Natural Resource Curse Thesis

Natural Resource Curse Thesis-34
Therefore, these theorists conclude that the solution to the resource curse is 'free market' policies epitomised by the Washington Consensus.

Therefore, these theorists conclude that the solution to the resource curse is 'free market' policies epitomised by the Washington Consensus.

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A commonly cited example of the resource curse is the Dutch disease, a situation that occurred in the Netherlands following a large natural gas find. Skilled workers from other sectors transfer to the resource sector4.

Higher wages make the national currency less competitive5.

The resource curse is most often witnessed in emerging markets following a major natural resource discovery.

The resource curse gets its name from the binary way in which it affects an economy.

The resource curse is a paradoxical situation in which countries with an abundance of non-renewable natural resources experience stagnant economic growth or even economic contraction.

The resource curse occurs as a country begins to focus all of its production means on a single industry, such as mining, and neglects investment in other major sectors.

One of the external factors is the legal regime imposed through colonialism.

Colonial laws have effectively divested indigenous peoples of their ownership and property rights in natural resources, which the neo-colonial nation-states retained upon independence, which are then transferred to transnational corporations in exchange for licence fees and non-controlling equity.

Most often the problem is seen in less developed countries with relatively concentrated and undiversified industrial sectors.

Once a natural resource is discovered, available investment capital tends to gravitate to this industry.

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