Monocausalism versus systems approach to development - The possibility of natural resource-based development

Development economics have over the years produced several one-factor explanations by one-sidedly focusing on specific development factors or mechanisms as for example saving and investment, human capital, free markets, technology, institutions and production structure. In this paper we term such narrow monocausal explanations as ‘fundamentalisms’. We identify and discuss several types of fundamentalism. We then argue that these diverse explanations of development in reality are interdependent and complement each other, and hence that the process of economic development must be understood as systemic.
Throughout the paper there is a focus on natural resource-based development. It has been argued that abundant natural resources are detrimental to economic development – an argument known as the resource curse, which is one type of ‘production structure fundamentalism’. We argue that abundant natural resources can be a curse as well as a blessing. But if you can build an institutional framework for the utilization of specific natural resources, which supports development of new knowledge and competences that can be applied in a range of different activities, resource based development is possible. The latter is illustrated by examples from Norway, the US and especially Brazil. We conclude that it is not the various endowments per se that are ‘fundamental’ for development, but rather the by institutions sustained interdependency and interaction between the different types of development factors, and how these are managed or coordinated.