Paul Collier, Professor of Economics at Oxford University, spoke earlier today at USAID’s Frontiers in Development Forum, and will speak again tomorrow morning. Below is an excerpt from his contribution to the Frontiers in Development essays.
As the world economy grows, it increasingly faces natural constraints. These provide both new opportunities and new risks for the poorest countries; managing them well will be central to their exit from poverty. These were the themes of The Plundered Planet. Here I bring out some of the key current issues. Industry needs natural resources, for energy and material inputs, but many of the natural resources we use for these purposes have a ﬁxed endowment, which we are depleting. A growing global population needs food, and food needs land, but land suitable for agriculture is ﬁnite.
Both industry and agriculture emit carbon dioxide into the atmosphere, but the stock that can be safely absorbed by the atmosphere is ﬁnite, and as it builds up it gradually changes the climate. How concerned should we be about these constraints, and what do they imply for development?
I think that the concerns about industrialization grinding to a halt because of shortages of vital natural-resource inputs are misplaced. As any particular resource becomes depleted, its price rises. In turn, this induces fresh investment in prospecting and so furthers discoveries, and ultimately research into innovation. This has happened so many times across such a wide range of activities that we can be fully conﬁdent of it. The past decade of rising prices for natural resources has already triggered these waves of investment. Currently, by far the highest-valued natural resource is carbon-based energy, from oil, coal, and gas. The high prices of the past decade have triggered an astonishing wave of new technologies that enable us to tap into endowments that were previously inaccessible: The United States has already discovered enough additional resources through these new technologies to be self-sufﬁcient for several decades. Beyond technology-based discoveries are technology-based
substitutes: For example, in the 19th century, nitrates were considered vital and ﬁnite; then we discovered modern fertilizers.
Similarly, the global population will not face hunger because of land shortages. There are still huge areas of grossly underutilized fertile land; beyond that are drip-feed and greenhouse technologies that open up lands that are currently too dry or cold. Nor will we face a stark choice between energy shortage and overheating. Although global supplies of carbon-based energy are ﬁnite, there are many non-carbon sources of energy waiting to be developed. Indeed, modern physics tells us that the endowment of other forms of energy is inﬁnite: The challenge of permanently sustained energy supply is entirely technological, and we can be conﬁdent that innovations will be forthcoming. But although we are not facing a natureimposed Armageddon, natural resources, climate, and food are interconnected in ways that pose new opportunities and new risks for the poorest developing countries.
Read the full article in USAID’s Frontiers in Development publication.