Shifting towards low-carbon economies is imperative on a global level, but countries will follow different trajectories depending on their natural endowments, industrial basis and development needs and priorities. The challenges are toughest and the solutions hardest to implement in emerging and developing countries, particularly those which rely on the revenues of fossil fuel extraction. The OECD fosters peer learning and knowledge sharing between OECD and non-OECD producing countries, in consultation with extractive industries,civil society organisations, and think tanks, to help them craft innovative and collaborative solutions for resource-based development.
Natural resources and development
If well managed, oil, gas, minerals and other natural resources can propel economic and social transformation. However, overdependence on natural resources, or dependence on too few of them, does expose countries to serious economic, social and environmental hazards. The OECD works with resource-rich countries, their partners and businesses to help them mitigate the risks and make the most of their resource endowments for sustainable development.
Key messages
The domestic resources lost to oil producing developing countries on account of illicit financial flows (IFFs) in oil trade activities are estimated to exceed the combined values of foreign direct investment (FDI) and official development assistance (ODA) flows to those countries. Bribery, kickbacks and collusion, tax evasion, mispricing, and trade-based money laundering conducted via offshore entities are some of the IFF practices that occur in oil commodity trading. With data, analysis and policy guidance, the OECD supports ODA providers in their efforts to increase the transparency and accountability of extractive sectors.
Unbalanced extractive contracts create strained relationships between governments and investors and are often a source of social conflict around extractive projects. They can also limit the benefits for the country in terms of public revenues and employment. The OECD’s Guiding Principles for Durable Extractive Contracts provide guidance on how resource projects can be developed to reflect the balance of risks and rewards that underpins durable contracts, while taking into account community interests and concerns from the outset.
Context
How can fossil fuel producers and mineral-rich developing countries design realistic, just and cost-effective low-carbon transition pathways?
Taking into account the heterogeneity of low-carbon trajectories, the Equitable Framework and Finance for extractive-based Countries in Transition (EFFECT) provides options for policy makers, industry and finance institutions in search of the answers. The aim is to help them seize the transformational opportunities linked to sustainable, low-carbon growth, by mitigating the transition’s impacts on fossil fuel industries, workers and poor households, and preventing the risks of high-carbon lock-in and stranded assets.
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The OECD analyses fast-changing global and regional development trends, to help countries of all income levels design innovative policies that meet their needs and improve their populations’ lives.Learn more