There are territories that one day discover that they have something under their feet that the world wants. Oil, gas, copper, lithium, nickel, cobalt. From that moment the same words always arrive: opportunity, development, employment, growth. Then the years pass and in many cases we are left with a tighter economy, a weaker state, services that struggle and a dependency that sticks to us. The curse of resources begins here: in the gap between the value that comes out of the subsoil and that which manages to remain in the territories.
The new study published in PNAS tries to bring order to this mechanism. The model constructed by the researchers brings together economics, sociology and development and shows two possible outcomes for regions rich in raw materials: on the one hand a trajectory with low economic diversification and weak institutions, on the other a broader economy and more solid institutions. The difference is played out very early, in the starting conditions: human capital, social capital, strength of the public sphere. Territories that come to extraction with more fragile foundations are more likely to fall into the trap.
The most interesting passage of the work lies in the idea of loss along the way. Researchers describe institutions as a kind of pipeline that should carry the value of resources to schools, infrastructure, services and widespread investments. When that pipeline cracks, the money goes out before it gets to where it’s needed. Income remains concentrated, other sectors are shrinking, dependence on extraction continues to grow. The material released by Princeton also recalls a fact already observed in the literature: every 1% of GDP obtained from resources is associated with a drop of 0.2 percentage points in the share of tax revenue in GDP, together with an increase in corruption as income increases.
Here comes the first real critical point of the topic. Natural wealth does not save anyone on its own. We need a public machine capable of collecting that income, redistributing it, investing it and using it to expand the economy instead of squeezing it around a single sector. Without this step, the deposit stops feeling like a blessing and becomes a shortcut that empties out the rest. Even the most stable economies, according to the model, can slide into dependency if a shock arrives, such as a drop in commodity prices. And getting out of there takes much longer than the initial boom.
The old extractive logic with a more elegant vocabulary
We’re not just talking about oil and fossils. The International Energy Agency recalls that the low-emissions transition depends heavily on critical minerals such as copper, lithium, nickel, cobalt, graphite and rare earths, essential for batteries, networks, renewables and advanced manufacturing.
It’s the most uncomfortable part of the story. The ecological transition risks repeating the old extractive pattern with new words. UNCTAD writes it very clearly: the countries that possess these resources must move up the supply chains, work, transform, build industry and skills, otherwise the boom in critical minerals will end up worsening dependencies, economic vulnerabilities and inequalities. The UN secretary general also recalled the same risk, warning that the race to net zero cannot place the burden on countries reduced to the role of simple suppliers of raw material.
The example of Indonesia helps to see the problem without too many abstractions. Today Jakarta tightens state control over the nickel supply chain after having focused for years on this metal as the basis for a national electric car supply chain. Second APIndonesia’s share of global nickel supply rose to 60% in 2024 from 31.5% in 2020, also driven by a ban on exports of raw ore and a wave of investment in refining. Meanwhile, deforestation, environmental pressure and the use of coal to power plants have also increased. In the meantime, the battery market is changing and part of the industrial bet has become more fragile. It is a concrete case of how thin the line between opportunity and new dependence remains.
True wealth begins long before the mine and continues long after
Then there are the institutions. The study insists on this: investing in human, social and physical capital can push even already trapped territories towards a more diversified outcome. The same goes for the new extraction frontiers, including those of critical minerals: robust democratic and institutional guarantees are needed to prevent the fossil dynamics from reproducing the same. It seems like the least flashy part of the story. Instead he decides almost everything.
This answer alone is not enough. Strong institutions are useful, but they are often lacking precisely in the territories that reach extraction in a more fragile position. And the income, instead of strengthening them, can erode them even more. The trap also lies here: those who most need a State capable of redistribution and planning are often the least equipped to do so when the money starts to flow in.
Then there is another level, much less technical and much more political. Consumer countries, including Europe, have every interest in guaranteeing access to raw materials, much less in encouraging the industrial growth of those who extract them. As long as the producing territories remain suppliers of raw material, the bulk of the value continues to be concentrated elsewhere: in transformation, in manufacturing, in technology.
The environmental issue does not end in the ecological damage of the excavation. It touches on the type of economy that grows around that excavation, the relationship between community and income, the possibility of using temporary wealth to build something that will last. Without better schools, stronger public services, useful infrastructure and a supply chain that retains skilled labor, the budget remains unbalanced. Extraction rises, GDP rises, the territory continues to depend on the outside for almost everything else.
The resource curse then stops seeming like an economic curiosity and goes back to being what it has always been: a question of power, of rules, of long times. The deposit remains there. Power too. The value, unfortunately, is not.
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