Poor Little Rich Countries: Another Look at the 'Resource Curse'

Abstract

Resource-rich countries are plagued by macroeconomic crises known as ‘Dutch Disease’, which is associated with the inflation of local currencies on account of a large influx of foreign exchange and a dip in labor supply for non-traded goods. In developing countries, the historical context of state formation is often such that the revenues generated by natural resource exports bolster the stability of authoritarian regimes, and the dominant state actors consolidate their power by managing boom–bust cycles to avert crises. In the context of oil resources, with their special geopolitical significance, relevance for the environment, and enclave character, the primary producers face even more challenges, especially if they are relatively new players and are buffeted by geopolitical power games. Using Mexico, Venezuela and Angola as paradigmatic cases, the relevance of outside forces, domestic policies, and the opportunistic forms of engagement with external power chosen by local actors that produced tragic outcomes in each of these instances are examined.

Keywords: resource curse, dependency theory, extraversion, development