Rich in Resources: Norway, Australia, Canada and More
Lessons From Resource-Rich Democracies
What India and other countries can learn from how Norway, Australia, Canada, Chile and New Zealand managed natural wealth, plus a recap of the module.
Resource-rich democracies offer lessons for any country with commodity wealth, including India’s coal, iron ore and minerals.
Key lessons
- Institutions come first: rule of law and accountability determine whether wealth is shared or captured.
- Save windfalls: funds like Norway’s and rules like Chile’s prevent boom-and-bust spending.
- Invest abroad or wisely: reduce Dutch disease by not spending all revenue at home at once.
- Diversify: invest in education, services and new industries.
- Floating currencies can absorb commodity shocks.
- Share benefits with local and indigenous communities.
- Plan for transition: fossil fuel exporters face declining demand as the world decarbonises.
India’s resources
India has large reserves of coal, iron ore, bauxite and other minerals, often in poorer, forested, tribal regions such as Jharkhand, Odisha and Chhattisgarh. The District Mineral Foundations, created in 2015, use part of mining revenue for the welfare of affected communities, though spending quality has been questioned.
Module recap
- Strong institutions helped some democracies escape the resource curse.
- Norway saved oil wealth in the world’s largest sovereign fund.
- Australia’s mining boom brought growth and a two-speed economy; superannuation built savings.
- Canada balances oil sands, pipelines and immigration.
- Chile’s fiscal rule manages copper volatility; New Zealand pioneered inflation targeting.
- Dutch disease, commodity currencies and indigenous rights shape outcomes.
A mining district in Odisha receives money from its District Mineral Foundation. When spent on schools, clinics and water supply, it improves lives near mines. When spent on poorly planned projects, benefits are limited.
Botswana and Chile show developing countries can manage resources well with strong institutions and rules.
- Institutions, saving windfalls and diversification are central lessons.
- Floating currencies and benefit sharing help manage resource wealth.
- India's minerals lie in poorer tribal regions, where District Mineral Foundations aim to share benefits.
- Fossil fuel exporters must plan for the energy transition.
No recording for this one yet - EconReader can read it aloud for you.