Why Do Countries Become/Remain Democracies? Or Don’t? (8): The Resource Curse

The resource curse refers to the claim that some countries with lots of natural resources tend to do worse than countries with less resource wealth, worse in two respects: less economic growth and prosperity and less political stability and respect for basic rights.

Reliance on natural resources is said to inhibit development, political and institutional stability, anti-corruption efforts and legal protection for human rights.

Now, the important thing to stress here is that reliance on resources can lead to negative consequences, but doesn’t necessarily have to. Not all resource-rich countries are “cursed”. There’s a paper here arguing

that the natural resource curse burdens non-democracies, but countries with better democratic institutions are not corrupted by such endowments. For governments accountable to their citizens, resources can be a blessing.

The paper does not demonstrate that there’s a linear relationship between higher levels of corruption and natural resources. The dispersion of countries is very wide. Norway and Iraq are more or less on the same level of resources, but on opposite extreme of corruption, and the same is true for many other countries.

So, natural resources do not produce corruption or a resource curse in any mechanical or deterministic way. Some third element is necessary for the curse to take place. The paper cited above argues

that strong democratic institutions help to moderate the effect of natural resources on corruption. In figures, we split the sample into democratic and non-democratic countries. These suggest that the negative relationship between natural resources and the corruption index prevails in the sample of non-democratic countries but not in the sample of democratic countries… the relationship between natural resource rent and corruption depends on the quality of the democratic institutions… These findings imply that resource-rich countries have a tendency to be corrupt, because resource windfalls encourage their governments to engage in rent seeking. However, history shows that countries discovering natural resources after they have established well-functioning democratic institutions tend to handle the scourge of corruption much better.

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2 thoughts on “Why Do Countries Become/Remain Democracies? Or Don’t? (8): The Resource Curse

  1. am a author and i wonder if u can help me to get reports, researches, general informations about resources curse

    please send on attachment infos which can be downloaded or send via post on flas disk etc to;-

    Michael M,
    Box 62769,
    Dsm, Tanzania

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