An extraction-based economy is an economic model that relies heavily on the extraction and use of natural resources as a primary source of economic growth and development. Countries with abundant natural resources, such as oil, minerals, or timber, often adopt an extraction-based economy to maximize the economic benefits of their resources.

In an extraction-based economy natural resource extraction industries are often the dominant economic activity, and they may account for a significant portion of the country’s gross domestic product (GDP), employment, and government resources. This can lead to the concentration of economic and political power in the hands of a small elite and create a dependence on a single commodity or resource.

Extraction-based economies can bring significant economic benefits but they also have significant social, economic, and environmental costs. The economic benefits can be unevenly distributed and can lead to increased inequality, corruption, and political instability. Extraction-based economies can also be vulnerable to fluctuations in commodity prices, environmental degradation, and resource depletion.

To mitigate these risks, some countries with extraction-based economies have attempted to diversify their economies by investing in other sectors such as manufacturing, services, and tourism. Others have implemented policies to improve resource management, increase transparency, and accountability and promote sustainable resource use.