Resources curse thesis
Resources curse thesis
Unsourced material may be challenged and removed. Colonial laws have effectively divested indigenous peoples of their ownership and property rights in natural resources, which the neo-colonial nation-states retained upon independence, which are then transferred to transnational corporations in exchange for licence fees and non-controlling equity. Responsible use of financial hedges can mitigate this risk to some extent. This lack of investment exacerbates the negative impact of sudden drops in the resource's price. The curse comes from the fact that this new industry that is bringing economic prosperity begins to negatively impact other parts of the economy by diverting available means of production and investment only to the new industry itself. First, the donor community should extend the International Finance Corporation's recently updated transparency requirements for extractive industries to all bilateral development finance. The fate of such proposals, like so much in global economic governance today, will depend on whether they can win support from governments and corporations not only in the OECD world, but also within the dynamic emerging economies that are driving today's global growth. We also review more recent studies suggesting that the findings supporting the resource curse may reflect only empirical mis-specification. Finally, the Dodd-Frank Act of mandates annual reports by U. Based on comparative statistics collected from the s to the s, the resource curse theorists claim that natural resources-rich developing countries have performed very poorly in terms of economic growth leading to industrialisation and improvement in social welfare compared to resource-poor developing countries at similar stage of development such as Singapore, Taiwan and South Korea. Hooi Hooi Lean Abstract This paper surveys the literature of the natural resource curse hypothesis. Finally, the financial institutions that subscribe to the Equator Principles should "establish independent monitoring mechanisms" to ensure that their membership is actually living by these standards, rather than paying them mere lip service. Google Scholar Tsiang, S. Data for Syria and North Korea were unavailable.
Google Scholar Balassa, B. Innovation and investment in education were therefore neglected, so that the prerequisites for successful future development were given up.
Resource curse countries list
Other factors may include the volatility associated with commodity prices, which can have especially negative impacts on weak-state economies; and the underdevelopment of agricultural and manufacturing sectors during boom periods in resource-based economies. One study re-examined the Haber-Menaldo analysis, using Haber and Menaldo's own data and statistical models. Most obviously, easy resource revenues eliminate a critical link of accountability between government and citizens, by reducing incentives to tax other productive activity and use the revenue to deliver social services effectively. Harberger ed. Consistent with the use of force to gain power, positive price shocks also induce an increase in paramilitary violence and reduce electoral competition: fewer candidates run for office, and winners are elected with a wider vote margin. It reports that their conclusions are only valid for the period before the s, but since about , there has been a pronounced resource curse. Local ruling elites and foreign capitalists share the resources wealth, leaving the majority impoverished and their countries underdeveloped. Unsourced material may be challenged and removed. This lack of investment exacerbates the negative impact of sudden drops in the resource's price.
This is a preview of subscription content, log in to check access. Google Scholar Wood, A.
The same revenues also generate staggering wealth that facilitates corruption and patronage networks. These policies are the 'autarkic' policies rejected by the resource curse theorists but recommended by the political economists of the underdevelopment discourse.
Finally, the financial institutions that subscribe to the Equator Principles should "establish independent monitoring mechanisms" to ensure that their membership is actually living by these standards, rather than paying them mere lip service.
It is not clear whether the pattern of petro-aggression found in oil-rich countries also applies to other natural resources besides oil. Oil-rich Angola is a case in point.
Successful natural-resource-exporting countries often become increasingly dependent on extractive industries over time. Local ruling elites and foreign capitalists share the resources wealth, leaving the majority impoverished and their countries underdeveloped.
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