Resource curse

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The term resource curse ( English : resource curse ) or resource trap refers to the negative consequences that the abundance of natural resources of a country and its people can have. In particular, he describes the apparent paradox that economic growth in countries that export many mineral and fossil raw materials is usually lower than in countries that are poor in raw materials. The “ curse ” is based on the misconduct of the market participants concerned. In addition, the economy in countries with political instability, high levels of corruption and armed conflicts is reduced to local raw materials, which emphasizes their role. In this context one speaks of the continuation of colonial extractivism through post-colonial neo-extractivism.

thesis

For a long time it was assumed that the abundance of natural resources, especially oil , was fundamentally a blessing for a country and guaranteed development and prosperity. In the 1980s the idea emerged that this was more of a "curse" after hardly any third world country had managed to build up a processing export industry on the basis of its resources. In some cases agriculture even declined as a result of flourishing oil and mineral exports. Numerous studies, such as the well-known works by Jeffrey Sachs and Andrew Warner , have shown a connection between abundance of raw materials and low economic growth. However, the term resource curse was coined by Richard Auty in 1993 to describe why resource-rich countries, contrary to expectations, are often unable to use their wealth for an economic upswing .

Negative consequences

Silver inflation in Spain

An early example of the ambivalence of colonial exploitation through the unilateral promotion of extractive industries is the silver mining of Potosí , which began in the mid-16th century and led to massive silver exports to Spain there leading to inflation, the decline of the manufacturing sector and mass poverty . The coin deterioration also affected Germany.

The "Dutch disease"

Dutch disease is an economic phenomenon in which income from the export of raw materials increases the real exchange rate of the local currency. As a result, the manufacturing industry loses its competitiveness on the world market , which can lead to the de-industrialization of a country. The dependence of the economy on the export of raw materials, however, continues to increase in a vicious circle . The economy is becoming exceptionally susceptible to fluctuations in the price of raw materials, with the increase in productivity in raw material exports usually being less than in processing. Azerbaijan , which is dependent on income from oil exports, can serve as an example , whose economy has hardly developed differently because its currency, the manat , was completely overvalued. A collapse in revenues from the export of raw materials then leads - as in 2015 in Kazakhstan - to a sharp devaluation of the national currency.

Excessive debt

When the real exchange rate rises, be it through capital inflow (capital import) or through Dutch disease, then the interest on debt becomes cheaper. This encourages governments to accumulate debt even if they also have high revenues from commodity exports. As a rule, they expect even greater income in the future, for example through an increase in oil production quotas. However, if oil prices fall and the real exchange rate falls, the government will no longer have enough money to pay off the now relatively expensive debt. This also applies to commodity companies that have expanded their funding by issuing bonds (e.g. the Brazilian Petrobras ).

But the massive expansion of extractive industries to reduce dependency on imports can also cause problems for developed industrial countries, as the example of the US fracking industry shows. In recent years this has massively increased its funding, regardless of any funding quotas, but at the price of high debt by issuing debt securities in the billions. When the oil price fell in 2015 and even more sharply in 2020, fracking oil became unprofitable and the risk of default turned the bonds into scrap paper.

Commodity-rich countries try to counter this tendency by investing funds and making commodity income less sensitive to exchange rates through long-term investments abroad. The Alaska Permanent Fund , which was introduced by referendum in 1976, was the model for many such sovereign wealth funds . The largest fund of its kind, the Abu Dhabi Investment Authority , was also established in 1976. The Statens pensjonsfond of Norway is the world's largest fund of its kind, although Norway only ranks 13th among the oil producing countries.

Dictatorship and corruption

Many resource-rich countries are ruled by authoritarian or dictatorial and corrupt governments. In part, this is because the resource-rich sector often attracts large corporations, from which governments receive extensive bribes, or they can use the revenues from commodity exports to finance their retention of power. Examples of this development are Azerbaijan (oil and gas), Saudi Arabia (largest oil reserves in the world), Chad (oil), Gabon (oil), tiny Equatorial Guinea (oil), the president of which is said to have a private fortune of 600 Millions to 3 billion dollars, while the majority of the population lives on less than 2 dollars a day, furthermore Nigeria (oil) and Myanmar / Burma ( natural gas ), but also for democracies like Brazil . In view of the temporarily high profitability of limited natural resources, those in power tend to neglect economic diversity.

If the exploitation and export of raw materials only benefit a narrow elite, the wealth of resources contributes less to increasing general prosperity. In resource-rich developing countries there is a particularly large gap between rich and poor.

According to Michael Penfold, the example of Venezuela clearly shows the interaction between oil revenues and more or less stable political institutions. The change from a former military government to a stable democracy in the 1950s and political chaos to an authoritarian regime change afterwards cannot be explained by the oil revenues alone, but has to do with political action.

Political instability and armed conflict

Diamond mining in Sierra Leone

Developing countries rich in raw materials are often politically unstable or even affected by armed conflicts . Examples were the civil wars in Sierra Leone and Liberia ( West Africa ) in which it comes to sustainable diamond fields (and in the Liberian civil war also Edelhölzer went), the Iraq war , the decades-long civil war in Angola (the rebels of UNITA diamond-financed) and the Congo War , which was waged by various rebel groups and neighboring countries over the oil, diamond, gold, cobalt , cassiterite and coltan deposits of the Democratic Republic of the Congo and is still being waged by militias in the provinces of North and South Kiwu . After the end of the war in the Congo, the mining companies were then privatized under non-transparent conditions and sold to Western and Chinese investors at low prices. Today up to 2 million people also work in illegal mines and produce for the black market or smuggle the goods into legal mines in order to have them sealed there. Every second of the unapproved mines is controlled by a militia.

In numerous conflicts (e.g. in the civil war in South Sudan or the conflict in East Sudan ) that are attributed to religious and ethnic tensions, the distribution of the profits from the export of raw materials also plays an important role. In addition, income from raw materials (see blood diamonds and conflict raw materials ) is an important source of funding for weapons for local civil wars.

Neglect of education and health

Another possible effect of the resource curse is neglect of education or health systems. Countries that rely on raw material exports may neglect the education of their people as they see no need for it at the moment. In contrast, resource-poor economies, such as the so-called “ tiger states ”, have made enormous efforts in education, which has contributed to their economic success. Other researchers, however, contradict this conclusion. They argue that natural resources produce easily taxable returns, which could just as easily lead to increased spending on education.

Environmental degradation and poverty

Another consequence of the extraction of raw materials is inevitably a certain amount of environmental damage. Depending on the local awareness of the environment, the local environmental regulations and the more or less consistent enforcement, the degree of these environmental impacts can be very different. Affected are both the population and their livelihoods as well as nature with animals and plants and, last but not least, the landscape itself. In countries in which the population has little ability to assert itself against the ruling powers of government and business or is suppressed (i.e. Especially in developing countries, but also in more developed countries with a predominant focus on the interests of industrial companies and in regions where corruption is strongly represented), these environmental impacts are often very drastic.

These environmental impacts depend heavily on the respective raw material and are very diverse depending on the species. From the poisoning of rivers, and thus drinking water, to the contamination of arable soils, the pollution of the air by pollutants, the deforestation of entire regions with all the associated consequences (e.g. erosion ), to the disruption or even transformation of sensitive ecosystems the consequences are manifold. Corruption is an important intensifier for possible environmental consequences. For example, the pollution of the environment in the Nigerian Niger Delta by oil production is notorious . In the Amazon basin , especially in Ecuador , oil production leads to the destruction of the rainforest and the livelihoods of indigenous peoples . Gold mines such as the Yanacocha mine in Peru or the Ahafo mine in Ghana often require the forced relocation of thousands. In many cases, the resettled people do not receive adequate compensation for their land, which increases their poverty.

Due to the high demand for high-performance batteries for e-mobility, for example, since around 2015 lithium extraction has had the reputation of not only causing major environmental damage, but also triggering political crises by adhering to an extractive economic model that hinders development and the resulting conflicts over the distribution of wealth , for example in 2019 in Bolivia and Chile . This further intensifies international competition for the raw material.

Alternative declaration

Another explanation reverses the cause and effect - corruption, conflict and civil war reduce the local economy to the extraction and export of rare natural resources, the proceeds of which flow into the pockets of small elites, not the other way around; because the wealth of resources in many industrialized countries by no means hinders their economic success.

Empirical research

Numerous studies, such as the well-known works by Jeffrey Sachs and Andrew Warner , have shown a connection between abundance of raw materials and low economic growth. This disproportion is z. B. clearly using the example of the oil-producing countries. In the years from 1965 to 1998 the gross national income (formerly: gross national product ) per capita decreased in the countries of the OPEC by an average of 1.3%, while in the remaining developing countries the per capita growth averaged 2.2% .

A study by the British non-governmental organization Oxfam also found that the standard of living of people in resource-rich countries, measured by the human development index, is lower than would be expected based on statistical per capita income .

However, the development among the resource-rich countries also differs significantly in some cases. Oil was discovered in Ghana in 2008 and has been extracted since 2010. Budget discipline collapsed after oil sales began. In 2014 oil prices fell; today the proceeds, which were widely spread and not invested, are just enough to pay a quarter of the interest on the national debt. A counter-example to the resource curse phenomenon is the development of Norway , a stable constitutional monarchy with a parliamentary system of government and extremely low levels of corruption. In contrast to many African countries, there is no fragile administration here, and a state fund manages the wealth of raw materials there in the interests of the common good. Despite the oil wealth and considerable economic contrasts with other countries, the country was spared civil war and armed conflicts with its neighbors. The comparatively stable economic development of Malaysia is also considered exceptional . Possible reasons for this lie in the failure to comply with the IMF's liberal economic proposals for change , extensive investments in education and effective programs to promote minorities.

A study published in Stanford in 2007 found, when looking at long-term developments, a. in Mexico , Ecuador , Venezuela and Norway no statistically significant correlation between resource wealth and lack of democracy. The authors consider the opposite results of other studies to be fragile due to their findings. However, the growth crisis in the emerging economies has not contributed to further democratization due to the fall in raw materials and, in particular, the oil price since 2014, as the example of Venezuela illustrates.

See also

literature

  • Tom Burgis: The Curse of Wealth - Warlords, Corporations, Smugglers and the Looting of Africa , Westend, Frankfurt 2016, ISBN 978-3-86489-148-9

Web links

Individual evidence

The initial edits of this article are based on the article en: Resource curse .

  1. ↑ As described in the speech by Minister Dirk Niebel on October 6, 2010, archived copy ( memento of the original from December 6, 2010 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.bmz.de
  2. ↑ a b Jeffrey D. Sachs, Andrew M. Warner: Natural resource abundance and economic growth. , 1995. NBER Working Paper 5398 .
  3. ^ Richard M. Auty: Sustaining Development in Mineral Economies: The Resource Curse Thesis . London: Routledge, 1993.
  4. ↑ Slawa Obodzinskiy, The Dutch Disease using the Example of Azerbaijan , E-Book, GRIN 2009, ISBN 978-3-640-74203-5 .
  5. ↑ Wolfgang Müller: Oil Price: How Dangerous is the Crash for the World Economy? in: finanzmarktwelt.de, March 11, 2020.
  6. ↑ Interview with Joseph E. Stiglitz on misik.at ( Memento of the original from June 21, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. , November 20, 2006 @1@ 2Template: Webachiv / IABot / www.misik.at
  7. ↑ Elkhan Richard Sadik-Zada: . Oil Abundance and Economic Growth, Row: Bochum Studies in International Development, Vol 70. In: www.logos-verlag.de. UA-RUHR, November 7, 2016, accessed on November 30, 2016 (English).
  8. ↑ Thomas Seifert, Klaus Werner, Black Book Oil , series of bpb, vol. 588, Bonn 2006, pp. 190 ff. Gabon therefore held the world record in 1984 for the highest per capita consumption of champagne.
  9. ↑ a b bpb, Axel Harneit-Sievers: Raw materials for export , December 5, 2005
  10. ↑ The Curse of Wealth in the Congo. in: Handelsblatt, April 23, 2017.
  11. ↑ tagesschau: "A curse can turn into a blessing" , interview with raw materials expert Kristian Lempa September 24, 2009
  12. ↑ Jean-Philippe Stijns: Natural resource abundance and human capital accumulation , 2006. World Development, Volume 34, Issue 6, June, Pages 1060-1083. doi : 10.1016 / j.worlddev.2005.11.005
  13. ↑ The fall of Evo Morales , in: Der Tagesspiegel , November 11, 2019.
  14. ↑ Lithium mining in Chile - curse or blessing? , on: Deutsche Welle , April 28, 2018.
  15. ↑ Bolivia “practically dead as a lithium supplier” , in WirtschaftsWoche , November 12, 2019.
  16. ^ Tierney, John, Rethinking the Oil Curse. Comment from May 5, 2008 in the New York Times on: Linking Natural Resources to Slow Growth and More Conflict , CN Brunnschweiler1, EH Bulte. In: Science, Vol. 320, no. 5876, 2008, pp. 616-617.
  17. ↑ Fabian Urech: The oil has turned the government's head. In: NZZ , international edition, August 12, 2015, p. 6.
  18. ↑ Susanne Giese: Curse of the Oil . ( Memento of the original from June 15, 2011 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. In: D + C Development and Cooperation , Issue 5/2010, Tribüne, pp. 206–207. @1@ 2Template: Webachiv / IABot / www.inwent.org
  19. ^ Project Syndicate, 2007: The Miracle of Malaysia , Joseph E. Stiglitz
  20. ↑ Stephen Haber, Victor Menaldo: Do Natural Resources Fuel Authoritarianism? A Reappraisal of the Resource Course. Stanford Center for International Development, Working Paper 351, 2011.