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. Why are natural resources a curse in africa, but not. The natural resource paradox dutch disease the norwegian paradox natural resources governance. Can the natural resource curse be turned into a blessing. Published in volume 49, issue 2, pages 366420 of journal of economic literature, june 2011, abstract. Is oil in nigeria a growth cure or a resource curse. The paradox of plenty 97 2 overseas development institute odi 2006 3 catholic relief services 2003. 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 notion of the resource curse goes back to the 18th century, but the realities are more complex. This paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources.
In recent years a number of african economies have seen an accelerated gdp growth rate. The empirical evidence suggests that either outcome is. This paper tests the hypothesis that whether natural resources are a curse or a blessing depends on the. Making natural resources into a blessing rather than a curse joseph e. 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. Article pdf available in journal of economic literature 492. The paradox of plenty 97 2 overseas development institute odi 2006 3 catholic relief services 2003 e africanbank 2007 ch4 111007. Resource curse the annual sales of oil and other natural resources in the future will be. Wayne nafziger of kansas state university in the us, natural resources, by themselves, are not a curse. From resource curse to blessing aug 6, 2012 joseph e. Aug 06, 2012 from resource curse to blessing aug 6, 2012 joseph e. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization and. Ragnar 2009 studies the differences between the countries for which the natural resources are either a blessing or a curse. May, 2011 abstract the literature on the impact of an abundance of natural resources on economic performance remains inconclusive.
Is natural resource abundance in africa a curse or a blessing. Yet, more recently resource rich countries, including many in africa, have performed worse than their resource scarce. In many cases the petroleum industry has played a pivotal role in this growth. It is fitting that the curse and the disease are puzzling to observers since natural resources should be a blessing, if managed correctly. The notion of the resource curse goes back to the 18th century, but the realities. Many african countries such as angola, nigeria, sudan, and the congo are.
Many economies in the developing world rely heavily on the export of minerals. 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. It appears that, on average, resourcerich countries have performed worse than those with smaller endowmentsquite the opposite of what might have been expected. The natural resource paradox countries with abundant natural resources. Natural resources 369 united arab emirates account for close to 10 percent of the worlds crude oil and 4 per cent of the worlds natural gas reserves but has turned its resource curse into a blessing ugo fasano 2002. Its time for africas leaders to address the problems that hinder the development of the continents natural resources. 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 empirical evidence suggests either outcome is possible. When used well, these resources can create greater prosperity for current and future generations.
Natural resources, for most poor countries, are deemed to be more of a curse than a blessing. Of course, he adds, theres bad stewardship of resources. Resource curse theoretical literature distinguishes between the direct and indirect effects of natural resources on economic growth. Are natural resources more of a curse than a blessing.
However, convincing empirical evidence that the natural resource curse is conditional on the quality of institutions has not yet emerged from crosscountry studies. Its government debt is very small, inflation is low, and hydrocarbon wealth has been used to modernize infra. Natural resources in a multiple growth regimes analysis maty konte greqamaixmarseille university this draft. 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. Historically, natural resources such as coal and iron played a critical role in the industrialisation of the western world. Has the management of natural resources really stunted the growth africas natural resources. 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. Exports of natural resources and changes in the growth of gdp per capita were analyzed. Resources and how best we can make these resources a blessing for the people of africa rather than a curse on the continent.
Escaping the natural resource curse and the dutch disease. We allow for interaction effects and provide evidence that the natural resource curse is particularly severe for economic performance. Africas natural resources can be a blessing, not an economic. Proper management addresses at least two challenges in a resource boom. Let us consider why transparency is crucial in the context of cambodias extractive. Stiglitz new discoveries of natural resources in several african countries including ghana, uganda, tanzania, and mozambique raise an important question. Richard jones discusses what the development of new nanomaterials will mean for such countries. Other resources, such as land or human resources,have more diffuse rents and do not seem to have such an effect. Stiglitz there is a curious phenomenon that economists refer to as the resource curse. The direct effect, commonly known as dutch disease, relates to. 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. In terms of intellectual history, this negative view of mineral and fuel abundance goes against much of the earlier thinking on the subject. We would not expect the discovery of vast natural resources to affect the uk in the same way as it would zimbabwe. Tw o lines of explanation have emerged to explain the natural resource curse.
The empirical evidence suggests that either outcome is possible. Why natural resources are a curse on developing countries and how to fix it. 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. Oct 25, 2012 are natural resources a blessing or a curse for developing countries. 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. 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. Are natural resources a blessing or a curse for developing. 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. The varied development outcomes associated with natural resource abundance are often explained as resulting from differences in institutional quality. The notion of the resource curse goes back to the 18th century, but the realities are more complex than the term might suggest. This paper argues against a natural resource curse for human development. 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.
Why are natural resources a curse in africa, but not elsewhere. The first focuses on how natural resources affect the econ. 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. While our results are consistent with those of other authors who have recently argued that natural resources do not. Why natural resources are a curse on developing countries and. 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. Testing of natural resources as blessing or curse to the.
Making natural resources into a blessing rather than a curse. The paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. Apr 30, 2012 why natural resources are a curse on developing countries and how to fix it. Africa is a region abundant in natural resources and rich in vast oil reserves. 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. First, it discourages rent seeking and internal conflicts of redistribution. After all, resource revenue is meant to be a blessing for cambodia. 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. Why natural resources are a curse on developing countries. 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. Africas natural resources can be a blessing, not an. There are concrete steps the international community can take to help break this curse. 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.
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