Why do many countries that are rich in natural resources tend to have less economic growth? How do Austrian economists analyze this problem? I assume that Austrians think that this is largely caused by government control of resources leading to misallocation and mismanagement. Under the Austrian analysis, what is the best approach for people in those countries to maximize the utility of these resources ?
Can you restate your question? The economist qua economist doesn’t “run a country.”
If you’re asking how does an Austrian economist explain an economy rich in natural resources, the particulars and amounts of resources aren’t relevant for economic analysis. Austrian economics uses a deductive method starting with the premise of human action. The particular ends and means (resources falling under the category of means) aren’t what is relevant, but rather the structure of human action, the fact that human beings do have ends and means, and the conclusions we can deduce from that.
There is no strong correlation between the endowment of natural resources in a country and the standard of living people enjoy. America, Canada, Russia, China, and Africa are all well endowed with natural resources but have widely divergent standards of living. China, with the same natural resources, had very low standards of living before 1980 and steady rising standards of living since 1980. Hong Kong and Singapore have no natural resources to speak of and yet very high standards of living.
The key to economic progress is giving legal sanction to private property and contract. Then people can enter into the international division of labor and process of capital accumulation. They can be the beneficiaries of the greater productivity of everyone else in the world by selling to them and buying from them.
Thus, in countries with low standards of living like in the Middle East, which have few natural resources, and in Africa, which have many natural resources, need market reform. With private property and contract protected, people there could enter into the international division of labor and process of capital accumulation. Five hundred million people have been lifted out of poverty in China in the last three decades.