The paradox of plenty

Here the chapter turns a common belief upside down. You would expect a country full of riches under the ground to be rich. Often it is not.

Economists call this the 'natural resource curse' or the 'paradox of plenty'. A paradox is a statement that seems to contradict itself but turns out to be true.

Put simply: having plenty of natural resources does not automatically make a country rich. Some resource-rich regions actually grow and develop more slowly.

Why? The book gives the reason in one line: often these economies are unable to develop industries that turn the resources into products of higher value.

Think about what that means. Selling iron ore earns something. Selling steel earns more. Selling machines made of steel earns more still. If a country can only do the first step, most of the value is made somewhere else.

You will understand this properly in the chapter 'Factors of Production', later in this same book.

India has generally avoided this curse by investing in such industries to meet our growing needs.

But the book does not let us relax. The challenge of balancing taking resources out with keeping things sustainable remains. Its closing point: understanding and managing resources is a good start, but human knowledge, good governance and careful planning decide whether they become lasting benefits or short-lived windfalls.