MGEC32H3 Chapter Notes - Chapter 3: Dutch Disease, Resource Curse, Autocracy
16 Apr 2016
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Document Summary
Discovery of natural resources in the context of poverty is paradoxical trap. Sometimes resource wealth contributed to conflict trap and even during peace, it fails to grow o o. The surplus from natural resource exports significantly reduce growth. Economists term the excess of revenues over all costs including normal profit margins rent and rents are damaging. Over time countries with large resource discoveries can end up poorer with the lost growth offsetting the one-off gain in income provided by rents. A large group of resource rich countries have enough income from resources to take the to middle-income status, but not beyond o o. To fully develop they would need to harness the resource wealth for growth. This has been difficult and the normal pattern has been stagnation or booms and busts around a pretty flat trend - 3rd group of resource-rich countries are poor o.
