The resource curse without natural resources: expectations of resource booms and their impact

Many resource-rich countries have experienced a range of negative economic and political effects from natural resource extraction, often lumped together as the ‘resource curse’. This article investigates to what extent expectations of future natural resource booms in So Tom Principe and Madagascar led to ‘resource curse’ effects, even though these countries did not experience the expected booms. It finds that both countries experienced resource curse effects as a result of future expectations, including volatile economic growth and eroded governance. The article demonstrates that shared aspirations and expectations alone may make for material political and economic outcomes even when they become visibly divorced from reality. Thus, there is much more to resource curse effects than simply the product of the material extraction of natural endowments. At a time of extremely volatile prices for primary commodities, and the relatively easy availability of investment capital and credit to support speculative ventures that in turn incentivize resource hype, it is likely that a growing number of countries may suffer the malign effects of a resource curse without natural resource extraction. Notes, ref., sum. [Journal abstract]

Title: The resource curse without natural resources: expectations of resource booms and their impact
Authors: Frynas, Jedrzej George
Wood, Geoffrey
Hinks, Timothy
Year: 2017
Periodical: African Affairs: The Journal of the Royal African Society (ISSN 1468-2621)
Volume: 116
Issue: 463
Pages: 233-260
Language: English
Geographic terms: So Tom and Principe
Madagascar
External link: https://doi.org/10.1093/afraf/adx001
Abstract: Many resource-rich countries have experienced a range of negative economic and political effects from natural resource extraction, often lumped together as the ‘resource curse’. This article investigates to what extent expectations of future natural resource booms in So Tom Principe and Madagascar led to ‘resource curse’ effects, even though these countries did not experience the expected booms. It finds that both countries experienced resource curse effects as a result of future expectations, including volatile economic growth and eroded governance. The article demonstrates that shared aspirations and expectations alone may make for material political and economic outcomes even when they become visibly divorced from reality. Thus, there is much more to resource curse effects than simply the product of the material extraction of natural endowments. At a time of extremely volatile prices for primary commodities, and the relatively easy availability of investment capital and credit to support speculative ventures that in turn incentivize resource hype, it is likely that a growing number of countries may suffer the malign effects of a resource curse without natural resource extraction. Notes, ref., sum. [Journal abstract]

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