D1 Reserves, price and resource dependence

Topic

Reserves, price, and the resource share of GDP measure different facets of the same "Resources/Extraction" track—one geographically anchored to the physical availability of natural resources. Reserves indicate the quantity of the resource remaining; price reflects the value at which the resource trades on the global market; and the resource share of GDP reveals the extent to which the economy as a whole depends on that specific resource.

Proven reserves measure the stock of known, economically extractable resources. Their decline relative to the annual extraction rate acts as the direct trigger for resource depletion: when proven reserves fall relative to the annual extraction rate and cross a pre-established critical threshold, resource depletion accelerates sharply.

Commodity prices measure the market value of the extracted resource. Significant fluctuations—far exceeding historical volatility over a short period—trigger commodity price shocks. Unlike proven reserves, which measure the remaining quantity of a resource, commodity prices reflect how the global market values ​​that same resource at any given moment.

The share of resources in GDP or total exports measures the economy's dependence on the Resources/Extraction track. Sustained growth beyond a pre-established threshold of excessive dependence serves as a direct indicator of the "resource curse": the greater the concentration of resources within GDP or total exports, the more distorted the rest of the economy becomes.

Together, these three indicators allow for the monitoring of this geographically anchored track from three distinct angles: proven reserves signal impending resource depletion; commodity prices signal potential price shocks; and the resource share of GDP signals the risk of the resource curse. These are three distinct anomalies, yet they all stem from the same source: the physical and geographic availability of natural resources.

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