Policy

18 May 09

Oxford professors have helped to create an international agreement to help governments and societies in developing countries manage their natural resources more effectively. The Natural Resource Charter is a set of principles for governments and societies on how to use opportunities created by natural resources so that its citizens get the best value from them.

The charter, launched on 14 May at the Summit on Business Ethics and Responsibility in Oslo, is a living document which has been developed by a world- leading group of economists, lawyers and political scientists. They include Nobel Prize winning economist Professor A Michael Spence; Professor Paul Collier, Director of the Centre for the Study of African Economies, University of Oxford, and author of the internationally acclaimed book The Bottom Billion; and Professor Tony Venables, Director of OxCARRE (Oxford Centre for the Analysis of Resource Rich Economies) at the University of Oxford.

Natural resources have often proved to be a curse and not a catalyst for growth and prosperity for societies due to a lack of competence or unethical practices. Instead of governments signing up to a set of principles they would be held to account for their actions by their citizens, according to the articles of the charter. 

The charter provides 12 principles, designed to guide governments through the whole process – from the first discovery of natural resources to how to use the money earned from natural resources. Among the issues addressed are: whether or not to extract natural resources; whether to use state-owned enterprises or rely on the private sector; how to design laws and contracts that can produce the greatest benefits for the country; the environmental and social costs of extraction; managing variations in the international markets; and how resources can produce lasting economic benefits for a population.

Professor Paul Collier said: ‘Too often the opportunities given by the discovery of oil, gas or minerals have been missed because there have been weak links in the process on how to use natural resources effectively. Now as we have come to the end of a boom in commodities prices, is a good time to be reflecting on how things could be done better.’

Professor Collier argues that an open and transparent system for the auctioning of commodities is a simple way of ensuring that citizens get good value for money. ‘ All too often it has been good deals for the minister who negotiated it but not good deals for ordinary citizens,’ he said. 

Professor Tony Venables, Director of OxCARRE (Oxford Centre for the Analysis of Resource Rich Economies), said: ‘ For some countries, the best use of resource wealth may be to leave it in the ground for future use.  For others, it may be to extract quickly to generate money for investments to help humanitarian needs and stimulate economic growth.’

Attending the launch were Dr Kandeh Yumkella, Secretary General of UNIDO (United Nations Industrial Development  Organization); Festus G Mogae, former President of Botswana; and Erik Solheim, Norway’s Minister for Environment and Development.

UNIDO Director-General Kandeh K. Yumkella said: 'The Natural Resource Charter establishes fundamental principles that will help bolster the rights and interests of countries which are resource-rich yet remain mired in poverty, while also protecting our global commons. It also gives practical guidance and good governance to both policymakers and company managers to ensure that natural resources can be the basis for a successful transformation to productive assets for sustainable, broader development. In this sense, it is very much in line with the research findings of UNIDO's 2009 Industrial Development Report.'