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Resource Impact - Curse or Blessing?
by Professor Paul Stevens
Abstract
Since the 1950’s, economists have been concerned that economies dominated by natural resources would somehow be disadvantaged in the drive for economic progress.
In the 1950’s and 1960’s, this concern was based upon deteriorating terms of trade between the “centre” and “periphery” (Prebisch, 1950 and 1964; Singer, 1950) coupled with concern over the limited economic linkages from primary product exports to the rest of the economy (Baldwin, 1966; Hirschman, 1958; Seers, 1964). In the 1970’s, it was driven by the impact of the oil shocks on the oil exporting countries (Neary & Van Wijnbergen, 1986; Mabro and Munroe, 1974; Mabro, 1980). In the 1980’s, the phenomenon of “Dutch Disease” (the impact of an overvalued exchange rate on the non-resource traded sector) attracted attention (Corden, 1984; Corden and Neary, 1982). Finally in the 1990’s, it was the impact of revenues from oil, gas and mineral projects on government behaviour that dominated the discussion (Ascher, 1999; Auty, 1990; Gelb, 1986; Stevens, 1986).
The common thread running through these concerns is that the development of natural resources should generate revenues to translate into economic growth and development. Thus the revenues accruing to the economies should provide capital in the form of foreign exchange overcoming what was seen as a key barrier to economic progress. This could be explained both in terms of common sense (more money means a better standard of life) and development theories (the requirement for a “big-push” (Rosenstein-Rodan, 1943 and 1961; Murphy et al., 1989), capital constraints (Lewis, 1955; Rostow, 1960) and dual-gap analysis (Joshi, 1970; El Shibley and Thirwall, 1981). However, the reality appeared to be the reverse. Countries with abundant natural resources appeared to perform less well than their more poorly endowed neighbours. Thus the term “resource curse” began to enter the literature (Auty, 1993).
More recently there has been a revival of interest in the phenomenon of “resource curse”. Furthermore, this has drawn the attention of a much wider audience than previously. Several factors explain.
Professor Paul Stevens
Centre for Energy, Petroleum and Mineral Law and Policy
University of Dundee
Dundee
UK
(added 26 June 2003)
