How Argentina can protect its resource wealth

Argentinian President Javier Milei has launched a reform program inspired by the free market economist Friedrich Hayek, at the heart of which is the development of Argentina’s vast energy reserves. Milei and his supporters hope that this will reverse almost a century of economic decline. But while translating natural resource wealth into long-term prosperity is certainly possible, it is not easy — as the many countries that have fallen victim to the “resource curse” can attest.
Argentina is home to Vaca Muerta, which holds the world’s second-largest shale gas reserves and fourth-largest shale oil reserves. It also sits, with Bolivia and Chile, within the “lithium triangle,” which contains about 60 percent of the world’s known reserves of a critical input for the batteries needed to power electric vehicles, enable large-scale grid storage and more.
These resources are not controlled by the federal government. Instead, they belong to the provinces where they are located, as per a 1994 constitutional amendment. The constitution, modeled largely on that of the US, also states that any power that is not explicitly delegated to the federal government belongs to provincial governments. This means that provincial governments can collect royalties on the extraction of oil, gas, lithium and other resources from their territories.
The resulting revenues are becoming substantial. Neuquen, where most of Vaca Muerta is located, currently collects some $350 million per month in royalties and provincial authorities expect that figure to rise to $500 million once Argentina’s liquefied natural gas export infrastructure is fully developed — as early as 2031. That would amount to about $6 billion annually for a province of just over 700,000 inhabitants.
Similarly, Catamarca, home to some of Argentina’s largest lithium deposits and just 430,000 people, expects royalty revenues to reach about $350 million annually by 2031.
To translate these windfalls into sustained prosperity, Argentina’s provinces should look to the examples set by Alaska, Chile and Norway, all of which created a sovereign wealth fund to manage their resource revenues.
Alaska offers perhaps the most instructive model. When it became the 49th US state in 1959, the magnitude of its oil wealth remained unknown. The discovery of oil at Prudhoe Bay in 1968 transformed the state’s finances almost overnight, with lease sales generating hundreds of millions of dollars. But the revenues were spent quickly, raising fears that the bonanza would be squandered. 

To translate these windfalls into sustained prosperity, Argentina’s provinces should look to Alaska, Chile and Norway.

Conrado Tenaglia

The solution came in the form of the Alaska Permanent Fund. Established through an amendment to the state constitution in 1976, the fund kept a significant portion of the state’s oil revenues beyond the reach of day-to-day budgetary spending. Alaskan law requires that 50 percent of mineral royalties be deposited into the fund and its principal cannot be spent without the direct approval of voters. Since the first dedicated deposit was made in 1977, the fund has amassed nearly $90 billion in assets.
Norway’s experience is also worth revisiting. Its sovereign wealth fund is often presented as a model of careful planning but the reality was more complicated. In the decades after one of the world’s largest offshore oil fields was discovered off Norway in 1969, the country grappled with many of the institutional and political challenges typically associated with resource booms.
Norway’s sovereign wealth fund was established in 1990 to shield petroleum revenues from short-term political pressures, protect the economy from price fluctuations and ensure that future generations would benefit from the country’s resource wealth. Oil revenues would be channeled directly into the fund and, crucially, the money would be invested exclusively abroad. Moreover, spending would be subject to strict parliamentary oversight. Today, 30 years after the first deposit was made, Norway’s sovereign wealth fund is the world’s largest, with assets of about $2.2 trillion.
Chile — one of the world’s largest copper producers — similarly struggled with volatile commodity revenues. In 1987, it created the Copper Stabilization Fund to serve as a kind of buffer, accumulating funds when prices were high and closing gaps when they were low. Twenty years later, this was replaced by the Economic and Social Stabilization Fund — a comprehensive sovereign wealth fund rather than a commodity-focused buffer.
All these efforts reflect a commitment to converting today’s resource windfalls into enduring financial assets. Alaska, Norway and Chile recognized the dangers of Dutch disease, whereby commodity booms drive up the currency’s exchange rate, undermine competitiveness and ultimately leave economies poorer. Argentina should learn from their experience rather than from its own mistakes.
In his 1941 short story “The Garden of the Forking Paths,” Jorge Luis Borges imagined a garden in which infinite futures coexist, each accessed through a different choice. Argentina’s provincial governments must now make their choice: leverage today’s resource wealth to strengthen institutions and deliver lasting prosperity or squander their windfalls. As in Borges’ garden, once a path is chosen, changing course is not easy, if it is possible at all.

• Conrado Tenaglia, a former partner at Linklaters LLP, was a 2025 visiting scholar at Harvard Law School.
©Project Syndicate