Conclusion

The average level of human capital per capita is lower in RR countries compared with non-RR countries. Evidence suggests that an abundance of nonrenewable resources can distort the economy away from the accumulation of human capital, including via the Dutch disease. Consequently, the accumulation of human capital per capita is slower in RR countries. Further, the distribution of human capital between men and women is more unequal in RR countries compared with non-RR countries, and the size of public sector employment is larger.

Countries may be able to mitigate each of these distortions, and this may have the additional benefit of boosting overall levels of human capital accumulation and value. First, countries may be able to mitigate Dutch disease by investing rents from resource extraction in the domestic economy. By boosting productivity and flattening supply curves, governments may be able to alleviate the effect of rising nontraded sector prices. Second, by addressing gender distortions in education and the labor market, governments may be able to alleviate a male bias in human capital in RR countries, a bias that may lead to suboptimal levels of human capital accumulation as well as associated inequities. Finally, via innovative revenue distribution methods, such as direct cash transfers, governments may be able to alleviate an oversized public sector, which can result from resource abundance, as resource revenues would not directly fuel the general budget and would transit first through citizens with significant incentives to scrutinize the use and efficiency of public spending. This in turn may boost human capital valuation by reallocating labor to emerging private activities with higher productivity and thus provide benefits from circumventing the public sector.