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Applied Mathematics
Applied Mathematics 1413
Eric Ball

THE POLITICAL ECONOMY OF THE RESOURCE CURSE By MICHAEL L.ROSS* Terry Lynn Karl. The Paradox ofPlenty: Oil Booms andPetro-States. Berkeley: of California University Press, 1997,342 pp. JeffreyD. Sachs and Andrew M. Warner. Natural Resource Abundance and Eco nomic Discussion no. 517a. Har Growth, Development Paper Cambridge: vard Institute for International Development, 1995,49 pp. D. Michael Shafer. Winners and Losers: How Sectors the Shape Developmental Prospects of States. Ithaca,N.Y.: Cornell University Press, 1994,272 pp. It isthe devil'sexcrement.We aredrowning in the devilsexcrement. ?Juan Pablo P?rezAlfonso, Founder OPEC We are inpart toblame, but this isthe curse of being born with a copper spoon in ourmouths. ?Kenneth Kaunday President of Zambia in we water. All all,wish had discovered ?Sheik Ahmed Yamani, Oil minister, SaudiArabia does a state's natural-resource wealth influence its economic HOW For the years, versions of this development? past fifty question have figured prominently in debates over dependency theory, economic a New International Economic East Asia's dualism, proposed Order, success, and Africa's Since the late 1980s, economists and po collapse. litical scientists have produced a flood of new research thatbears on this There isnow evidence that states with abundant re question. strong source wealth less well than their resource-poor counterparts, perform but there is littleagreement on why this occurs. At first the role of resource wealth in economic glance, development looks like a of In 1970,80.4 percent of question dwindling importance. the developing world's export earnings came from primary commodi *For their comments on earlier drafts this I am to generous of article, grateful ChrisAchen, PradeepChhibber, RichardDoner, Robert Franzese,SuziKerr,iriam Lowi, Robert Pahre,Jeffrey Vincent, Jenniferdner, and two anonymous reviewers. WorldPolitics51 (January 1999), 297-322 298 WORLD POLITICS ties; 1993 ithad to 34.2 But most of this was by dropped percent. drop caused by the fast growth of manufactured exports inEast Asia and a handful of Latin American states.Three-quarters of the states in sub Saharan Africa and two-thirds of those in Latin the America, Caribbean, North Africa, and theMiddle East still on depend primary commodities for at least half of their export income.1 For these coun tries the "resource curse" isan urgent puzzle. In this article I review efforts both economists and scien by political tists to explain how the export of minimally processed natural resources, including hard rock minerals, petroleum, timber, and agricultural com influences economic first summarize the evidence modities, growth.21 for a resource curse and review new research on the four most promi nent economic explanations for the curse: a decline in the terms of trade for primary commodities, the instability of international commodity the economic between resource and nonresource markets, poor linkages sectors, and an ailment commonly known as the "Dutch Disease." I then review efforts to explain the political aspects of the resource seem to their curse?why resource-exporting governments manage economies so Most fall into one of three poorly. explanations categories: cognitive explanations, which contend that resource booms produce a type of short-sightedness among policymakers; societal explanations, which that resource tend to or argue exports empower sectors, classes, interest groups that favor and state-centered growth-impeding policies; explanations?including recent books by D. Michael Shafer and Terry resource to state Lynn Karl?which contend that booms tend weaken institutions. In the third and final section, Idiscuss two other explanations for the curse that might be fruitfully explored, butwhich have received little attention. The first would attribute the curse to state explanation owned which resource extraction indevel enterprises, typically govern oping states. The second suggests that a state's inability to enforce or property rights may directly indirectly lead to a resource curse. 1United Nations Conference onTrade and Development (UNCTAD), Commodity Yearbook 1995 (NewYork United Nations, 1995). 21have omitted the extensiveliterature the ofresourceextraction deliberately sociologicaimpact on localommunities. Important recentworks include:Bradford Barham, Stephen G. Bunker, and Dennis O'Hearn, eds.,States, Firms,d Raw Materials: TheWorld Economy and Ecology ofluminum (Madison:Universityofisconsin Press,1994);Stephen G. Bunker, UnderdevelopingtheAmazon: Ex traction, and theailure theodern State (Urbana: of IllinoiPress, ScottuFrickelandWilliam R. of the Past: HistoricaContext and the 1985); Freudenburg, "Mining Changing Implications ofNatural Resource Extraction,"Social Problem43 (November 1996); and Nancy Lee Peluso,RichForests,oor People:ResourceControland ResistanceinJava (Berkeley:niver sityofCaliforniaPress, 1992). POLITICAL ECONOMYOF THE RESOURCE CURSE 299 From the 1950s to the 1970s, the question of resource wealth was at the center of debates between mainstream scholars and development their Marxist and non-Marxist critics. Since then, the study of resource more wealth and development has grown less ideological and empiri cal, and the of the work has Yet quality empirical improved sharply. with the ideological stakes lowered, research on this topic has grown economists and scientists seem to be lamentably fragmented: political unaware of each others' contributions, and political scientists are often area to divided by their specialties. One purpose of this article is better scholars with each others' work, and to show how recent stud acquaint ies from awide range of subfields can cast light on the special problems of resource exporters. A second aim is to compare the approaches of economists and polit to ical scientists this iss
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