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The Resource Curse: An Overview of Studies Andrew Rosser Introduction • Prior to the late 1980s, the conventional wisdom was that natural resources were good for development – It was thought resources would facilitate industrial development by providing domestic markets and funds for investment • However, since then dozens of studies have suggested that in fact natural resources are bad for development. • In this session, I will: – review what these studies have suggested about the nature of the resource curse; and – critically evaluate the evidence that they have presented for the existence of a resource curse.* *For an extended discussion of the issues raised in this paper, see Rosser (2006) • Three preliminary points: – The term ‘resource curse’ first used by Auty (1993) but it has a longer heritage. – The literature on the resource curse consists of several different sub-literatures (economic performance, poverty, civil war, regime type, gender inequality) – Different scholars use different definitions of ‘natural resource wealth’. The Nature of the Resource Curse • Studies of the resource curse have suggested that it is a multi-dimensional phenomenon. • Specifically, they have suggested that natural resource wealth (NRW): – – – – reduces economic growth limits exports of manufactured goods increases poverty levels increases the incidence, duration and intensity of civil war – increases the incidence of corruption – increases the risk of authoritarian rule – increases gender inequality The Evidence • The evidence in favour of the notion of a resource curse is strong. – lots of studies, big names • However, there are several reasons for treating the results of these studies with caution. – results not robust to changes in measure of NRW – ratio of NR exports to GDP may not be an appropriate measure of NRW – Several studies have suggested that the problem is specific natural resources rather than natural resources in general. • i.e. an oil curse rather than a NR curse • At the same time, the results in relation to specific natural resources are inconsistent – e.g. point source resources and civil war. Some suggest lootable resources more pernicious – Some studies have suggested that NRs may have a positive impact on development • especially in relation to human development indicators – A number of resource rich countries have been very successful in development terms: • e.g. Botswana, Indonesia, Chile, Malaysia – Finally, the studies have only shown that NRW and bad development outcomes are correlated with one another, not that the former causes the latter • direction of causation may be other way around • relationship between NRs and development outcomes may be spurious—i.e. there may be a third factor at work that shapes both • In sum, then, the evidence in favour of a resource curse is compelling but not conclusive. References Auty R. (1993) Sustaining Development in Mineral Economies: The Resource Curse Thesis, London: Routledge. Rosser A. (2006) The Political Economy of the Resource Curse: A Literature Survey, IDS Working Paper 268, Brighton: Institute of Development Studies.