Escaping the resource curse
In a new book Messrs. Humphreys, Sachs and Stiglitz explain why countries with lots of natural resources tend to do worse than countries with less resource wealth.
This vade mecum for governments advises on how to gain advantage over oil corporations and how to effectively redistribute (oil) revenues. Foreword by George Soros.
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This tragic irony is a cause for concern in some parts of Africa, especially Nigeria where i am from. Our natural resource endowment is truly a curse to the country to the extent that it has underdeveloped us because the sole reason why most of our leaders seek public office and state power is to loot oil proceeds to the detriment of teeming millions who live in abject poverty. It is therefore the prayer of every discerning Nigerian that we run out of the stock of these non-renewable resources so that our leaders become less corrupt and more innovative and make better use of our human resouce endowment who often flee abroad to further develop foreign economies that are already developed because they can't find fulfillment at home. It is a curse for any economy not to have working infrastructure in the twenty-first century! Where does development start from?
Posted by: Niyi Okesanjo | Jun 7, 2007 1:50:40 PM
Thanks for the pointer that the book's finally out. The Earth Institute has presentations of many contributors of the book on its website also:
http://www.earthinstitute.columbia.edu/cgsd/events/resource_curse_timetable.html
On a more substantive level - with due respect to heavyweights such as Sachs, Stiglitz and Humphreys - it does seem that a lot of discussion rehashes old debates on resource curse and how to alleviate it.
Perhaps the most interesting proposal is to create a 'virtual distribution' of resource rents, and the formula proposed by Martin Sandbu seems to have good potential (in theory at least): http://www.earthinstitute.columbia.edu/cgsd/events/documents/sandbu.ppt
Posted by: Chanakya | Jun 8, 2007 12:20:39 PM
I do completely subscribe to Niyi Okesanjo’s view except for the part where he says “It is therefore the prayer of every discerning Nigerian that we run out of the stock of these non-renewable resources” since there must be better ways around it than giving up.
In churches ask your priests to now and again to thank the Lord for the resources so that people can begin to understand that they are personally responsible for their use. One of the big contradictions of the resource curse is the numerous candidates that volunteer to release you from it.
In my country Venezuela I have started do disclose our national stupidity of every six years gathering to elect someone who to hand over our resources to just so that we have then have to spend the next six years begging him to give us… please! Some of it back.
Up here I have been praying for the help of setting a good example with the following paragraph:
While the USA is busy leaving Iraq why don’t they make themselves more useful and try to market a transparent oil revenue sharing system that pays out most of their oil revenues directly to the Iraqi citizens. Only the most politically analphabets would think it possible to establish some type of working democracy in a land where most of the central state revenues do not come through taxes. “Taxation Without Representation” in an oil rich country means just what it says “No Taxation, No Representation” and I should know it being from Venezuela. Come on, how many TV stations do you think Chavez would have even tried to close if he was not the sole owner of the state’s checkbook in the middle of an oil boom.
Posted by: Per Kurowski | Jun 11, 2007 1:36:53 PM
What probably worsens the natural resource curse in Nigeria is the "human resource curse." Just like the oil resource, Nigeria is also blessed with enormous human resource potentials which over the years has presented more problems than hopes. Nigerians are among the smartest and most talented people in the world. Everybody seems to be so good at what he does. Political leaders and public office holders get so perfected in the acts of mismanagement and corruption that the rest of the public, who equally are busy with their chosen endeavours, accept them,as the norm. For effective results, efforts at reversing the two resource curses should be made concurrently and equally. An alert and responsive public is essential for efficient resource revenue management and good governance.
Posted by: Michael Uzoigwe | Jun 26, 2007 4:44:59 PM
A March 5, 2008 post on the IMF's Public Financial Management Blog reviews at length this book and international experience with managing oil and natural resource revenues.
It concludes in particular that:
"before recommending the creation of additional “parallel” budgetary bodies and special contractual arrangements for the management of resource revenues, it could be useful first to:
* strengthen existing budgetary bodies and processes; and,
* evaluate whether these new institutions could undermine existing budget institutions and governance, and discourage reform of these systems, especially in low-income countries."
This review can be accessed at the following URL:
http://blog-pfm.imf.org/pfmblog/2008/03/the-pile-of-boo.html
Posted by: Michel Lazare | Mar 11, 2008 11:09:26 AM
I'm writing to bring to your attention a new study published by the HSRC Press, entitled 'Resource Intensity, Knowledge and Development: Insights from Africa and South America'. Edited by Dr Jo Lorentzen (Chief Research Specialist at the Human Sciences Research Council in South Africa), it is actually a series of studies that make the case for a fresh look at resource-strong economies. The publication shows the direct contribution that resource-based activities can make to the knowledge intensification of an economy at large. By focusing on the technological trajectories of firms and research teams in resource-intensive sectors in Brazil, Costa Rica, Peru and South Africa, researchers engage with the issue that what ultimately can contribute to growth is not an abundance (or lack) of natural resources, but what one does with it.
The publication begins with an overview on knowledge intensification in resource-based economies, before presenting the five detailed case studies. All are tackling the 'resource curse' you have written about in your blog.
The case studies were commissioned by the South African Department of Science and Technology (DST) with the aim of contributing to principles that would guide public policy in promoting resource-based technology clusters, and to explore the concept of lateral migration. It forms a part of the DST’s national research and development strategy to leverage know-how in resource-based industries to create new knowledge-based industries.
I think that the content would interest your readers enormously. We're an open access publisher - so you can access the studies at http://www.hsrcpress.ac.za/product.php?productid=2221.
Copies of all of HSRC Press published titles are available from leading booksellers, via amazon , via our sales agents and from our online bookshop at www.hsrcpress.ac.za.
Posted by: Karen | Jul 18, 2008 10:23:34 AM