Reference Entry

resource curse

Mark Neal

in A Dictionary of Business and Management in the Middle East and North Africa

Published online May 2019 | e-ISBN: 9780191843266

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A characterization of the negative consequences of a country possessing large mineral reserves. The term was first used by Richard Auty to express the ‘paradox of plenty’—that those states that have the largest petrochemical resources tend to have high corruption, low levels of personal freedom, little real democracy, high levels of media censorship, low levels of human capital development, and stifled levels of economic growth. The resource-curse thesis is grounded in the foundational observation that the political elites of resource-rich countries are reliant on mineral rents, but not reliant on their citizens as a taxation base. This encourages a social contract whereby people have little personal freedom or political representation, but are provided with employment, free health and education, and high levels of subsidies on such facilities as electricity, gas, and petrol. The resource curse sustains corruption and inefficiencies in the state and corporate sector, and leads to a lack of accountability throughout the political economy. These consequences of mineral endowment mean that the economic and social sustainability of these states is undermined from within. With entrepreneurship and economic diversification stifled, the ability for such economies to function and compete after the depletion of their resources is undermined....

Reference Entry.  200 words. 

Subjects: Business and Management ; Middle Eastern Studies

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