The Resource Curse (Dutch Disease)
Observed economic phenomenon · Various academic studies (e.g., Auty 1993) (1993)
The resource curse (or paradox of plenty) is the observation that countries with abundant natural resources tend to have less economic growth and worse development outcomes than those without. The phenomenon is often attributed to currency appreciation (Dutch disease), governance failures, and economic mismanagement.
Core Concepts
The Problem
Resource-rich countries often become dependent on volatile commodity exports, leading to deindustrialization and political corruption.
The Claim
Prudent management, like Norway's sovereign wealth fund, can mitigate the curse.
Key Evidence
- •Many oil-rich countries like Venezuela and Nigeria have suffered stagnation
- •Norway's counterexample shows institutional design matters
Practical Implication
How a country manages a resource windfall determines its long-term prosperity, not the resource itself.
Nuance & Limits
The curse is not inevitable; it depends on pre-existing institutions, fiscal discipline, and diversification.
Source Material
Citation Density
Extensive in economics literature
Gaps
- ⚠ The exact mechanisms and necessary conditions for avoidance are still debated.
Citation Trend
Who's Talking About This
5 episodes reference this idea.
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