Executive Summary

The literature is divided between foreign aid and natural resource exploitation as a path to economic development. In terms of the effective use of foreign aid, the literature is divided between those who argue that foreign aid can lift poor nations out of poverty and lead them to economic development and those who believe that foreign aid can never lead developing countries to economic development. Regarding the exploitation of natural resources, the literature is divided between those who argue that resource abundance leads to negative economic consequences that impede economic development and those who believe that the exploitation of natural resources can lead to economic development. However, as a poor sub-Saharan African country, how can Guinea leverage its natural resources to develop without foreign aid?

This paper conducts a comparative study between Norway’s oil exploitation and Guinea’s mining exploitation. In doing so, Norway is used as a model for Guinea, a country that has effectively exploited its natural resources for economic development. The following are factors used to conduct the comparative study between Norway and Guinea: the precondition of oil exploitation in Norway and mineral exploitation in Guinea, the human development index, political and regulatory institutions governing oil and mining, the spending effect and revenue management, and the establishment of national companies. I find that Norway had a better precondition than Guinea. Norway began exploiting oil with a good economy, and a mature democracy with a strong bureaucratic system, which was not the case for Guinea. And, in all the other factors, Norway is doing better than Guinea. However, Guinea can learn from Norway’s experience as Norway was once very poor and a benefactor of U.S. foreign aid (the European Recovery Program). Implementing good policies to ensure transparency and avoid corruption as Norway did will enable Guinea to leverage its natural resources to develop without foreign aid.