Published in volume 49, issue 2, pages 366420 of journal of economic literature, june 2011, abstract. The idea that resources might be more of an economic curse than a blessing began to emerge in debates in the 1950s and 1960s about the economic problems of low and middleincome countries. Aug 06, 2012 africas natural resources can be a blessing, not an economic curse resourcerich countries have, on average, done poorly but progress is possible if they get economic and political support. Other resources, such as land or human resources,have more diffuse rents and do not seem to have such an effect. The varied development outcomes associated with natural resource abundance are often explained as resulting from differences in institutional quality. The paradox of plenty 97 2 overseas development institute odi 2006 3 catholic relief services 2003. Why natural resources are a curse on developing countries and how to fix it. Yet, more recently resource rich countries, including many in africa, have performed worse than their resource scarce. Are natural resources more of a curse than a blessing. First, it discourages rent seeking and internal conflicts of redistribution.
However, convincing empirical evidence that the natural resource curse is conditional on the quality of institutions has not yet emerged from crosscountry studies. Kurdistans oil and natural resources ashti hawrami the large revenue that iraq gets from the oilfields might be used to help us instead of being spent on waging wars in these mountains and making the kurds bitter and hostile. Of course, he adds, theres bad stewardship of resources. Africas natural resources can be a blessing, not an. While our results are consistent with those of other authors who have recently argued that natural resources do not. The paradox of plenty 97 2 overseas development institute odi 2006 3 catholic relief services 2003 e africanbank 2007 ch4 111007. We allow for interaction effects and provide evidence that the natural resource curse is particularly severe for economic performance. Why are natural resources a curse in africa, but not. When used well, these resources can create greater prosperity for current and future generations.
Escaping the natural resource curse and the dutch disease. Africas natural resources can be a blessing, not an economic. The empirical evidence suggests that either outcome is. The idea of a natural resource curse first arose during the interwar period, on the observation that resource rich latin american countries had become victims of a global commodity price slump, with. Africa is a region abundant in natural resources and rich in vast oil reserves. Richard jones discusses what the development of new nanomaterials will mean for such countries. Tw o lines of explanation have emerged to explain the natural resource curse. From curse to blessing natural resources and institutional quality online. Wayne nafziger of kansas state university in the us, natural resources, by themselves, are not a curse. Many african countries such as angola, nigeria, sudan, and the congo are. The notion of the resource curse goes back to the 18th century, but the realities are more complex than the term might suggest. Oct 25, 2012 are natural resources a blessing or a curse for developing countries.
Many economies in the developing world rely heavily on the export of minerals. Natural resources in a multiple growth regimes analysis maty konte greqamaixmarseille university this draft. The empirical evidence suggests either outcome is possible. Aug 06, 2012 from resource curse to blessing aug 6, 2012 joseph e. Why natural resources are a curse on developing countries. The idea of a natural resource curse first arose during the interwar period, on the observation that resource rich latin american countries had become victims of a global commodity price slump, with weak growth despite their natural resource endowment. Its government debt is very small, inflation is low, and hydrocarbon wealth has been used to modernize infra. Resource curse the annual sales of oil and other natural resources in the future will be. The natural resource paradox countries with abundant natural resources. Article pdf available in journal of economic literature 492. Resources and how best we can make these resources a blessing for the people of africa rather than a curse on the continent.
Is natural resource abundance in africa a curse or a blessing. It appears that, on average, resourcerich countries have performed worse than those with smaller endowmentsquite the opposite of what might have been expected. We find evidence that changes in human development from 1970 to 2005, proxied by changes in the human development index, are positively and significantly correlated with natural resource abundance. The direct effect, commonly known as dutch disease, relates to. Introduction it has been observed for some decades that the possession of oil, natural gas, or other valuable mineral deposits or natural resources does not necessarily confer economic success. The resource curse the political and economic challenges of natural resource wealth nrgi reader march 2015 countries with nonrenewable resource wealth face both an opportunity and a challenge. The first focuses on how natural resources affect the econ. The natural resource paradox countries with abundant natural resources, tend in average to grow less than countries with few natural resources that phenomenon happens with particular emphasis in countries with non renewable natural resources, like mineralsandoil whyis that.
In recent years a number of african economies have seen an accelerated gdp growth rate. Will these windfalls be a blessing that brings prosperity and hope, or a political and economic curse, as has been the case in so. Chapter 4 institutions and the resource curse or blessing. We would not expect the discovery of vast natural resources to affect the uk in the same way as it would zimbabwe. Exports of natural resources and changes in the growth of gdp per capita were analyzed. Apr 30, 2012 why natural resources are a curse on developing countries and how to fix it. The paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. In addition to a significant negative direct impact of natural resources on income per capita, we find a significant indirect effect of natural resources on institutions. The notion of the resource curse goes back to the 18th century, but the realities are more complex.
This years tana highlevel forum on security in africa, which will take place on april 22 and 23, will focus on natural resources governance in africa. In many cases the petroleum industry has played a pivotal role in this growth. May, 2011 abstract the literature on the impact of an abundance of natural resources on economic performance remains inconclusive. From resource curse to blessing aug 6, 2012 joseph e. Stiglitz there is a curious phenomenon that economists refer to as the resource curse.
Its hard to precisely conclude that africas resources have been a blessing or a curse due to various schools of thoughts about this critical issue. Are natural resources a blessing or a curse for developing. This paper argues against a natural resource curse for human development. This paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. Proper management addresses at least two challenges in a resource boom. Testing of natural resources as blessing or curse to the.
The notion of the resource curse goes back to the 18th century, but the realities. Resource curse theoretical literature distinguishes between the direct and indirect effects of natural resources on economic growth. If large endowments of natural 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. Why natural resources are a curse on developing countries and. This paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natu ral resources. After all, resource revenue is meant to be a blessing for cambodia. In terms of intellectual history, this negative view of mineral and fuel abundance goes against much of the earlier thinking on the subject. The resource curse, also known as the paradox of plenty, refers to the paradox that countries with an abundance of natural resources such as fossil fuels and certain minerals, tend to have less economic growth, less democracy, and worse development outcomes than countries with fewer natural resources. Making natural resources into a blessing rather than a curse joseph e. Its time for africas leaders to address the problems that hinder the development of the continents natural resources.
Natural resources, for most poor countries, are deemed to be more of a curse than a blessing. This paper tests the hypothesis that whether natural resources are a curse or a blessing depends on the. Ashley eva millar and malan rietveld we are in part to blame, but this is the curse of being born with a copper spoon in our mouths kenneth kuanda, first president of zambia. Ragnar 2009 studies the differences between the countries for which the natural resources are either a blessing or a curse. The role of inequality tullio buccellato a and michele alessandrini b october 2009 abstract in this paper we offer a novel contribution to the resource curse literature. Are natural resources a blessing or a curse for developing countries. However in 1711 the spectator wrote it is generally observed, that in countries of the greatest plenty there is the poorest living, so this was not a completely new observation. The competencies of policymakers, the influence of civil society and the effectiveness of institutions are just some of the infinite endogenous factors that will determine whether resources become a curse or a blessing. It is fitting that the curse and the disease are puzzling to observers since natural resources should be a blessing, if managed correctly. Has the management of natural resources really stunted the growth africas natural resources. Making natural resources into a blessing rather than a curse. Is oil in nigeria a growth cure or a resource curse.
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