The Idea of "The Resource Curse"

1. Introduction


The resource curse is a term that was discovered by Richard M. Auty back in 1993. Auty explored this phenomenon in terms of how nations with rich resources often develop more slowly, more corruptly, more violently and more with authoritarian governments than others. The resource curse describes the phenomenon of how, when a poor country discovers vast natural wealth, other countries around the world are not impressed. Basically the resource curse entails how what should be a blessing turns out to be an incentive for conflict and corruption and, in the wrong hands, a source of ruin. In this research paper, an attempt will be made to discuss the idea of resource curse. Following this, an explanation of how the resource curse brings about political weaknesses as well as, military conflict in resource rich African economies. Finally, research on case studies focusing on Nigeria, Zimbabwe and Sierra Lorne will be applied in this research paper.
To what extend does the resource curse provide an explanation for political weaknesses and military conflict in resource rich African economies:
The resource curse is by no means limited to Africa, but the continent has produced some examples of the curse at its most destructive. Global history is full of illustrations of countries like Sudan, Nigeria, Angola and Netherlands whose natural-resource wealth resource curse in form of conflict, corruption, and poverty.

The Resource curse and political weaknesses


Corruption is one of the key causes of a resource curse. the process of mining and extraction of the natural resources is bedeviled with corruption right from the point of discovery of the resources to extraction and sale of the products. Officials of the mining companies bribe government officials in order to get protected from competitors. Additionally, revenue gained from the extraction of minerals is embezzled by governments, leaders of governments and sometimes even by individuals and corporations from foreign nations.
In countries where the paradox of plenty was experienced, poor governance was a major contributing factor. Governments of such countries were accused of poorly managing the wealth that emanated from the exploitation of the resources. Such governments relied heavily on revenue raised from such natural resources instead of investing and concentrating on in other sectors of their economies.
In countries where the paradox of plenty was experienced, poor governance was a major contributing factor. Governments of such countries were accused of poorly managing the wealth that emanated from the exploitation of the resources. Such governments relied heavily on revenue raised from such natural resources instead of investing and concentrating on in other sectors of their economies.
There is a political model which emphasises the behaviour and incentives of politicians. The importance of institutions suggests that the behaviour of politicians is fundamental to explain the differential economic performance of resource abundant countries. More concretely, the standard voting model is extended to give voters political control beyond elections. In this model, as in reality, citizens have instruments in addition to elections that allow them to avoid policies which could cause them large welfare losses. These considerations in the model are introduced by assuming that citizens can initiate a revolution. This introduces a new restriction into our political economy model; policies should not give rise to a revolution.
With this assumption in mind, current rulers in a country will face two types of potential threats. One comes from elections, the other from revolutions. Governments have two policy instruments at their disposal to use the proceeds from natural resources: a direct transfer or a subsidy for the investment in human capital, which has a positive spillover on the entire population. Whatever they do not use, they keep for themselves. Human capital increases the productivity of the population – which crucially includes the opposition and potential revolutionaries. In that case, the incumbent is afraid of education. An educated population is more prone to rebellion, because they know that if they do revolt successfully, they will manage resources more efficiently. In that scenario, they prefer to offer panem et circenses rather than a good math course to keep revolutions at bay.
Another important finding is that the model can explain why natural resources not only can reduce growth when institutions are weak, but they can also weaken political competition itself, making the circle even more vicious. This is not always the case, because there are several forces at work. As resources increase, the government can pay higher direct transfers, thus increasing its chances of winning.

The Resource curse and military conflict


Resource curse can lead to civil war. This is what has been experienced in countries like Sudan and South Sudan. This could be due to scramble for the resources and poor distribution of resources.

References

 

  • Auty, RM (1993), Sustaining Development in Mineral Economies: The Resource Curse Thesis, Routledge.