- tags
- Economics
Definition
The resource curse is a phenomenon in which countries with an abundance of natural resources, such as oil, minerals, and other raw materials, often end up with slower economic growth and less democratic governments than countries without such resources. This may be because the wealth generated by the exploitation of these resources is not distributed evenly and can lead to corruption, conflict, and social unrest. The resource curse is also referred to as the “paradox of plenty”. Countries with abundant natural resources may be wealthier on paper, but in reality, they often have lower levels of development and higher levels of poverty than countries with fewer natural resources.
The Dutch disease is an example factor that can contribute to the resource curse. Another factor is the “rentier state,” in which the government relies heavily on the income from the sale of natural resources, rather than on taxes and other forms of revenue. This can lead to a lack of accountability and transparency in the government, as well as a lack of investment in infrastructure and social services. Also the fluctuations in demand for the resource can also affect the country’s finance dramatically.
There are also issues related to the distribution of wealth from the exploitation of natural resources. In many cases, a small group of elites, such as large companies or government entities will benefit from the sale of natural resources, while the rest of the population may see little benefit. This can lead to social unrest and conflict.
Overall, the resource curse is a complex phenomenon that can have negative impacts on economic development, democracy, and social stability in countries with abundant natural resources.
Resource curse and renewable energies
The exploitation of renewable energy resources can still lead to issues related to the distribution of wealth and the potential for corruption. This could bring another challenge to the energy transition landscape, and the fight against the climate crisis.
For example, the development of large-scale renewable energy projects, such as wind or solar farms, can require significant investment and may result in the displacement of local communities. In some cases, the benefits of these projects may not be evenly distributed, and there may be concerns about the lack of consultation with local communities and the potential for corruption in the allocation of contracts.
In (Brunet et al. 2022), the authors use six case studies in four different regions of the African continent to identify symptomatic components of the resource curse for solar projects: (i) the possibility of conflictual situations, (ii) fragile local development, (iii) latent financial risk, and (iv) limited economic development leverage. These symptoms may or may not get compensated by the expected socio-economic benefits of more electricity production available from the grid.
Bibliography
- Carole Brunet, Michel A. Bouchard, Pierre Baptiste, Oumarou Savadogo, Youba Sokona, Nicolas Merveille. . "Will Solar Energy Escape the Natural “resource Curse”?". Energy Strategy Reviews 44 (November):101010. DOI.