Resource curse

The resource curse, also known as the paradox of plenty or the poverty paradox, is the phenomenon of countries with an abundance of natural resources (such as fossil fuels and certain minerals) having less economic growth, less democracy, or worse development outcomes than countries with fewer natural resources. There are many theories and much academic debate about the reasons for and exceptions to the adverse outcomes. Most experts believe the resource curse is not universal or inevitable but affects certain types of countries or regions under certain conditions. As far back as in 1711, The Spectator noted, "It is generally observed, that in countries of the greatest plenty there is the poorest living." The idea that resources might be more of an economic curse than a blessing emerged in debates in the 1950s and the 1960s about the economic problems of low and middle-income countries. In 1993 Richard Auty first used the term resource curse 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. An influential 1995 study by Jeffrey Sachs and Andrew Warner found a strong correlation between natural resource abundance and poor economic growth. As of 2016, hundreds of studies have 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 lottery winners who struggle to manage the complex side-effects of newfound wealth. As of 2009, 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.