Resources curse thesis

This thesis critically examines the RCT from a political economy standpoint and establishes that the resource curse effects are the same outcome described by political economists in the s and s as the underdevelopment of development.

Unsourced material may be challenged and removed. A article by Thad Dunning argues that while resource revenues can promote or strengthen authoritarian regimes, in certain circumstances they can also promote democracy. The curse comes from the fact that this new industry that is bringing economic prosperity begins to negatively impact other parts of the economy by diverting available means of production and investment only to the new industry itself.

Resource-poor economies like SingaporeTaiwan or South Koreaby contrast, spent enormous efforts on education, and this contributed in part to their economic success see East Asian Tigers.

This is particularly the case with oil producing countries like Russia, Saudi Arabia and Venezuela. This Resources curse thesis has historically influenced the domestic economics of large empires including Rome during its transition from a Republic[ when? This process has been witnessed in multiple countries around the world including but not limited to Venezuela oilAngola diamondsoilthe Democratic Republic of the Congo diamondsand various other nations.

With a focus on alleviating the methodological biases of earlier studies, the authors find evidence which suggests that increasing reliance on natural resources promotes democratization, the opposite of what the Resource curse theory suggests. Colonial laws have effectively divested indigenous peoples of their ownership and property rights in natural resources, which the neo-colonial nation-states retained upon independence, which are then transferred to transnational corporations in exchange for licence fees and non-controlling equity.

Factories may close and businesses may flee, but petroleum and precious metals remain for the taking. Rentier state Research shows that oil wealth lowers levels of democracy and strengthens autocratic rule. The increasing national revenue will often also result in higher government spending on health, welfare, military, and public infrastructure, and if this is done corruptly or inefficiently it can be a burden on the economy.

The steps of the Dutch disease include: Human resources[ edit ] In many poor countries, natural resource industries tend to pay far higher salaries than would be available elsewhere in the economy. The Netherlands sought to tap this resource in an attempt to export the gas for profit.

Resource Curse

In many economies that are not resource-dependent, governments tax citizens, who demand efficient and responsive government in return.

The thesis concludes that the solution to the resource curse or underdevelopment is for natural resources-rich developing countries to reform their laws to allow majority ownership and control in their citizens and adopt policies that the now developed countries adopted and followed when they were at similar stage of development.

While resource sectors tend to produce large financial revenues, they often add few jobs to the economy, and tend to operate as enclaves with few forward and backward connections to the rest of the economy. For example, many oil-rich countries like Nigeria and Venezuela saw rapid expansions of their debt burdens during the s oil boom; however, when oil prices fell in the s, bankers stopped lending to them and many of them fell into arrears, triggering penalty interest charges that made their debts grow even more.

It has been argued rises and falls in the price of petroleum correlate with rises and falls in the implementation of human rights in major oil-producing countries. This section needs additional citations for verification. Real exchange rate increases, through capital inflows or the "Dutch disease" can make this appear an attractive option by lowering the cost of interest payments on the foreign debt, and they may be considered more creditworthy due to the existence of natural resources.

Resource extraction becomes the "default sector" that still functions after other industries have come to a halt. As imports become cheaper in all sectors, internal employment suffers and with it the skill infrastructure and manufacturing capabilities of the nation.

No doubt, coal mining provides opportunities for relatively high-wage employment in the region, but its effect on prosperity appears to be negative in the longer run. Subsequent tests find that oil-rich nations who experience nonviolent, mass-based movements provide better water and sanitation services than those who experience violent, mass-based movements.

Please help improve this section by adding citations to reliable sources. The so-called "aid curse" results from giving perverse political incentives on a weak body of civil servants, lowering politicians accountability towards citizens and decreasing economic pressure thanks to the income of an unearned resource to mitigate economic crisis.

The causation goes in the opposite direction: The resource curse theorists argue that, contrary to the assumptions of modernisation theory of the s and s that natural resources abundance would lead to rapid capital accumulation that would then lead to rapid industrialisation and usher in a stage of sustained economic growth, resource-rich developing countries have experienced regressive economic growth trends, systemic corruption, civil wars, political instability, and general decline in the standard of living and social wellbeing.

Successful natural-resource-exporting countries often become increasingly dependent on extractive industries over time. Abrupt changes in economic realities that result from this often provoke widespread breaking of contracts or curtailment of social programs, eroding the rule of law and popular support.

The concentration of capital, labor and economic resources to a single industry can leave countries vulnerable to a downturn in that industry.According to the resource curse thesis (RCT) of the s, a strand of development discourse informed by neoliberal development economics, natural resource-rich developing countries are cursed by their natural resources abundance, particularly minerals and petroleum.

Based on comparative statistics collected from the s to.

Resource curse

The evolution of the natural resource curse thesis: A critical literature survey. Author links open overlay panel Ramez Abubakr Badeeb a Hooi Hooi Lean a Jeremy Clark b. In practice, the resource curse thesis tends to focus on non-renewable natural resources following the lead of case studies first used to illustrate it.

1. Request PDF on ResearchGate | On Mar 1,Ramez Abubakr Badeeb and others published The evolution of the natural resource curse thesis: A critical literature survey. Florida International University FIU Digital Commons FIU Electronic Theses and Dissertations University Graduate School Escaping the Resource Curse:.

the Resource Curse Thesis particular emphasis in countries with non renewable natural resources, like mineralsandoil. Sustaining Development in Mineral Economies: The Resource Curse Thesis [Richard Auty] on *FREE* shipping on qualifying offers.

It is widely believed that natural mineral resources are desirable. However there is growing evidence that this may not always be the case. Indeed.

Resources curse thesis
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