The Myth of the Resource Curse

idi120710.jpgWriting in Foreign Policy, Charles Kenny reviews several new studies which challenge the conventionally accepted “resource curse,” which proposes that natural resource wealth leads to civil conflict and authoritarianism.

Do kleptocratic regimes exploit natural resources to pad their bank accounts, buy off opponents, and purchase weapons to cow holdouts? Of course they do. Exploiting, padding, bribing, and bullying are what kleptocrats do best. But they are equal-opportunity exploiters. If natural resource rents aren’t available, they’ll find something else — and maybe do something worse to get it. For every Gen. Sani Abacha skimming billions off Nigeria’s oil wealth, there is a Field Marshal Idi Amin massacring Ugandans by the thousands without the aid or incentive of significant mineral resources.

Happily for those countries stuck atop piles of diamonds orlakes of oil, then, it turns out the resource curse must have been enchanted bya pretty feeble witch. Once you look at the evidence more carefully, theusual argument is turned on its head. Countries that rely on natural resourcesfor a large part of their output are indeed cursed — by poor qualitygovernment and an institutional environment that stifles the growth ofmanufacturing and services. That’s the good news for Afghanistan, Mozambique, and Papua New Guinea: Theywon’t necessarily get any poorer or more unstable thanks to their massivemineral reserves. But bad news follows, too: Given the comparatively weak stateof their current institutions, the countries are unlikely to use the moneygenerated to become the next Norway, either.

That’s why the most heraldedtalisman against the resource curse — improving institutions through greatertransparency and oversight — makes sense regardless.