Book Chapter
The Sustainability of Extractive Economies

This chapter presents a theoretical approach to measure whether an economy is on a sustainable path, and then presents empirical evidence on the sustainability of various extractive economies. An indicator of sustainability termed ‘genuine saving’ is developed, which accounts for the effects of natural resource depletion and environmental degradation in measuring national savings. Distinctive patterns of genuine savings across country incomes and natural resource endowment groups are observed. Robust savings do not ensure a smooth development path if the quality of investment is low.