Resource rich countries cannot manage their wealth – report

Resource rich countries cannot manage their wealth  – report
Only 11 out of 58 countries rich in natural resources can effectively manage their wealth, according to the first of its kind report from the Revenue Watch Institute, a think tank which specializes in effective management of natural resources.

A quarter of all independent countries on planet are resource rich. The 58 states produce 85% of world’s petroleum, 90% of the diamonds and 80% of copper with total profits from their extractive sector totaling more than $2.6 trillion.

According to the Resource Governance Index (RGI), in 41 countries out of the group the extractive sector contributes a third of their GDP. And the future of these countries heavily depends on how effective they govern their resources.

Norway takes the top ranking followed by the United States and the United Kingdom, all three majoring in hydrocarbon extraction. Russia comes 22 in the ranking, dragging behind its neighbor Kazakhstan and major South American energy states. Among the countries with the worst natural resource governance are Saudi Arabia, Iran, and Turkmenistan, and Myanmar concludes the ranking.  The Index shows a striking governance deficit in natural resources management worldwide with only 11 countries on the list scoring satisfactory. 

The RGI evaluates four key components of resources governance in each country: institutional and legal setting, reporting practices, safeguards and quality controls and enabling environment. It also takes into account data from the World bank, advocacy groups, including  Transparency International and various ecology watchdogs.

The Index is based on the assertion that a good governance of natural resources provides successful development of country and is designed to serve as a tool to help identify good practices as well as governing failure.

The Revenue Watch Institute is a unique organization of its kind exclusively dedicated to address the problems of countries that are rich in natural resources.