Diversified Development: Making the Most of Natural Resources in Eurasia (Europe and Central Asia Studies)

Development policy discussions in Eurasia often become debates about how
economies can be made more diversified. For a region that is resource-rich, this is to be
expected. But Eurasian economies have in many ways become less diversified during
the past two decades. At the same time, people are much better off today than they
were in the 1990s: poverty has been cut in half, incomes have increased fivefold, and
education and health have improved noticeably since the tumultuous days following
the collapse of communism. Eurasia’s economies have become more efficient: they are
more integrated with the global economy and more productive at home. The region
has also become better at converting natural wealth into productive capital; since the
mid-2000s, it has built more in assets than the mineral wealth it has used up. But most
countries in Eurasia have yet to learn the main lesson from the experience of resource-rich
countries in other parts of the world. What distinguishes success from failure are
the institutions to manage volatility, ensure high-quality education, and provide a
competition regime that levels the playing field for enterprises. Development success
comes from more diversified asset portfolios---a better balance between natural
resources, capital, and institutions. This report, written by the Europe and Central Asia
Region of the World Bank with the support of the Eurasian Development Bank, hopes
to make the task of creating such portfolios a little easier.