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The Political Economy of the Resource Curse
Published online by Cambridge University Press: 13 June 2011
Abstract
How does a state's natural resource wealth influence its economic development? For the past fifty years, versions of this question have been explored by both economists and political scientists. New research suggests that resource wealth tends to harm economic growth, yet there is little agreement on why this occurs. This article reviews a wide range of recent attempts in both economics and political science to explain the “resource curse.” It suggests that much has been learned about the economic problems of resource exporters but less is known about their political problems. The disparity between strong findings on economic matters and weak findings on political ones partly reflects the failure of political scientists to carefully test their own theories.
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References
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63 Kornai, Janos, “The Soft Budget Constraint,” Kyklos 39 (1986Google Scholar).
64 The World Bank notes that privately owned tea plantations in both Sri Lanka and India are far more productive and profitable than state-owned tea plantations. See Bank, World, Global Economic Prospects and the Developing Countries (Washington D.C.:World Bank, 1996), 51Google Scholar.
65 In fact, when a state poorly enforces property rights to its natural resources, it may gain a comparative advantage in international trade; see Chichilnisky, Graciela, “North-South Trade and the Global Environment,” American Economic Review 84, no. 4 (1994Google Scholar).
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67 Evidence of a link between resource extraction and extralegal violence can be gleaned from William Reno's intriguing history of the diamond industry in Sierra Leone's Kono District, Corruption and State Politics in Sierra Leone (New York: Cambridge University Press, 1995Google Scholar). See also Jonathan C Brown's fine study of oil firms during the Mexican revolution, Oil and Revolution in Mexico (Berkeley: University of California Press, 1992Google Scholar).
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