Resource wealth and sustainable development

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Natural resource-rich countries, particularly those in the Gulf Cooperation Council, face significant challenges due to their reliance on resource revenues. These challenges can be categorized into those arising from the non-renewability and depletability of resources, and those stemming from dependence on these resources, often discussed in the context of the resource curse literature. This literature suggests that countries rich in natural resources tend to experience slower growth compared to those with fewer resources, attributed to factors such as economic volatility and neglect of human development. Despite these challenges, natural resources offer opportunities through resource rents and reserves. To address issues related to resource dependence and ensure effective deployment of these assets, a focus on sustainable development, structural change, and national competitiveness is essential. This study investigates three key questions: the dual nature of resources as a blessing or curse for Gulf states, the sustainability of development in the GCC, and the characterization of current national competitiveness. Findings from an empirical cross-country analysis indicate that oil and gas-rich nations have inadequately substituted their natural capital, a trend observed across all GCC countries with available data. Additionally, a notable gap exists between current national competitiveness and sustainable competitiveness.