Fast Facts: Development and Extractive Industries

28 Apr 2014
image

Development of extractive industries, around oil, gas and minerals, holds the promise of raising incomes and living standards. However, many resource-dependent countries are also unable to fully benefit from their natural wealth.

 

Poverty can still persist; jobs may be hard to come by; the industry can be an ‘enclave’, with few backward and forward linkages with other industries or enterprises; and the environment can be degraded while livelihoods are destroyed. The wealth pouring into the country can also breed corruption and raise inequalities. All of these unwanted outcomes may create fertile grounds for violence and conflict.

 

Therefore, it is not surprising that, on average, resource-dependent economies score lower on the human development index than less endowed countries (see Figure 1). Out of the 3.5 billion people living in resource-dependent countries, approximately 887 million live below $1.25/day.

 

But it does not have to be this way. Some countries have managed their extractive industries successfully. They have diversified their economies, ensured backward and forward linkages, tackled corruption and conflict and invested in human and physical capital.

 

By focusing its development work on extractive industries, UNDP supports countries to reduce the risks and realize the benefits of resource extraction.

 

    Download this Document