Transcript Combating the Resource Curse

The Resource Curse: An
Overview of Studies
Andrew Rosser
Introduction
• Prior to the late 1980s, the conventional wisdom
was that natural resources were good for
development
– It was thought resources would facilitate industrial
development by providing domestic markets and
funds for investment
• However, since then dozens of studies have
suggested that in fact natural resources are bad
for development.
• In this session, I will:
– review what these studies have suggested about the
nature of the resource curse; and
– critically evaluate the evidence that they have
presented for the existence of a resource curse.*
*For an extended discussion of the issues raised in this paper, see Rosser (2006)
• Three preliminary points:
– The term ‘resource curse’ first used by Auty (1993)
but it has a longer heritage.
– The literature on the resource curse consists of
several different sub-literatures (economic
performance, poverty, civil war, regime type, gender
inequality)
– Different scholars use different definitions of ‘natural
resource wealth’.
The Nature of the Resource Curse
• Studies of the resource curse have suggested
that it is a multi-dimensional phenomenon.
• Specifically, they have suggested that natural
resource wealth (NRW):
–
–
–
–
reduces economic growth
limits exports of manufactured goods
increases poverty levels
increases the incidence, duration and intensity of civil
war
– increases the incidence of corruption
– increases the risk of authoritarian rule
– increases gender inequality
The Evidence
• The evidence in favour of the notion of a
resource curse is strong.
– lots of studies, big names
• However, there are several reasons for treating
the results of these studies with caution.
– results not robust to changes in measure of NRW
– ratio of NR exports to GDP may not be an appropriate
measure of NRW
– Several studies have suggested that the problem is
specific natural resources rather than natural
resources in general.
• i.e. an oil curse rather than a NR curse
• At the same time, the results in relation to specific natural
resources are inconsistent
– e.g. point source resources and civil war. Some suggest
lootable resources more pernicious
– Some studies have suggested that NRs may have a
positive impact on development
• especially in relation to human development indicators
– A number of resource rich countries have been very
successful in development terms:
• e.g. Botswana, Indonesia, Chile, Malaysia
– Finally, the studies have only shown that NRW and
bad development outcomes are correlated with one
another, not that the former causes the latter
• direction of causation may be other way around
• relationship between NRs and development outcomes may
be spurious—i.e. there may be a third factor at work that
shapes both
• In sum, then, the evidence in favour of a
resource curse is compelling but not conclusive.
References
Auty R. (1993) Sustaining Development in Mineral Economies: The
Resource Curse Thesis, London: Routledge.
Rosser A. (2006) The Political Economy of the Resource Curse: A
Literature Survey, IDS Working Paper 268, Brighton: Institute of
Development Studies.