The generalization that resource production harms the economy overlooks the complexity of economic development in different countries under different circumstances. This Element documents the diversity and dissensus of scholarship on the political resource curse, diagnoses its sources, and directs scholarly attention towards what the authors believe will be more fruitful avenues of future research. This article considers the debate over the "resource curse" (i.e., whether too much natural-resource wealth is harmful for developing countries) along with the debate about the mechanisms and conditions that likely generate the reported problems. Based on comparative statistics collected from the 1970s to the 1990s, the resource curse theorists claim that natural resources . In development economics, there are few topics that capture academia's imagination as intensively as the resource curse. The explanation for this lies in taxation. Since 1960s appreciation of real domestic exchange rate (Dutch Disease) was explained as the main reason for . • Poor but resource-rich countries tend to be underdeveloped not despite their hydrocarbon and mineral riches but because of their resource wealth. Web. resources can be a 'blessing' or a 'curse,' these resources, especially the alluvial diamond deposits, have been a curse for Sierra Leone as they are for many other countries that have found themselves embroiled in wars over abundant resources. O1,Q0 ABSTRACT It is striking how often countries with oil or other natural resource wealth have failed to grow more rapidly than those without. Group Conflict and Political Mobilization in Bahrain and the Arab Gulf: Rethinking the Rentier State. The 'resource curse' or 'Dutch disease' tries to explain why countries that are richer in natural resources are poorer, have less economic growth and are less democratic.¹ Its a paradox of economics - surely the countries and societies with the most valuable resources should be rich, not poor? The ' Resource Curse ' : Theory and Evidence ( ARI ) J. John Published 2010 This paper undertakes a critical survey of the 'resource curse' -the idea that mineral and fuel abundance generates poor economic performance in less developed countries-. icant shortcomings in terms of theory and evidence. The Resource Curse refers to the phenomenon of worse economic performance in resource-abundant countries comparing to resource-poor countries (Auty, 1993, p.1). By definition, resource curse, also called the paradox of plenty, refers to a situation where countries endowed with a natural resource curse tend to record slow economic growth as compared to countries with fewer natural resources. Resource curse. A situation termed as 'resource curse'. The Myth of the Resource Curse: A Case Study of Algeria Mohammed Akacem Metropolitan State University of Denver The Journal of Private Enterprise 32 (2), 2017, 1 - 15 Nicolás Cachanosky Metropolitan State University of Denver _____ Abstract This paper compares Algeria to Norway in the context of the resource curse theory. mitigate the negative effects of natural resource dependence, and finally, debt overhang as the causal mechanism behind the resource curse. Google Scholar. Zimbabwe Environmental Law Association (ZELA) has documented the evidence of Zimbabwe's mineral resource curse. the resource curse theory was originally proposed by british economist richard auty, who argued in 1993 that mineral resources could distort producing countries' economies by making them prone to factors like sudden price swings and "dutch disease," which occurs when sudden windfall profits from resource exports cause the value of a country's … It also identifies some decisive factors that help determine the blessing threshold—below which the risk of a resource curse may be very high—in mineral and fuel abun dant developing countries. History clearly shows that natural resource wealth may harm economic performance and make citizens worse off. mitigate the negative effects of natural resource dependence, and finally, debt overhang as the causal mechanism behind the resource curse. This theory is attributed to Jeffrey Sachs and Andrew Warner, who in 2001 The analysis surveys the Dutch disease, rentier state, and rent-seeking versions of the resource curse and finds they have significant shortcomings in terms of theory and evidence. The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions Oil, minerals, and agricultural resources can bring great riches to those who possess them. Second, the risk of resource curse symptoms varies by commodity: it is higher the larger and more volatile the commodity revenue, and the greater its . 26 March, 2022 . Resource curse Tomas Pranckevicius IBDEM-ERASMUS. The resource curse mainly occurs when a country begins to focus all of its production means on a single industry, such as mining or oil production, and neglects investment in other major sectors.. First, the curse has not only economic causes but also institutional and political ones. Resource curse theory examines the negative effects of rich natural resources on economic growth from an economic and political perspective. With these theories in mind, this thesis will attempt to answer some of the questions about policy-making in light of Dutch Disease and Natural Resource Curse if it is, in fact, an intractable problem. The emergence of the concept of "resource curse" has aroused widespread concern in the world. By definition, resource curse, also called the paradox of plenty, refers to a situation where countries endowed with a natural resource curse tend to record slow economic growth as compared to countries with fewer natural resources. There is some argument as to how much of a role the resource curse theory plays in economic development, with many . The subsequent two decades saw the emergence of a significant body of research proposing a link between resource production, economic underperformance and various socio-political ills. The literature has also been critiqued for its neglect of temporal variations in the incidence of resource curse, historical legacies and the exclusion of non-oil revenues with 'resource curse' like symptoms (e.g., foreign aid). Using the Natural Resource Charter as a framework, the course covers: 1) Designing and Evaluating Fiscal Regimes, 2) Distributing, Managing and Spending Resource Revenues, and 3) The Political Economy of Policymaking in Resource-Rich States. The Resource Curse •The belief or hypothesis that natural resource wealth and its exploitation hinder rather than help economic growth in developing countries Overview •Origins •Possible Causes •Suggested Cures Origins -Conventional View •Rich resource deposits are assets •Traditional production function Q = f ( K, L, N ) How can countries escape the natural resource curse? Box 4.1: Cross-Country Evidence of the Natural Resource Curse There are, indeed, resource-rich countries that benefit from their natural wealth, but overall, the economies of many resource-rich countries are in a surprisingly poor state. This mis-measurement, we contend, has direct and significant consequences for theoretical findings on the resource curse. Using a combination of the resource curse and structural transformation theories, we highlight the perverse connections between oil dependence and weak institutional framework as well as low human development and its concomitant effect on conflict and political instability in Nigeria. Resource curse. The resource curse, also known as the paradox of plenty or the poverty paradox, is the phenomenon of countries with an abundance of natural resources (such as fossil fuels and certain minerals) having less economic growth, less democracy, or worse development outcomes than countries with fewer natural resources. Here I highlight three reasons for poor performance of resource-rich countries, interlaced with the . There are many theories and much academic debate about the reasons for, and . Figure 1 shows GDP per capita at purchasing power parity for highly resource-intensive countries such as Saudi Arabia, Nigeria, Venezuela and Zaire, and for . Academics and policymakers alike have utilized this theory in an attempt to describe the paradoxical relationship between economic underdevelopment and natural resource wealth. ZELA has argued that the extractives sector in Zimbabwe has violated five main pillars of sustainable development. The main thing is to carry out research on these two issues. The term as used here refers to the phenomenon whereby countries with an abundance of natural resources grow more slowly than those without such an abundance. The above is first confirmed by Sachs and Warner in many of their research on the same subject (1995, 1997a, b, c, 1999a, b, 2001), and later it became a . 'Industrial policy reform in six large newly industrialising countries' (Vol 22, No.1, pp. Our main hypothesis - that institutions are decisive for the resource curse - This is a modified version of a paper from World Development, Auty, R.M. resource-scarce economies—the phenomenon often referred to as the "resource curse." This paper casts light on the question of whether and why Botswana has succeeded in transforming its diamond wealth into growth and development. Bloomington: Indiana University Press. Despite many advances in this literature, a core concept—resource rents—remains under-theorized, and even less well measured. 15836 March 2010 JEL No. The resource curse is the observation that countries endowed with a rich source of natural resources can struggle to make effective use of these and often end up with low levels of economic development than countries with low levels of natural resources. Firstly, despite touting the mining sector as significant in the economic revival of the country and the drive to . Resource Curse Theory Pdf Creator. This book gives a comprehensive overview of Ghana's hydrocarbon economy using actor network and assemblage theories to contest the methodological nationalism of mainstream accounts of the resource curse in resource-rich countries. 42 Pages Posted: 11 Jul 2016 Last revised: 2 Oct 2018. The Democratic Republic of the Congo (DRC), also known as "The Congo" and "Zaire," remains the "heart of darkness" depicted so scintillatingly by Conrad in his novella. 1.1 Market-based Theories of the Resource Curse117 explainthepooreconomicperformanceoftheNetherlandsfollowingthe discovery of North Sea oil.8The Dutch disease theory postulates that a natural resource boom causes a country窶冱 exchange rate to appreciate, making its manufacturing exports less competitive. As the name suggests, the emerging literature that studies this variant of the "natural resource curse" uses subnational units of analysis to examine the processes and . The Wharton School, University of Pennsylvania, 31 October, 2007. Drawing upon recent field research focused on Ghana's oil and gas sector and utilizing the theoretical framework of actor network theory, the authors contend . Resource curse • Oil is a curse. The financial support of the Nuffield Foundation, British Academy, RTZ and World Bank is gratefully acknowledged. developed to developing countries. A place of conflict, brutality, and exploitation, the Congo documented by Marlow, a Belgian traveler journeying up the Congo River in search . resource rich countries are condemned to low growth (Lederman and Maloney 2007; Brunnschweiler 2008)5. As a result, many see a 'resource curse' in Africa, whereby easily obtainable natural resources and commodities have essentially hurt the prospects of several African national and regional economies by fostering political corruption and feeding Using these links will ensure access to this page indefinitely. Fundamental Keywords: resource curse, economic perform ance, rentier state, rent-seeking models, resource . See all articles by Amrita Dhillon Electoral Accountability and the Natural Resource Curse: Theory and Evidence from India. The empirical evidence that economies predominantly reliant on their natural resources are characterized by slower economic growth—the so-called Resource Curse (RC)—is in many ways confirmed by the case of Zambia. Open PDF in Browser. The present survey casts a wider net, is intended for a more general audience, and offers policy prescriptions. This is the phenomenon known as the Natural Resource Curse. It has been observed; however, some reverse cases in this regard. Raw materials, such as coal in England during the early stages of the Industrial The resource curse has not been lifted The theory of a 'curse of natural resources' can be traced back to the 1970s. The resource curse is a complicated phenomenon that results from a variety of reasons, including the Dutch disease, rent seeking, crowding out of human capital, and crowding out of social capital (Auty 2001). The resource curse theory is a theory in economics which, simply put, suggests that nations which have rich, yet finite, natural resources may fail to develop in other sectors, ultimately bringing about financial problems. The Natural Resource Curse: A Survey Jeffrey A. Frankel NBER Working Paper No. work in theory. There are several causal mechanisms through which natural resources could have an impact on political outcomes. 11-26, 1994) with kind permission of Pergamon Press Ltd.It extends the analysis in that paper to include mineral . A large body of scholarship finds a negative relationship between natural resources and democracy. The resource curse is not a novel theory within the academic community. We show that when political institutions are cohesive and power is shared among the diverse groups in a multi-ethnic society, The Resource Curse • Democracy: Natural resource wealth, particularly oil wealth, has made it more likely for governments to become or remain authoritarian over the past 30 years. Copy URL. resource curse focus on the specific behaviors associated with agents in the presence of rents generated by the exploitation of natural resources and not on economic dependence or on the distortion of the export structure related to the presence of natural resources. Natural gas, copper, and diamonds are also bad for a country's health. Share: Permalink. Explanation 3: Lack of diversification The third explanation for the resource curse is that natural resource wealth undermines broad based economic development. 2 From National to Subnational: Theory and Evidence for the Resource Curse Research on the resource curse has generally deployed three types of explanations for why natural resource wealth causes under-development: (1) economic explanations that examine how resources affect prices and economic production; (2) political economy explanations that . volatility is the central problem of the resource curse. According to one count, the academic literature has grown from thirteen academic papers covering some aspect of the resource curse in 1995 to 543 in 2005 and 2420 in 2014 (Gilberthorpe and Papyrakis, 2015). More natural resources push aggregate income down, when institutions are grabber friendly, while more resources raise income, when institutions are producer friendly. This ideology brings us the Lucas Paradox. It can be seen that the definition of the Resource Curse is quite loose, and this causes loopholes in the whole theory of the Resource Curse. According to Ross (2001), "rentier effects" may occur if the Botswana: Growth Contribution by Mining, 1980/81-2003/04 (Percent change)-10-5 0 5 10 15 20 25 The Resource Curse The existence of a resource curse is highly debated in the literature. There are various reasons put forward to explain this resource curse, such . Yet countries that are abundantly endowed with such natural resources often encounter pitfalls that interfere with the expected superior economic performance. Resource curse • Oil is a curse. The paradox of the resource curse is which offer a range of economic factors both that a resource boom provides valuable foreign internal and external to the economy. The shortcomings of the resource-curse theory arise mainly from the reductionist quest for 'one big explanation' of the role of resources in development. Natural gas, copper, and diamonds are also bad for a country's health. Therefore, it appears that a measure in terms of 1 Two other surveys of the resource curse, Stevens (2003) and van der Ploeg (2010), are written for energy specialists and economic theorists, respectively. These exchange, attracts foreign investment, and include effects on production and investment provides raw material for production. We test this theory building on Sachs and Warner's influential works on the resource curse. This results in the nation's other exports becoming more expensive for other countries to buy, and imports becoming cheaper, making those sectors less competitive. The 'Resource Curse': Theory and Evidence (ARI) Jonathan Di John* Theme: Mineral and fuel abundance does not determine either the political or economic trajectory of less developed countries. After reviewing the literature on the resource curse, this article discusses the ways that scholars define "natural resources." He also stated that developing countries tend to suffer because of low capital flows. While most published studies report evidence that is consistent with the idea of a resource curse, there is considerable disagreement about the mechanisms that cause the resource curse, that is, the potential negative impact of natural resource abundance on governance. Lucas (1990) observed that the neoclassical theory does not occur presently. 2018. Rosser's (2006) different perspectives of the resource curse theory, viz: the behaviouralist, rational-actor, state-centric, historico-structuralist, and social capital perspectives, show more or less that developing petro-states tend to over-reach themselves in terms of what they expect from the oil resources at their disposal, while not . Downloadable! 1. 2. A situation termed as 'resource curse'. Instead of benefiting and prospering the country and its citizen, the . "'The Resource Curse': Why Africa's Oil Riches Don't Trickle Down to Africans." Knowledge@Wharton. Instead of benefiting and prospering the country and its citizen, the . Weak economic performance of most oil rich countries states that natural resources are more curse than blessing for these countries. Countries highly dependent on oil or other natural resources performed very poorly since 1980. The resource curse, whereby resource-rich economies do not thrive, is more complex than initially thought. Table1 Regressionofeconomicgrowthonnaturalresourceabundance,1970}1990,controllingforgrowth inthe1960s LogGDP1970 !1.8 (8.87) Naturalresourceabundance !9.9 International Development What is the resource curse? The Resource Curse The existence of a resource curse is highly debated in the literature. Mass Protests and the Resource Curse: The Politics of Demobilization in Rentier Autocracies. Add Paper to My Library. In some cases, resource conflict is embedded in the social and economic grievance narrative. In general, political scientists find that governments are more responsive to their citizens and are more likely to . Summary: This paper undertakes a critical survey of the 'resource curse' -the idea that The term as used here refers to the phenomenon whereby countries with an abundance of natural resources grow more slowly than those without such an abundance. While it most often refers to natural resource discovery, it can also refer to . Introduction. ABSTRACT: According to the theory of the resource curse, poor countries with large endowments of natural resources, especially oil, often do not achieve sustainable economic growth because the size. According to the resource curse thesis (RCT) of the 1990s, a strand of development discourse informed by neoliberal development economics, natural resource-rich developing countries are cursed by their natural resources abundance, particularly minerals and petroleum. Figure 1. This theory is attributed to Jeffrey Sachs and Andrew Warner, who in 2001 This article reviews a wide range of recent attempts in both economics and political science to explain the "resource curse." It suggests that much has been learned about the economic problems of. From this perspective a country must diversify its economy in order to develop. Girod, Desha, Stewart, Megan, and Walters, Meir. Extant cross-country regressions, however, assume random effects and are run on panel datasets with relatively short time dimensions. The natural resource curse is a case in point. 130/ Dutch Disease, Rentier State, and Resource Curse: … of those resources are much prosperous and whether than countries that are deprived of the very resources. The term resource curse represents an economic phenomenon associated with the abundance of natural resources in certain countries. Haber and Menaldo (Am Polit Sci Rev 105(1):1-26, 2011) identify Zambia's extreme dependence on copper exports as one of the worldwide most striking examples for a country . The "subnational resource curse" refers to the overall negative effects of natural resource wealth in the economy, politics, polity or environment of a subnational area. • Poor but resource-rich countries tend to be underdeveloped not despite their hydrocarbon and mineral riches but because of their resource wealth. 4 The theory of the resource curse, in addition to the economic impact on countries with large natural resource endowments, also speaks about a broader impact on the social and political aspects of the country. With these theories in mind, this thesis will attempt to answer some of the questions about policy-making in light of Dutch Disease and Natural Resource Curse if it is, in fact, an intractable problem.

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