Yes, finding having a boom in natural resources does have the effect of crowding out other industries. I agree with you. That's "Dutch Disease" and you can find it in many well governed resource rich nations.
The poster above brings up Alberta, you bring up Norway.
But Dutch Disease is just one detrimental 'symptom' of the resource curse.
Some of the more adverse symptoms are increased levels of conflict and corruption and those are precisely the fears you need to have when looking at Afghanistan's potential mineral wealth because there is a lack of proper governance in place.
Now going back to your example, Norway -- and Alberta too. It is precisely because of their governance systems that they can harness natural resource wealth at more optimal levels than nations with the curse.
Norway for example has one of the largest sovereign wealth funds in the world. That provides a mechanism for reinvesting the natural resource wealth into other industries. I am no experts on SWFs, but from my reading, Norway's SWF has a pretty good reputation.
To contrast that, look at some of the resource rich conflict nations in Africa. They don't have formal laws and organizations to structure transparent SWFs, they have swiss bank accounts that they use to raid government revenues and sometimes fund militias.
So it is good governance that helps minimize the friction caused by new found natural resource wealth and redistribute it in an optimal manner.
I pretty much agree with you. In the case of Afghanistan, though, I'd have to say that poor governance is already a serious problem, and in fact it could hardly get worse. The U.S. would like to improve this situation (as long as we've got troops in the country, anyway), but I've yet to see any evidence that we know how.
Actually, Norway's SWF is required to only invest outside of Norway (in order to avoid Dutch disease) and, although actively managed is ALMOST an index fund. They own very small stakes in many companies, and thus spread risk around.
The poster above brings up Alberta, you bring up Norway.
But Dutch Disease is just one detrimental 'symptom' of the resource curse.
Some of the more adverse symptoms are increased levels of conflict and corruption and those are precisely the fears you need to have when looking at Afghanistan's potential mineral wealth because there is a lack of proper governance in place.
Now going back to your example, Norway -- and Alberta too. It is precisely because of their governance systems that they can harness natural resource wealth at more optimal levels than nations with the curse.
Norway for example has one of the largest sovereign wealth funds in the world. That provides a mechanism for reinvesting the natural resource wealth into other industries. I am no experts on SWFs, but from my reading, Norway's SWF has a pretty good reputation.
To contrast that, look at some of the resource rich conflict nations in Africa. They don't have formal laws and organizations to structure transparent SWFs, they have swiss bank accounts that they use to raid government revenues and sometimes fund militias.
So it is good governance that helps minimize the friction caused by new found natural resource wealth and redistribute it in an optimal manner.