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Lecture 6

IDSB01H3 Lecture Notes - Lecture 6: Resource Curse

International Development Studies
Course Code
Liang Chen

of 9
IDSB01 Lec 6
Admin Stuff
- Midterm
oStudy: up to and including today’s class + movie
oMost common question: what different weight should I give to sources of
information in course? (Lectures + his lecture notes + readings)
Essay-type questions draw on all 3 sources
Usually good if you have lectures, but better with readings
Compare his answer to answer you have, might be different but
thats ok, no right answer
Dont worry about formal essay structure, somewhat concerned
with order of ideas, but no worry about intro/body/conclusion
Advise: jot down your points on the side and just string together in
the essay
Short-answer questions draw much more on readings
Greater share would be unable to answer if you dont read
Sometimes list but always explain, anything is fair game
i.e. for what reason is the IMF created?
oDont worry about names, numbers (good if you can mention, but no big)
oOften asks for definitions / meanings of things
If its just mentioned once in passing in the reading, no worries, but if its
the subject of discussion in readings, you should know the issue/word
oWarning: dont spend excessive amounts of time on short answers, make
sure you budget your time according to mark budgets (i.e. if a question is
worth 25% of midterm, you spend 25% of time on it)
oHanded out in class, if still not received available by appointment (check intranet)
-Tutorial next week for individual brief essay review; movie this week
-IDS Student Association
oGulu Walk (Oct. 25th 11 3pm) *to help other people in programs and
rehabilitation of kids that are ex-child soldiers*
-/+ + + + +
-Q = f(NR, KP, KH, L, technology, etc) Development Equation
oSummarizes level of output/GDP via natural resources, natural capital, human
capital, labour force, tech, and other stuff
oThe more of you have stuff, the better your GDP should be (i.e. more capital 
better in terms of more output) in principle
oToday’s focus: natural resources
oFindings in last 20 years: having more natural resources isnt always a good
thing. WHY??
The Natural Resource Curse
- More of certain type of resources the worse you can be
oMinerals (i.e. not agricultural land)
-The more minerals you have in 1960, the slower you will develop over the next 20 40
oHaving more minerals at the start perch your development
-The Natural Resource Curse
oContrary to popular belief, having more natural resources is not a blessing
oMain message: if you have a lot of natural resources, you are at risk of doing
badly unless you know what youre doing; not a guarantee of failure
-Natural resource countries are the hardest to govern
oSouth America, some African countries
oSubject of threats as opposed to other countries
-Does that mean that not having natural resources is a blessing?
oJapan, South Korea, Taiwan
-2 conclusions:
oOn average, having a lot of natural resources is not a blessing
oEconomic performance among natural resource countries vary very widely
Some can do very well, some do really badly
High variance of performance within that group
Countries with less resources have variances too, but smaller gap
Natural Resource Countries
-Bad Countries
oA lot of countries do badly
Bad ones include:
oIncome distribution is particularly unequal (large differences between rich and
In terms of income and spread of minerals
-Why are the outcomes so different in natural resource countries? (i.e. what goes wrong?)
oExploitation of resources
oHad oil not been found, some countries would have probably gone to
manufacturing (i.e. Middle-East)
Having oil in those countries deterred development of other things. Why?
4 Elements of the Natural Resource Curse