What is the curse of natural resources?

What is the curse of natural resources?

WHAT IS THE RESOURCE CURSE? The resource curse (also known as the paradox of plenty) refers to the failure of many resource-rich countries to benefit fully from their natural resource wealth, and for governments in these countries to respond effectively to public welfare needs.

Why is oil a curse in Nigeria?

In Nigeria, oil has been more of a curse than a blessing. Weak institutions of state and poor governance in managing the vast revenues have led the country to fail to realise its full potential in a textbook example of what academics know as the “resource curse”.

What is the natural resource curse in Africa?

The Sub-Saharan Africa (SSA) region has become a classic case of the resource-curse phenomenon characterized by the abundance of natural resources, low economic development, and misuse of natural resources.

What is resource curse example?

Real World Examples of the Resource Curse Angola’s economy is extremely vulnerable to any large or sustained decline in the price of oil, since virtually all of the nation’s wealth is reliant on this one sector. In this sense, Angola may have been “cursed” by its large oil reserves.

How did resource curse affect Africa?

The resource curse is by no means limited to Africa, but the continent has produced some examples of the curse at its most destructive. Government forces and armed groups have vied for control of resources, with the proceeds from their sale funding more weapons, which prolongs the violence.

Is natural resources a curse or blessing?

Natural resources are a blessing for economic growth. The foreign scholar, Davis (1995), selected the proportion of mineral income in GDP as an indicator of resource abundance. The empirical results found that richer natural resources are more beneficial to economic growth.

What are the two main causes of oil curse?

The political and economic dysfunction known as the “oil curse” is a complex, structural phenomenon, caused largely by poor management or investment of oil revenues by the governments of oil-producing countries.

Is Nigeria a blessing or a curse?

In the case of Nigeria it has been a blessing since it has assisted in increased export and revenue generation which has been used for developmental purposes while on the other hand it has been a curse since the discovery of oil which has led to the neglect of other sectors of the Nigerian economy that would have …

Why is the resource curse a problem?

Reasons for resource curse Conflict leads to wasted resources, lost human capital and resources diverted away from productive investment.

Can the natural resource curse be turned into a blessing?

The natural resource curse may even become a blessing for very open economies. In section 3 we re-estimate these equations where we instrument institutional quality and openness with bilateral trade shares, distance to the equator, settler mortality rates, legal origin, and fraction of the population speaking English.

How do you solve resource curse?

Thus, the most common solutions proposed to help these states achieve this include (1) sound fiscal and monetary policies; (2) economic diversification; (3) natural resource funds; (4) transparency, accountability and pubic involvement; and (5) direct distribution to the population.

Is oil a blessing or curse to the Nigerian economy?

Who created the resource curse?

economist Richard Auty
The British economist Richard Auty coined the term “resource curse” in a 1993 book investigating why resource-rich countries under-performed other developing economies.