Editing Resource curse (section)

=== Enclave effects <span class="anchor" id="Resource enclave"></span> ===
"Oil production generally takes place in an economic enclave, meaning it has few direct effects on the rest of the economy." Michael Ross describes how there are limited economic linkages with other industries in the economy. Consequently, [[economic diversification]] may be delayed or neglected by the authorities in light of the high profits that can be obtained from limited natural resources. The attempts at diversification that do occur are often [[white elephant]] [[public works]] projects which may be misguided or mismanaged. However, even when the authorities attempt diversification in the economy, this is made difficult because resource extraction is vastly more lucrative and out-competes other industries for the best human capital and capital investment. Successful natural-resource-exporting countries often become increasingly dependent on extractive industries over time, further increasing the levels of investment in said industry as it is necessary to maintain their states' finances. There is a lack of investment in other sectors of the economy which is further exacerbated by declines in the commodity's price. While resource sectors tend to produce large financial revenues, they often add few jobs to the economy, and tend to operate as [[enclave]]s with few forward and backward connections to the rest of the economy.<ref>Ross, M.L. (2012) The Oil Curse: How Petroleum Wealth Shapes the Development of Nations, Princeton University Press, Oxford</ref>