Resource Curse

21 Nov

I wrote a post where I wondered whether there could be any similarities between resource and aid. Today, I read a report that analysed the danger of the current rise in the price of oil for oil rich countries. The report is published by voxeu, and it is available here.

The article says

It is still not clear what exactly prevents resource-rich countries from making use of their resource endowments. The newly emerging consensus among economists is that resource abundance slows down, or may even revert, development of growth-enhancing institutions.

It goes on to say

Recently, it has been widely discussed by policymakers and the media. In particular, the New York Times’ columnist Tom Friedman’s formulated it as the First Law of Petropolitics: high oil prices stifle the development of democracy and political and economic freedom in oil-rich countries.

Generally, there is nothing new in the arguments advanced in the paper, but anyone who wants to know the opinion of economists on the effect of oil – and a rise in oil prices – on governance issues like transparency – both in the public and the private sector – and press freedom should have a look at it.

  • http://www.omodudu.com/ OMODUDU

    Makes a bit of sense. But one thing sure worse than petro money is not money at all. I guess it is an open debate. The growth in G = government size / spending which is unsustainable, bad spending habits aka Gowon and Leventis…Structure, structure structure..if Nigeria were in the middle of a genuine reconstruction (infrastructure and politics) then one could say more petro-money would be a good thing. The ability of a few leaders to steal large sums of money and now turn around to hold the country in hostage will get my number one vote for the negative mechanism thru which cheap capital could hinder growth…

  • http://www.omodudu.com OMODUDU

    Makes a bit of sense. But one thing sure worse than petro money is not money at all. I guess it is an open debate. The growth in G = government size / spending which is unsustainable, bad spending habits aka Gowon and Leventis…Structure, structure structure..if Nigeria were in the middle of a genuine reconstruction (infrastructure and politics) then one could say more petro-money would be a good thing. The ability of a few leaders to steal large sums of money and now turn around to hold the country in hostage will get my number one vote for the negative mechanism thru which cheap capital could hinder growth…

  • http://loomnie.com/ aitrai

    i don’t like the talk about ‘resource curse’ because it is, in addition to being much too parochial, indeed deviously simplistic and largely reflects the trickeries of those who would evade the vital business of engaging the glocalized politics surrounding south-derived resources. oil is a curse, but what about oil in norway? the logical upshot of the thesis of accursed resources is: give up your goddam mineral wealth to… you know whom!

  • http://loomnie.com aitrai

    i don’t like the talk about ‘resource curse’ because it is, in addition to being much too parochial, indeed deviously simplistic and largely reflects the trickeries of those who would evade the vital business of engaging the glocalized politics surrounding south-derived resources. oil is a curse, but what about oil in norway? the logical upshot of the thesis of accursed resources is: give up your goddam mineral wealth to… you know whom!

  • http://shakara.wordpress.com/ Random African

    the thesis which is “fear of predation generates secrecy” is kinda weak.
    and the regressions should be between similar countries with similar political climates. aka yes Norway and Canada should be compared to Sweden or UK and Nigeria and Angola to Zaire and Cameroon and Irak to Syria or Jordan.
    not that i don’t believe in the ressource curse but this isn’t how it works.

  • http://shakara.wordpress.com Random African

    the thesis which is “fear of predation generates secrecy” is kinda weak.
    and the regressions should be between similar countries with similar political climates. aka yes Norway and Canada should be compared to Sweden or UK and Nigeria and Angola to Zaire and Cameroon and Irak to Syria or Jordan.
    not that i don’t believe in the ressource curse but this isn’t how it works.