Paper short abstract:

This paper argues for a comprehensive approach to resource-based development involving multiple interrelated but separate strategies states can pursue to maximize the benefit of natural resources.

Paper long abstract:

The failure of 1970s-style resource nationalism and rise to prominence of market liberalism has limited imaginations around the possibilities for developmental interventions in natural resource economies. Throwing the proverbial baby out with the bathwater, there has been a tendency to dismiss all state-led approaches to natural resource-based development. As a result, scholars and practitioners have looked to corporate social responsibility (CSR) to as a means of delivering a developmental benefit from resource extraction. However, while CSR is a good first step, social investment alone can at best only be a very small aspect of meaningful development. In recent years, local content policies (LCPs) have emerged as a second and related mechanism for state-led development in a context of resource wealth (Ovadia, 2014, 2016). Local content can be more than a stand-alone policy for the extractive sector. It can be also be part of a broader strategy of economic diversification. However, while local content is a good second step, it too is insufficient for making natural resources an asset instead of a liability. This paper argues for a comprehensive approach to resource-based development involving multiple interrelated but separate strategies, including maximizing natural resource revenues, managing those resources wisely, promoting and directing social investments by natural resource companies to mitigate the harmful effects of their activities, increasing local content and managing the overall local content strategy, and redistributing revenues and benefits through investment in education, health, technology, manufacturing and poverty alleviation.