The Imperative of a Local Economic Development Approach in the Context of the Dutch Disease

The extractive sector plays a significant role in the global economic landscape. The sector contributes substantially to countries’ gross domestic products (GDPs) and has the potential to improve the economic outcomes of the geographic spaces in which they are hosted. The extractive sector comprises a country’s natural capital assets, which Barbier (2002) distinguished from physical and human capital resources, which can contribute both positively and negatively to economic opportunities. Despite their functional value, an explicit role for natural resources must be articulated clearly in the context of sustainable economic development, given that the natural resource base is intricately linked to the integrity of the physical environment. Importantly, the environment directly affects human welfare in the short and the long term. Wise and Stylla (2007) identify the economic value of the extractive sector via effective and equitable distribution of revenue flows that can be used to finance as well as improve quality and access to public goods such as education, training, health care and infrastructure. Notwithstanding this, Oppenheimer1 (1999, cited in Gordon and Pestre, 2002: 4) cautions that, Natural resources can be a source of great good… or dreadful ill. The key element is not the resource itself, but how it is exploited.