Contents • • • • • • • • • • • • • • • • • • • Resource curse thesis [ ] The idea that resources might be more of an economic curse than a blessing began to emerge in debates in the 1950s and 1960s about the economic problems of low and middle-income countries. The term resource curse was first used by Richard Auty in 1993 to describe how countries rich in mineral resources were unable to use that wealth to boost their economies and how, counter-intuitively, these countries had lower economic growth than countries without an abundance of natural resources.

Sierra Vista Wedding Cakes. An influential study by and Andrew Warner found a strong correlation between natural resource abundance and poor. Hundreds of studies have now evaluated the effects of resource wealth on a wide range of economic outcomes, and offered many explanations for how, why, and when a resource curse is likely to occur. While 'the lottery analogy has value but also has shortcomings', many observers have likened the resource curse to the difficulties that befall winners who struggle to manage the complex side-effects of newfound wealth. Scholarship on the resource curse has increasingly shifted towards explaining why some resource-rich countries succeed and why others do not, as opposed to just investigating the average economic effects of resources. Research suggests that the manner in which resource income is spent, system of government, institutional quality, type of resources, and early vs.

Late industrialization all have been used to explain successes and failures. Economic effects [ ] The IMF classifies 51 countries as “resource-rich.” These are countries which derive at least 20% of exports or 20% of fiscal revenue from nonrenewable natural resources. 29 of these countries are low- and lower-middle-income. Common characteristics of these 29 countries include (i) extreme dependence on resource wealth for fiscal revenues, export sales, or both; (ii) low saving rates; (iii) poor growth performance; and (iv) highly volatile resource revenues. A 2016 meta-study finds weak support for the thesis that resource richness adversely affects long-term economic growth. The authors note that 'approximately 40% of empirical papers finding a negative effect, 40% finding no effect, and 20% finding a positive effect' but 'overall support for the resource curse hypothesis is weak when potential and method heterogeneity are taken into account.' A 2011 study in the journal found that 'natural resource wealth can be either a “curse” or a “blessing” and that the distinction is conditioned by domestic and international factors, both amenable to change through public policy, namely, human capital formation and economic openness.'

Dutch disease [ ]. Main article: Dutch disease first became apparent after the Dutch discovered a huge natural gas field in in 1959.

The Myth of the Resource Curse Gavin Wright and Jesse Czelusta. Lent to “resource abundance.” The elementary theory of international.

The Netherlands sought to tap this resource in an attempt to export the gas for profit. However, when the gas began to flow out of the country so too did its ability to compete against other countries' exports. With the Netherlands' focus primarily on the new gas exports, the Dutch currency began to appreciate, which harmed the country's ability to export other products. With the growing gas market and the shrinking export economy, the Netherlands began to experience a recession.

This process has been witnessed in multiple countries around the world including but not limited to (), (, ), the (), and various other nations. All of these countries are considered 'resource-cursed'. Dutch disease makes tradable goods less in world markets. Absent or a, appreciation of the currency can damage other sectors, leading to a compensating unfavorable. As imports become cheaper in all sectors, internal employment suffers and with it the skill infrastructure and manufacturing capabilities of the nation. This problem has historically influenced the domestic economics of large empires including during its transition from a Republic [ ], and the during the height of its colonial empire. To compensate for the loss of local employment opportunities, government resources are used to artificially create employment.