Resource Curse

Definition

The resource curse refers to the paradox where countries rich in natural resources, such as minerals and oil, often experience slower economic growth, less democracy, and worse development outcomes compared to countries with fewer natural resources. This phenomenon is particularly relevant in post-colonial states, where the abundance of resources can lead to corruption, conflict, and a lack of diversified economic development.

5 Must Know Facts For Your Next Test

1. Countries that experience the resource curse often become overly dependent on a single commodity, which makes them vulnerable to price fluctuations in global markets.
2. The presence of valuable natural resources can lead to an increase in corruption as leaders may mismanage revenues or divert funds for personal gain.
3. In many post-colonial states, the competition for control of resources has fueled civil conflicts and violence, undermining stability and development.
4. Resource-rich countries often neglect other sectors like agriculture and manufacturing, leading to an unbalanced economy that can struggle when resource prices drop.
5. The resource curse can hinder democratic governance, as governments may prioritize resource extraction over accountability to citizens.

Review Questions

• How does the resource curse impact economic growth and political stability in post-colonial states?
  • The resource curse negatively affects economic growth by making countries reliant on fluctuating commodity prices, which can lead to boom-and-bust cycles. Politically, this reliance on resources often breeds corruption and weak governance, as leaders exploit revenues for personal gain instead of investing in public services. This results in instability, as social divisions grow and conflicts over resource control intensify.
• In what ways can the presence of natural resources lead to civil conflict in post-colonial nations?
  • Natural resources can lead to civil conflict by creating competition among various groups for control over these valuable assets. When different factions vie for power and access to resource revenues, it can escalate into violence. Additionally, if the government fails to manage resource wealth equitably, marginalized communities may resort to armed resistance to claim their share of national wealth.
• Evaluate the long-term implications of the resource curse on governance and development strategies in countries rich in natural resources.
  • The long-term implications of the resource curse on governance are significant, as it often leads to entrenched corruption and weak institutions that prioritize short-term gains over sustainable development. These countries may struggle with inadequate infrastructure and social services since revenues from resources are mismanaged or siphoned off by elites. To combat this curse, effective governance strategies must focus on diversifying the economy, promoting transparency in resource management, and ensuring that resource wealth benefits all citizens rather than a select few.

Related terms

Dutch Disease: A situation where the discovery of a natural resource causes a nation's currency to appreciate, making other sectors less competitive internationally.

Rent-Seeking: The practice of individuals or businesses trying to gain wealth without contributing to productivity, often by manipulating or exploiting political systems.

Civil Conflict: Violence or conflict occurring between organized groups within the same nation, often exacerbated by competition for control over valuable resources.