Natural resources in developing and emerging states clearly have the potential to make a significant contribution to the domestic economy. An equitable and logical return to the state is from the sale of natural resources, in an efficient and transparent way, on the appropriate international market. Notwithstanding this straightforward pathway trillions of dollars are lost in resource revenues that are hijacked in one way or another and siphoned away from the sovereign treasury.

Calls for benefeciation of resources are totally legitimate but care must be taken to apply industry and trade knowledge to any decision as to downstream processing, or benefeciation, based on a simplistic or misleading calculus. Refining oil, processing ore, intermediating grains into food, polishing rough diamonds, refining gold, may generate theoretical paper profits and jobs. However, very significant efficiency advantages due to a number of factors may outweigh any theoretical considerations.

Governments are of-course entitled to make political decisions to create jobs through less than optimum efficiency of resource commercialization but care should be taken not to destroy value or to inadvertently trigger other undesirable side-effects including corruption. Beneficiation decisions must be taken with a 360° perspective.

Today, a smart use of nature’s endowment of natural resources is the allocation of a small portion of incoming resource revenue to state-of-the-art education, health, training and entrepreneurship instruction as part of a coherent, long-term nation-building strategy.