Oct 21, 2013

The Politics of the Resource Curse: a review

From a paper by Michael L. Ross
This essay discusses the intellectual roots of the resource curse lit- erature, explains how scholars define natural resources, and summarizes recent findings on how resource wealth affects democracy, the quality of government institutions, and the incidence of violent conflict. It suggests there is robust evidence that one type of mineral wealth, petroleum, has at least three harmful effects: it makes authoritarian regimes more durable, increases some types of corruption, and is associated with the onset of vio- lent conflict in low and middle income countries under certain conditions. The essay also points to some of the literature’s weaknesses, unresolved puzzles, and empirical challenges.
 Ross explains
Studies that take location into account, however, show different results: when it is found offshore, oil wealth has no robust relationship with on a countrys conflict risk; if it is onshore, it has a large effect, as seen in Figure ?? (Lujala, 2010; Ross, 2012). Moreover, the precise onshore location matters: oil is more likely to spark conflict when it is found in regions that are poor relative to the national average (Østby, Nordås and Rød, 2009) and populated by marginal- ized ethnic groups (Basedau and Richter, 2011; Hunziker and Cederman, 2012); when the resource is located in a region with a highly-concentrated ethnic group (Morelli and Rohner, 2010); and where ethnic entrepreneurs use it to promote collective resistance to the central government (Aspinall, 2007).
The conclusions are very interesting and the key and somewhat unanswered question is: What should be done?
He says
Many scholars have developed ideas about policy interventions, including greater transparency, sta- bilization and savings funds, community participation, cash payments to citi- zens, and alternative tax and royalty systems (Humphreys, Sachs, and Stiglitz 2007; Collier 2011; Moss 2012; Barma et al. 2011, Ross 2012). We have little systematic knowledge, however, about which policies work and under what con- ditions. A growing number of low and middle income countries particularly in Africa are likely to become oil or natural gas exporters in the next half-decade. The need for empirically-based policy advice is more urgent than ever before.

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