"Resource Blessed"?

Many political scientists argue the lack of democratic institutions, poor economic growth and prolonged state of conflict characterizing many African states can largely be attributed to the “resource curse”.  In “Beyond the Resource Curse”, Brenda Shaffer argues that countries with abundant resources are hindered by the economic value placed on such resources.  States fail to establish institutions to tax, monitor, regulate or promote other sectors of the economy.  For leaders in African states such as Ethiopia, short-term interests of the mining sector outweigh long-term interests of the nation.  The resource curse facilitates the proliferation of myopic policy makers, privileged social groups and weakened state institutions. This issue is of relevance because failing to mitigate the “resource curse” will undoubtedly lead to increased conflict and political and economic instability within sub-Saharan Africa.

In “Recipes for Overturning Africa’s Resource Curse to Blessing”, Ethiopia’s Mines Minister argues that Africa has entered a phase of development in which the continent has become “resource blessed”.  Claire Short, Claire Short, former U.K. Development Secretary and Chair of the Extractive Industry Transparency Initiative (EITI), is skeptical of Sinkinesh Ejgu’s optimism regarding African countries rich in resources. She asserts that though Ethiopia has a conducive environment for private investors, African leaders need to implement policies that are “development-oriented”.  Influential political figures such as Ethiopia’s Mines Minister, Sinkinesh Ejgu, need to partner with private investors committed to exercising corporate social responsibility.

In “The Political Economy of the Resource Curse” Ross argues that price fluctuations, declining terms of trade and unstable commodity markets caused by valued resources explain low-development in countries like Ethiopia. The Dutch Disease is an effect of the paradox of plenty.  When a nation has an abundance of natural resources, the other tradable sectors of the economy experience a “crowding out” effect.  Ross explains the Dutch Disease as caused by an influx of foreign capital and a decrease of competitiveness in other sectors of the economy.

In economies that are not resource dependent, governments tax citizens and citizens demand efficient and responsive governments in return.  In rentier states, however, citizens are poorly served by government.  The rentier state theory is often contested in political discourse because the mechanisms between resources and economic development are often unclear.  In countries with abundant resources, however, that the taxation effect and the spending effect prevent group formation and collective action goes largely uncontested. In order to ensure Ethiopia continues on the path to becoming “resource blessed”, it is vital that leaders ensure diversified economic development. Whether these leaders choose to make moral decisions regarding economic development, may be irrelevant in the wake of the modernization effect.  Rising education levels and rising occupational specialization amongst citizens in sub-Saharan African countries will undoubtedly have a positive correlation with polity scores.

African Development Bank Group “Recipes for Overturning Africa’s Resource Curse to Blessing”. October 24, 2012.

Ross, Michael. “The Political Economy of the Resource Curse”. World Politics 51 (January 1999)

Shaffer, Brenda and Taleh Ziyadov. “Beyond the Resource Curse" (University of Pennsylvania Press, 2012)