The Resource Curse Revisited

There is a curious phenomenon that economists call the resource curse - so named because, on average, countries with large endowments of natural resources perform worse than countries that are less well endowed. Yet some countries with abundant natural resources do perform better than others, and some have done well. Why is the spell of the resource curse cast so unequally?

Thirty years ago, Indonesia and Nigeria - both dependent on oil - had comparable per capita incomes. Today, Indonesia's per capita income is four times that of Nigeria. Indeed, Nigeria's per capita income (as measured in constant dollars circa 1995) has fallen.

A similar pattern holds true in Sierra Leone and Botswana. Both are rich in diamonds. Yet Botswana averaged 8.7% annual economic growth over the past thirty years, while Sierra Leone plunged into civil strife. The failures in the oil-rich Middle East are legion.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

Featured

http://prosyn.org/jfNuMbn;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.