The Political Economy of the Resource Curse

TLDR

For the past fifty years, scholars have examined how natural resource wealth affects economic development, with recent studies indicating a harmful impact on growth but little consensus on the underlying causes. This article reviews recent economic and political science explanations of the resource curse, aiming to clarify how resource wealth influences economic development and to identify gaps in understanding its political consequences. It surveys a wide range of theoretical and empirical studies from both disciplines that attempt to explain the resource curse, noting that economic explanations are more developed than political ones. Recent research shows that resource wealth tends to harm economic growth, yet agreement on the mechanisms is weak, and the literature reveals stronger evidence for economic than political effects.

Abstract

How does a state's natural resource wealth influence its economic development? For the past fifty years, versions of this question have been explored by both economists and political scientists. New research suggests that resource wealth tends to harm economic growth, yet there is little agreement on why this occurs. This article reviews a wide range of recent attempts in both economics and political science to explain the “resource curse.” It suggests that much has been learned about the economic problems of resource exporters but less is known about their political problems. The disparity between strong findings on economic matters and weak findings on political ones partly reflects the failure of political scientists to carefully test their own theories.