The political economy of the resource curse : a literature survey

This paper presents a critical survey of the literature on the ‘resource curse’, focusing on three main questions: (i) are natural resources bad for development?; (ii) what causes the resource curse?; and, (iii) how can the resource curse be overcome? In respect of these questions, three observations are made. First, while the literature provides considerable evidence that natural resource abundance is associated with various negative development outcomes, this evidence is by no means conclusive. Second, existing explanations for the resource curse do not adequately account for the role of social forces or external political and economic environments in shaping development outcomes in resource abundant countries, nor for the fact that, while most resource abundant countries have performed poorly in developmental terms, a few have done quite well. Finally, recommendations for overcoming the resource curse have not generally taken into account the issue of political feasibility. More generally, it is argued that the basic problem with the literature is that researchers have been too reductionist – they have tended to explain development performance solely in terms of the size and nature of countries’ natural resource endowments. A consensus is emerging that various political and social variables mediate the relationship between natural resource wealth and development outcomes. But rather than acknowledge that these variables are shaped by a range of historical and other factors in each case, scholars have tended to see them as determined by the natural resource base. Put differently, scholars have been asking the wrong question: rather than asking why natural resource wealth has fostered various political pathologies and in turn promoted poor development performance, they should have been asking what political and social factors enable some resource abundant countries to utilise their natural resources to promote development and prevent other resource abundant countries from doing the same.

[1]  Macartan Humphreys,et al.  Natural Resources, Conflict, and Conflict Resolution , 2005 .

[2]  Richard Snyder,et al.  Diamonds, Blood, and Taxes , 2005 .

[3]  James D. Fearon,et al.  Primary Commodity Exports and Civil War , 2005 .

[4]  Anke Hoeffler,et al.  Resource Rents, Governance, and Conflict , 2005 .

[5]  Michael Herb,et al.  No Representation without Taxation? Rents, Development, and Democracy , 2005 .

[6]  J. Pearce Policy Failure and Petroleum Predation: The Economics of Civil War Debate Viewed ‘From the War-Zone’ , 2005, Government and Opposition.

[7]  N. Shaxson New approaches to volatility: dealing with the ‘resource curse’ in sub‐Saharan Africa , 2005 .

[8]  N. P. Gleditsch,et al.  Why Is There So Much Conflict in the Middle East? , 2005 .

[9]  R. Auty Conclusions: Resource Abundance, Growth Collapses, and Policy , 2004 .

[10]  M. Woolcock,et al.  The Social Foundations of Poor Economic Growth in Resource-Rich Countries , 2004 .

[11]  Léonard Wantchekon,et al.  Resource Wealth and Political Regimes in Africa , 2004 .

[12]  M. Moore Revenues, State Formation, and the Quality of Governance in Developing Countries , 2004 .

[13]  Michael L. Ross,et al.  What Do We Know about Natural Resources and Civil War? , 2004 .

[14]  J. Fearon Why Do Some Civil Wars Last So Much Longer than Others? , 2004 .

[15]  E. Neumayer Does the 'Resource Curse' Hold for Growth in Genuine Income as Well? , 2004 .

[16]  Benjamin Smith,et al.  Oil Wealth and Regime Survival in the Developing World , 2004 .

[17]  R. Auty Natural resources and civil strife: a two-stage process , 2004 .

[18]  M. Silberfein The Geopolitics of conflict and diamonds in Sierra Leone , 2004 .

[19]  K. Hamilton,et al.  Savings, Growth and the Resource Curse Hypothesis , 2003 .

[20]  Jeffrey M. Davis,et al.  Fiscal Policy Formulation and Implementation in Oil-Producing Countries , 2003 .

[21]  Arvind Subramanian,et al.  Addressing the Natural Resource Curse: An Illustration from Nigeria , 2003, SSRN Electronic Journal.

[22]  Michael Perelman Myths of the Market , 2003 .

[23]  Andrew MacIntyre,et al.  Institutions and the political economy of corruption in developing countries , 2003 .

[24]  J. Fearon,et al.  Ethnicity, Insurgency, and Civil War , 2003, American Political Science Review.

[25]  Dani Rodrik,et al.  In Search of Prosperity: Analytic Narratives on Economic Growth , 2003 .

[26]  Benn Eifert,et al.  The Political Economy of Fiscal Policy and Economic Management in Oil-Exporting Countries , 2002 .

[27]  Indra de Soysa,et al.  Paradise is a Bazaar? Greed, Creed, and Governance in Civil War, 1989-99 , 2002 .

[28]  Indra de Soysa Paradise is a Bazaar? Greed, Creed, and Governance in Civil War, 1989-99 , 2002 .

[29]  Thierry Verdier,et al.  Political Foundations of the Resource Curse , 2002 .

[30]  Ragnar Torvik,et al.  Natural resources, rent seeking and welfare , 2002 .

[31]  Marta Reynal-Querol,et al.  Ethnicity, Political Systems, and Civil Wars , 2002 .

[32]  Pauline Jones Luong,et al.  Energy wealth and tax reform in Russia and Kazakhstan , 2001 .

[33]  M. Sarraf Beating the resource curse : the case of Botswana , 2001 .

[34]  P. Collier,et al.  On the Duration of Civil War , 2001 .

[35]  M. Moore Political Underdevelopment: What causes ‘bad governance’ , 2001 .

[36]  Daron Acemoglu,et al.  An African Success Story: Botswana , 2001 .

[37]  S. Amin Imperialism and Globalization , 2001 .

[38]  P. Billon The political ecology of war: natural resources and armed conflicts , 2001 .

[39]  R. Auty The political economy of resource-driven growth , 2001 .

[40]  Michael L. Ross,et al.  Does Oil Hinder Democracy? , 2001 .

[41]  R. Auty Transition reform in the mineral-rich Caspian region countries , 2001 .

[42]  Michael L. Ross Timber Booms and Institutional Breakdown in Southeast Asia: Conclusion: Rent Seeking and Rent Seizing , 2001 .

[43]  Nicholas Sambanis,et al.  International Peacebuilding: A Theoretical and Quantitative Analysis , 2000, American Political Science Review.

[44]  R. Auty,et al.  Political economy of resource abundant states , 2000 .

[45]  Jake H. Sherman,et al.  Profit vs. Peace: The Clandestine Diamond Economy of Angola , 2000 .

[46]  D. Bevan,et al.  The Political Economy of Poverty, Equity, and Growth: Nigeria and Indonesia , 1999 .

[47]  Jens Weidmann Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth , 1999, SSRN Electronic Journal.

[48]  Jens Weidmann,et al.  Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth , 1999 .

[49]  Gwenn Okruhlik Rentier Wealth, Unruly Law, and the Rise of Opposition: The Political Economy of Oil States , 1999 .

[50]  R. Stubbs War and Economic Development Export-Oriented Industrialization in East and Southeast Asia , 1999 .

[51]  Michael L. Ross,et al.  The Political Economy of the Resource Curse , 1999, World Politics.

[52]  P. Collier,et al.  On economic causes of civil war , 1998 .

[53]  F. Gregory Iii Gause The Paradox of Plenty: Oil Booms and Petro-States , 1998 .

[54]  Dirk Vandewalle,et al.  Libya since Independence: Oil and State-building , 1998 .

[55]  D. Rodrik Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses , 1998 .

[56]  Raymond F. Mikesell,et al.  Explaining the resource curse, with special reference to mineral-exporting countries , 1997 .

[57]  Norio Usui Dutch disease and policy adjustments to the oil boom: A comparative study of Indonesia and Mexico , 1997 .

[58]  A. Wood,et al.  Exporting manufactures: Human resources, natural resources, and trade policy , 1997 .

[59]  John F. Clark Petro-Politics in Congo , 1997 .

[60]  Jeffrey A. Winters Power in Motion: Capital Mobility and the Indonesian State , 1996 .

[61]  J. Sachs,et al.  Natural Resource Abundance and Economic Growth , 1995 .

[62]  Graham A. Davis,et al.  Learning to love the Dutch disease: Evidence from the mineral economies , 1995 .

[63]  M. Salisu,et al.  Adjustment in oil-importing developing countries : a comparative economic analysis , 1995 .

[64]  R. Auty Industrial Policy, Sectoral Maturation, and Postwar Economic Growth in Brazil: The Resource Curse Thesis* , 1995 .

[65]  K. Chaudhry Economic Liberalization and the Lineages of the Rentier State , 1994 .

[66]  Hootan Shambayati The rentier state, interest groups, and the paradox of autonomy: state and business in Turkey and Iran , 1994 .

[67]  A. Gelb Oil Windfalls: Blessing or Curse? , 1988 .

[68]  Frederic C. Deyo,et al.  The Political Economy of the New Asian Industrialism ed. by Frederic C. Deyo (review) , 1987, Asian Perspective.

[69]  W. Max Corden,et al.  Booming Sector and De-Industrialisation in a Small Open Economy , 1982 .

[70]  T. Skocpol Rentier state and Shi'a Islam in the Iranian Revolution , 1982 .

[71]  J. Sachs,et al.  Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease" , 1982 .

[72]  B. Balassa,et al.  The process of industrial development and alternative development strategies , 1980 .

[73]  Jacques Delacroix,et al.  The distributive state in the world system , 1980 .

[74]  A. Krueger Trade Policy as an Input to Development , 1980 .

[75]  Gobind T. Nankani Development problems of mineral-exporting countries , 1979 .

[76]  P. Drake Natural Resources versus Foreign Borrowing in Economic Development , 1972 .

[77]  M. Watkins,et al.  A Staple Theory of Economic Growth , 1963 .

[78]  J. Levin The export economics: their pattern of development in historical perspective. , 1962 .

[79]  R. W. Bradbury The Export Economies. Their Pattern of Development in Historical Perspective , 1961 .

[80]  Walt W. Rostow,et al.  The Stages of Economic Growth: A Non-Communist Manifesto. , 1960 .

[81]  R. Nurkse TRADE FLUCTUATIONS AND BUFFER POLICIES OF LOW-INCOME COUNTRIES , 1958 .

[82]  Hans Kelsen Science and Politics , 1951, American Political Science Review.

[83]  J. Foster,et al.  Ecological Imperialism: The Curse of Capitalism , 2004 .

[84]  A. Rosser Why did Indonesia overcome the resource curse , 2004 .

[85]  K. Ballentine,et al.  The political economy of armed conflict : beyond greed and grievance , 2003 .

[86]  M. Woolcock,et al.  The Varieties of Rentier Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth * , 2003 .

[87]  A. Regan,et al.  The Bougainville Conflict: Political and Economic Agendas , 2003 .

[88]  Bumba Mukherjee,et al.  Comparative Political Studies , 2003 .

[89]  Léonard Wantchekon,et al.  Why do Resource Abundant Countries Have Authoritarian Governments , 2002 .

[90]  S. Ellis,et al.  Greed and Grievance: Economic Agendas in Civil Wars , 2001 .

[91]  J. Camilleri The political economy of the Asia-Pacific Region , 2000 .

[92]  Duffield Greed and Grievance: Economic Agendas in Civil Wars , 2000 .

[93]  W. Ascher Why Governments Waste Natural Resources: Policy Failures in Developing Countries , 1999 .

[94]  Léonard Wantchekon,et al.  Why do Resource Dependent Countries Have Authoritarian Governments ? ¤ , 1999 .

[95]  R. Vernon D. Michael Shafer, Winners and Losers: How Sectors Shape the Developmental Prospects of States :Winners and Losers: How Sectors Shape the Developmental Prospects of States , 1997 .

[96]  Robin Broad The political economy of natural resources: case studies of the Indonesian and Philippine forest sectors , 1995 .

[97]  D. Perkins,et al.  Social Capability and Long-Term Economic Growth , 1995 .

[98]  R. Auty Industrial policy reform in six large newly industrializing countries: The resource curse thesis , 1994 .

[99]  Richard M. Auty,et al.  Sustaining Development in Mineral Economies: The Resource Curse Thesis , 1993 .

[100]  James E. MahonJr. Was Latin America too rich to prosper? Structural and political obstacles to export‐led industrial growth , 1992 .

[101]  Marianne Cooper,et al.  Introduction and overview , 1988, J. Am. Soc. Inf. Sci..

[102]  David C. Wheeler Sources of stagnation in sub-Saharan Africa , 1984 .

[103]  H. Wallich Monetary problems of an export economy , 1978 .

[104]  Hans W. Singer,et al.  The Distribution of Gains between Investing and Borrowing Countries , 1975 .

[105]  J. Anjaria Strategy of economic development , 1971 .

[106]  Hussein Mahdavy,et al.  The patterns and problems of economic development in rentier states: The case of Iran , 1970 .