Measuring Extractives Dependency: Why it Matters and New Approaches

These include:

• The volatility of natural resource commodity prices, which can cause shocks that are difficult for the country to manage
• The exhaustibility of natural resources and the challenges of replacing them as a source of income when they run out
• The political economy of governments relying on natural resources, which seems to make governments less effective (e.g., if they rely on resource wealth to fund themselves rather than developing other sectors of the economy)

To address resource dependency, we need to be able to measure it. With this in mind, NRGI has produced a new dataset that builds on existing literature to provide a broad range of indicators of dependency on the extractive industries. This dataset is primarily for internal use by NRGI colleagues, but is also freely available to interested researchers.

The aim of this dataset is to support a more multidimensional approach to understanding resource dependency, its causes and consequences. The related briefing explains the rationale behind the dataset and its various indicators, and some includes some initial insights based on analysis of the data.