(a) What are natural resources? (b) Describe any four roles natural resources play in economic development.

(a) Natural resources. Natural resources are the free gifts of nature that can be used to produce goods and services. They include land, mineral deposits, forests, water bodies, wildlife, sunshine, fertile soil and the climate. In economics they are grouped under the factor of production called land, and they command a reward known as rent.

(b) Four roles of natural resources in economic development.

1. Source of raw materials. Minerals, timber, farm land and water supply the inputs that industries process into finished goods, so their availability determines the pattern and scale of industrialisation.
2. Source of government revenue and foreign exchange. Exporting resources such as crude oil, cocoa and solid minerals earns foreign exchange and yields royalties and taxes that finance development.
3. Provision of employment and income. Extracting, processing and marketing resources (mining, farming, fishing, forestry) create jobs and raise the incomes of the people.
4. Attraction of investment and infrastructure. Rich resource endowments attract domestic and foreign investment and encourage the building of roads, railways, power and ports to exploit them, spreading development.

Resources also provide food and a base for the growth of allied and supporting industries.

Examination reminder: stress that resources must be combined with capital, labour and enterprise before they contribute to development; on their own they remain idle potential.