Abstract
While some countries have developed robust economies and high standards of living, along with stable and democratic political systems, others languish in poverty and are bedeviled by endemic corruption, authoritarianism, and violence. What explains this variation? The notion that there is a resource curse is perhaps the most counterintuitive and controversial hypothesis that has been tendered to address this question. Early work on the idea that oil and minerals doom countries to underdevelopment was largely inductive, building from observations made about Middle Eastern nations that experienced economic and political dysfunction in the face of bountiful resource endowments. The second wave includes authors who built stronger theories centered on the fiscal contract model of state building. The third wave saw scholars looking to establish the external validity of past claims about the resource curse using large-n data and statistical inference. Entries in the fourth wave share a strong focus on establishing causal inference. Within this set, a relatively recent group of scholars argues against the prevailing wisdom altogether. They cast doubt on the very existence of a resource curse.
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Notes
- 1.
There are several authors that focus on potential ways to ‘treat’ the resource curse, a topic that is not the main focus of this review. For those interested, Humphreys et al. (2007) is a useful starting point for exploring this literature. See also Darimani and Kebemba (2009) and Sala-i-Martin & Subramanian on how professionals in the policy world seek to address the so-called curse.
- 2.
This contrasts with those Marxists and dependency scholars who focused on class relations.
- 3.
Michael Ross (2015) cites Auty as the first person to use the term ‘resource curse’ in print.
- 4.
See also Ross (2012, p. 206) on this point.
- 5.
The first usage of this term is found in The Economist, 26 November 1977, p. 82, in reference to the decline in the Dutch manufacturing sector following the discovery of the Groningen gas field.
- 6.
Ross retreats somewhat from earlier claims made by him and others about oil’s negative impacts on economic growth, however. He argues that dependence on oil does not lead to negative growth, but instead that oil states are decidedly average in this category. This is itself a puzzle for Ross, given strong priors about how a resource windfall should negatively impact a national economy. Ross argues that oil may have an indirect slowing influence on growth by restricting economic opportunities for women. When women are kept out of the workforce, birth rates increase, resulting in slower per capita growth overall. Further, politicians are unlikely to enact policies to counteract oil’s volatile economic impact, both because of public pressure and because of selection of oil industry-friendly elites into office.
- 7.
Menaldo (2016) responds to this argument, however. He shows that, once oil income per capita is instrumented with giant oil field discoveries and measures of regional oil stocks, and oil exploration efforts are adequately controlled for, the post-1980s period yields no more evidence for a curse than any other period for which there are data. In fact, across both periods there is strong evidence of a resource blessing.
- 8.
The factor endowment approach entails exploiting variation in climate, soil quality, the size of the native population, and disease in order to explain contemporary variation in political and economic institutions. This is useful for addressing questions of the direction of the causal arrow between institutions and dependent variables such as economic growth and democracy. The approach has been used in political science for the last two decades, perhaps most prominently by Acemoglu et al. (2001).
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Gochberg, W., Menaldo, V. (2016). The Resource Curse Puzzle Across Four Waves of Work. In: Van de Graaf, T., Sovacool, B., Ghosh, A., Kern, F., Klare, M. (eds) The Palgrave Handbook of the International Political Economy of Energy. Palgrave Handbooks in IPE. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-55631-8_21
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