Resource Curse or Resource Blessing? Natural Resource Dependence and Economic Development in South Asia

Abstract

The relationship between natural resource endowments and economic development remains one of the most contested debates in political economy. While the “resource curse” thesis suggests that resource abundance often hampers growth through rent-seeking, institutional decay, and economic distortions, opposing perspectives argue that resources, under effective governance, can serve as a catalyst for industrialization, infrastructure, and poverty reduction. South Asia presents a compelling case to revisit this paradox, given its diverse resource base—including coal, natural gas, minerals, and gems—contrasted with persistent poverty, governance challenges, and uneven development outcomes. Unlike regions such as Sub-Saharan Africa or Latin America, South Asia’s economies combine moderate resource dependence with labor-intensive exports, raising unique questions about the developmental role of natural wealth. This paper critically examines whether natural resources in South Asia have functioned as a curse or a blessing, drawing on classical theories of Dutch Disease and institutional weakness, alongside frameworks that highlight the potential of strong governance and strategic investment. By situating South Asia within this global debate, the study contributes to both theoretical discussions and policy considerations regarding resource management, inclusive growth, and sustainable development.