Natural resource handouts hinder growth by stifling human capital investment.
The curse of natural resources can slow down a country's economic growth by reducing the motivation to invest in education and skills. When money from resources is given directly to people, it can make them less likely to work hard and improve themselves. This can lead to a situation where a country stays stuck in a low-income cycle instead of moving towards becoming wealthier. Studies support this idea, showing that countries with this problem struggle to reach higher levels of prosperity in the long run.