Oil, institutions and the long road to prosperity

    Oluyemi Adeosun | Insights | Jan 28, 2026    
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Few natural resources have carried such promise, and delivered such disappointment, as crude oil. For a small group of countries, oil revenues became a launchpad for prosperity, industrialisation, and long-term stability. For others, Nigeria most notably, oil coincided with institutional decay, economic fragility, and unrealised potential. This divergence is often framed as a mystery of luck or geology, but it is neither. The difference lies in choices, timing, and the strength of institutions that govern resource wealth. Oil does not develop countries on its own; it amplifies whatever governance framework already exists. Where institutions are strong, oil accelerates progress. Where they are weak, oil magnifies dysfunction. The story of oil and development, therefore, is not about barrels or reserves, but about whether societies treat resource wealth as temporary capital to be transformed, or as income to be consumed. That distinction explains why some petrostates built lasting prosperity, while others remain trapped in cycles of boom, bust, and underdevelopment.

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