Russia is Not ‘Cursed’ With Oil

Konstantin Simonov takes up the popular theme of Russia’s oil-based economy in the Moscow Times today with an angle I haven’t seen elsewhere as yet.  Political analysts tend to focus on the fact that Russia needs to diversify its economy away from commodities, and occasionally it’s said that a surplus of petrol money is cementing the current system in place by encouraging corruption and helping officials to get used to the piles of money coming their way.  If that were true, Simonov says, there are plenty of other countries (Canada, Australia and the U.S.) that could be said to be suffering from an oil curse: but they’re not.  The problem has nothing to do with petrodollars.  Simonov also usefully rubbishes the argument that the economy needs to diversify, pointing out that ‘manufacturing and service sectors dwarf the raw materials sector in terms of people employed‘ (though not the wealth garnered):
[T]here are many examples of countries whose economies were heavily reliant on raw materials but were able to diversity. Take, for example, the United States, which is one of the largest raw materials producers in the world. Last year, the United States replaced Russia as the world’s largest producer of natural gas, thanks in large part to its booming shale gas production. In addition, the United States is in second place for coal extraction and is the world’s third-largest oil producer. But proponents of the curse theory tend to downplay the United States as a leading global natural resource producer to avoid contradicting their theory.

Norway, Canada and Australia are three other good examples. They prove that stable democracies and effective public institutions make the resource curse virtually unnoticeable.