International Organisation for Knowledge Economy and Enterprise Development

"ISSUE OF THE MONTH"

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International trade, financial flows, cross-border enterprise investment and operations, flows of technology, and flows of people, lead to rapidly advancing restructuring of national economies. Whereas primary industries and also manufacturing are shrinking in many countries, and services are growing across the board, a blending of goods and services, of sectors, of professions, are under way. At the heart of it all stands Information and Communications Technology (ICT), which makes it possible for people and organizations to access, use and diffuse information at lower costs and at higher speed than ever before. The result is an enhanced potential for firms to upgrade production processes, develop more sophisticated products and raise value-added in more or less all kinds of activities, wherever in the world they reside.

In this regard though, each society displays its own specific institutional conditions which impact on what can be done. Some economies demonstrate systematic differences and similarities between them. This includes the category of Natural Resource Rich Economies (NRE). Over the years, many have argued that natural resource abundance merely serves to boost the capital abundance and growth of the public sector, diminishing the incentives and the drive for institutions as well as for individuals to engage in activities marked by risk-taking, innovation and entrepreneurship.

The collective evidence now suggests that, on the one hand, there is nothing deterministic about the development path based on natural resources - it is "neither curse nor destiny". On the other hand, a wealth of natural resources makes a major difference to the development trajectory of a particular country. It is important to clarify in which way NRE in a general sense encounter special problems - and then why - as well as how a rich supply of natural resources can be turned into an opportunity. In a nutshell, the reason has to do with too much capital crowding out activities that are not capital intensive, along with the lure of negative rent-seeking behaviour, which also commonly translates into resistance to innovation and entrepreneurship. Turning these things around is basically about putting the focus on people, and how to inspire a mindset of openness to change. Exchange of views, based on real experience of what it is all about, can help spur progress. NREs should establish and expand new kinds of collaboration to engage in mutually-beneficial learning processes for how to master their transition towards knowledge-based economies, on terms that fit their specific situation. Such new learning processes are now evolving, with IKED contributing to a number of important projects.

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