Final answer:
Natural resources can facilitate economic growth but do not guarantee it, and they are not the most necessary factor for growth. Countries with few natural resources can still grow economically through innovation and efficient institutions. Government policies can support economic growth by focusing on infrastructure, education, and innovation.
Step-by-step explanation:
Regarding the role of natural resources as a determinant of economic growth, several aspects manage to be of varying importance:
- Abundant natural resources can aid in economic growth as they may be utilized to produce goods and services, attract foreign investment, and generate trade opportunities.
- While the presence of natural resources can contribute to growth, it does not guarantee rapid economic growth. Institutional factors, human capital, technology, and economic policies also play significant roles.
- Natural resources are not the sole or most necessary factor for economic growth. The combination of resources with human capital and technology is often more indicative of growth potential.
- Countries that are poor in natural resources can still achieve substantial economic growth through other means such as innovation, high levels of education, and efficient institutions.
In terms of government policy, areas where actions can promote economic growth include improving infrastructure, providing education and training, maintaining a stable political and economic climate, and fostering technological innovation. Policies aimed at these areas can stimulate an economy irrespective of its natural resource endowments.
An example of rapid growth without catching up is a low-income country that starts at a very low economic base and grows quickly through resource extraction, while a high-income country grows more slowly but from a much higher base. The low-income country's standard of living may improve, but it can still feel poor compared to the high-income country, as the gap in absolute terms remains large.