabia. Resource abundance challenges the progress of political and governance institutions by nurturing a culture of rentierism. For instance, revenues obtained from resources can be used for political manipulation. Additionally, extra capital from resources can dilute government accountability to both citizens and businesses by abandoning taxation completely, which leads to lack of government incentive to support economic growth through innovation. At the same time, citizens may lack the motives to advocate for better governance and transparency.