Natural Resources and Environmental Economics

Reflection Paper
Natural resource is an essential tool to the economic growth of a country and ye
t most countries, like ours, rich of it is not that productive. In contrast to t
he countries lacking them like Japan and Singapore which are far productive comp
are to a country like ours. This phenomenon is known to the economist as the nat
ural resources curse.
Natural resources has been vital to the growth of countries, like Nauru in South
Pacific. Nauru had reach the highest income per capita in late 1960 s and early 1
970 s because of the open access phosphate deposits present in their land. Philipp
ines is one of those countries that has a lot to offer in terms of natural resou
rces. On the other hand Philippines belonged to the category of third world coun
tries. It is sad to think that such country rich in natural resources belonged t
o that category. Keeping this in mind we can infer that is this a manifestation
of the natural resource curse. This situation which the Philippines is facing, i
s it because we depend too much to our resources rather than diversifying to man
ufacturing and other industrial activities? It might be but come to think of it
if it is the reason then why is it that Botswana manage to be the best performer
in Africa in terms of democracy, stability and growth of income while Congo did
n t even if both countries are rich in diamonds. With that fact we can infer that
maybe the curse didn t exists. Moreover economists became skeptical in the existen
ce of natural resource curse. While it is true that first world countries specia
lizes in manufacturing does Philippines has the ability or can Philippines reall
y compete and reach the heights of becoming a first world country if we manage t
o convert our economy to manufacturing? I think it would only cripple the econom
y. Although it is an advantage to have great amount of resources it is a disadva
ntage to solely depend to it. According to some analyst the boom and bust cycle
inhibits the potential economic growth of a country that is greatly dependent to
resource exports, as labor, land and capital bounce back and forth across secto
rs in response to change in price. The behavior in supply and demand dictates th
e changes in price where supply must meet the demand, with different factors aff
ecting supply, suppliers will have a hard time adjusting to the demand, let s say
oil supply shortage, for oil - suppliers it is hard for them, if not impossible
to find a substitute to oil so to fix this shortage adjustment in price is made
which stirs the economy.
Since Philippines in terms of resource is really rich, economic growth is indefi
nite as long as, generally speaking, government will manage the resources proper
ly to avoid pitfalls. If not manage well we might end up becoming like Nauru, en
ding up with nothing, and we don t want that to happen. Although some consider tha
t government policies which is also implying fiscal discipline is futile I think
it is possible for the Philippines to do so. Furthermore I think policies shoul
d be enforced and be executed effectively to maintain the existence of the open
access resource which is rapidly depleting like our fish resources in different
part of the Philippines. It is true that proper management of resources is easy
to say and hard to do, but if the government as well as the people will be vigil
ant on managing our resources and also in implementing policies it is possible t
o maintain and produce these resources effectively and to last for a longer time
.