Natural resources

Definition

Natural resources are materials or substances that occur naturally in the environment and can be used for economic gain. These resources include renewable resources like timber and fish, as well as non-renewable resources such as fossil fuels and minerals. In emerging markets, the abundance or scarcity of these resources can significantly influence economic growth, development strategies, and investment opportunities.

5 Must Know Facts For Your Next Test

1. Emerging markets often rely heavily on their natural resources to drive economic growth and attract foreign investment.
2. Natural resource management is crucial for sustainable development, especially in regions where resources are abundant but environmental protection is also a concern.
3. Countries rich in natural resources can experience rapid economic growth, but they may also face challenges like volatility in resource prices and potential over-reliance on a single sector.
4. The extraction and export of natural resources can lead to significant revenue streams for emerging markets, but it also requires careful regulation to avoid environmental degradation.
5. International demand for commodities from emerging markets can fluctuate based on global economic conditions, impacting local economies dependent on these resources.

Review Questions

• How do natural resources impact the economic growth of emerging markets?
  • Natural resources play a pivotal role in the economic growth of emerging markets by providing raw materials that drive industries and attract foreign investments. Countries rich in resources can leverage these materials to boost exports, create jobs, and generate government revenues. However, the reliance on natural resources also requires effective management to ensure sustainable growth and mitigate risks associated with price volatility.
• Discuss the challenges that emerging markets face in managing their natural resources sustainably.
  • Emerging markets often face significant challenges in managing their natural resources sustainably, including issues such as environmental degradation, corruption, and inadequate regulatory frameworks. The rapid extraction of resources can lead to ecological damage and loss of biodiversity, while mismanagement of revenues can result in corruption and lack of investment in public services. Striking a balance between resource exploitation and environmental stewardship is essential for long-term sustainability.
• Evaluate the relationship between natural resource wealth and political stability in emerging markets.
  • The relationship between natural resource wealth and political stability in emerging markets is complex. While abundant natural resources can provide a country with financial means for development, they can also lead to conflicts over control and distribution of those resources. This phenomenon, often referred to as the 'resource curse,' suggests that countries with rich natural resource reserves may experience heightened levels of corruption, governance challenges, and social unrest if resource wealth is not managed transparently and equitably.

Related terms

Renewable Resources: Resources that can be replenished naturally over time, such as solar energy, wind energy, and forests.

Non-renewable Resources: Resources that are finite and cannot be replaced once they are depleted, including oil, coal, and natural gas.

Resource Curse: A paradox where countries rich in natural resources often experience slower economic growth and worse development outcomes due to factors like corruption and mismanagement.