The Resource Curse: Fact or Myth

Resource-rich nations show repetitive patterns of governmental and economic malaise. But it may be misleading to attribute a country’s problems to just one factor.


International economics and international environmental studies have been recently preoccupied with the resource curse theory. This theory is based on data indicating that countries endowed with valuable natural resources — especially oil, gas, and minerals — face a specific set of socioeconomic issues, including inhibited economic development and a greater incidence of armed conflict.

Resource-rich countries tend to be prone to authoritarian rule, in part because their governments rely on taxing resource-extractive industries rather than their citizens. Untaxed citizens naturally are less aware of how government money is being spent. Authoritarian governments will bypass health, education, and social services to pour funds into government salaries, inefficient fuel subsidies, large monuments, and graft. Labor and capital that would normally be diversified across the country is funneled into the country’s resource extraction industry. This impedes full economic development and impacts women’s role in the workplace as well. Authoritarian regimes typically suppress a woman’s right to gainful employment. And, because reliance on only one resource creates a volatile market, the country can be trapped in boom-and-bust cycles.

The term petro-aggression applies to the theory that countries with petroleum-dependent economies are 50100% more likely to experience both international conflict and civil war. Iraq’s invasion of Kuwait in 1990 has been cited as an example of international conflict deriving from competition over natural resources. Given the number of factors in play, however, it is difficult for researchers to compile definitive cause-and-effect data about armed conflict.

The Brookings Institute published a study in 2020 that examined the validity of the resource curse theory over time, going back to 1970. Resource-rich countries in the 1970s were shown to have achieved elevated levels of human development, human capital accumulation, tertiary school enrollment, and public capital per person, but their development of effective institutions was impeded. Additionally, the study showed that dependency on a natural resource, as opposed to abundance within a diversified economy, was a prime factor in a country’s experience of the resource curse — particularly with respect to ensnarement in the boom-and-bust phenomenon.

The validity of the resource curse theory is still in question. Much depends on the time period being studied, and on what might be considered causation versus correlation. According to the Brookings study, armed conflict, authoritarian rule, and socioeconomic issues in the 1970s were not immediately associated with resource endowment. This association having developed over time, the question arises whether resource endowments are truly the cause of these problems, or if the problems themselves impact a government’s structure and economy. While reliance on a natural resource may contribute to these issues, direct causation is a hard claim to prove. Researchers must look beyond resource endowment and consider many additional factors when evaluating dysfunction in government, economy, and society. 

Like it? Share with your friends!

Megan Crimmins
Megan is a senior at Boston University from Prescott, Arizona with a dual degree in Environmental Analysis & Policy and International Relations.


Leave a Reply