Nobel Laureate Warns Indonesia: 8% Growth Cannot Rely on Natural Resources Alone

Jakarta, CNBC Indonesia – Nobel Prize-winning economist James A. Robinson has said that countries which rely solely on natural resources as a driver of economic growth often end up wasting their potential.

For Robinson, the most important factor is the inclusiveness of institutions in shaping policy, enabling a country to achieve strong economic growth.

In his book Why Nations Fail, Robinson sets out his view that growth is created by inclusive economic institutions that provide broad incentives and opportunities.

“The key factor behind 8% economic growth, or rapid growth, is institutions that create incentives and opportunities for the public and entrepreneurship, while also establishing an environment conducive to investment and rapid transformation,” Robinson said at the Indonesia Policy Forum 2026, organised by Prasasti in Jakarta on Tuesday (13 October 2026).

According to Robinson, gains from natural resources are derived only from movements in commodity prices and are therefore not permanent.

He said that if a country cannot make effective use of the windfall from its natural-resource wealth, it is often squandered, and high economic growth will not last.

“Resource-based economies that have wasted their wealth include Equatorial Guinea, Azerbaijan and Turkmenistan,” Robinson said.

For growth above 8% to be sustained, Robinson said, the use of natural resources must be followed by investment in other sectors that can become new drivers of economic growth.

He cited Oman, Saudi Arabia and Botswana as examples of resource-based economies that have used revenues from natural resources to diversify their economies.

“Growth may have lasted for a decade because of high commodity prices and resource-extraction activity during that period, but the proceeds were not invested elsewhere, and the wealth disappeared once extraction declined or commodity prices changed,” Robinson said.

Robinson said the pathways to 8% economic growth are shaped by several factors: the accumulation of factors of production, the adoption of technology, and the institutional structures that provide incentives and opportunities for individuals and businesses.