Are natural resources bad for development? What causes the resource curse and how can it be overcome? This working paper from the Institute of Development Studies (IDS) surveys the literature on the resource curse and explores the different perspectives and recommendations which have informed the debate.
The evidence that natural resource abundance is associated with negative development outcomes is inconclusive. 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. Recommendations for overcoming the resource curse have not generally taken into account the issue of political feasibility. Scholars have been too reductionist in their approaches to resource curse issues and need to focus more on understanding variation in development outcomes and the associated policy lessons.
The resource curse has come to be seen as a multi-dimensional phenomenon, involving poor economic performance, civil war and authoritarianism. Different perspectives (economistic, behaviouralist, rational actor, state-centred, social capital, structuralist and radical) emphasise different causal mechanisms:
- Poor economic management is widely believed to be the immediate cause of poor economic performance.
- Natural resource abundance may encourage incorporation into the global capitalist system, impairing a country’s ability to pursue autonomous programs of economic development.
- Natural resource abundance contributes in different ways to the onset, duration, intensity and type of civil wars.
- Natural resource abundance hinders democracy through the use of government spending to limit the scope for political opposition and to reduce pressure for democratisation. It can prevent the cultural and social changes that facilitate democratisation.
Suggestions for overcoming the resource curse include: economic policy changes, political and social changes, bypassing the state, privatising natural resource sectors and taking action at the international level:
- Many of these recommendations are not always politically feasible. They assume a deterministic relationship between natural resource abundance, various pathologies and various negative developmental outcomes.
- Geo-political and geo-economic environments are crucial in the relationship between natural resource wealth and developmental performance. Greater attention needs to be given to the nature of the social contexts in resource abundant countries and the effects of natural resource wealth on social structure.
- A better understanding of the dynamics underpinning variation in resource abundant countries’ development performance is needed to inform the required policy, behavioural, institutional or social changes.
- In the meantime, it may be more profitable to focus on promoting change at the international level. The shift towards increasing aid flows bodes well for any attempt to create new international financial mechanisms for helping poor countries cope with international commodity price instability.
