Beyond the Resource Curse
Publication Year: 2011
When countries discover that they possess large deposits of oil and natural gas, the news is usually welcome. Yet, paradoxically, if they rely on their wealth of natural resources, they often set down a path of poor economic performance and governance challenges. Only a few resource-rich countries have managed to develop their economies fully and provide a better and sustainable standard of living for large segments of their populations. This phenomenon, known as the resource curse, is a core challenge for energy-exporting states. Beyond the Resource Curse focuses on this relationship between natural wealth and economic security, discussing the particular pitfalls and consistent perils facing oil- and gas-exporting states.
The contributors to this volume look beyond the standard fields of research related to the resource curse. They also shed new light on the specific developmental problems of resource-rich exporting states around the globe, including Azerbaijan, Bahrain, Cambodia, East Timor, Iran, Norway, Russia, Trinidad and Tobago, the United Arab Emirates, and Venezuela.
Policy makers and academics think of energy security solely in terms of the interests of energy importers. Beyond the Resource Curse shows that the constant volatility in energy markets creates energy security challenges for exporters as well.
Published by: University of Pennsylvania Press
Table of Contents
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Energy security is a fundamental challenge for major energy-exporting states. Most policymakers and many academics think of energy security solely in terms of the interests of energy importers. However, the constant volatility in energy prices and the permanent uncertainty of supply and consumption trends create energy security challenges for both importers and exporters....
Part I: Economics and Infrastructures of Energy Exporters
1. The Natural Resource Curse: A Survey
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It is striking how often countries with oil or other natural resource wealth have failed to show better economic performance than those without. This is the phenomenon known as the “natural resource curse.” The pattern has been borne out in econometric tests across a comprehensive sample of countries. This paper considers seven aspects of commodity wealth, each of ...
2. Sometimes the Grass is Indeed Greener: The Successful Use of Energy Revenues
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Juan Pablo Pérez Alfonzo, Venezuela’s oil minister in the early 1960s and a father of OPEC, referred to oil not as “black gold” but as the “devil’s excrement.” In recent decades, the natural resource curse argument has often been presented as either a universal or near-universal rule.1 The rule nature of the argument is not plausible, however, because the ...
3. Is There a Policy Learning Curve? Trinidad and Tobago and the 2004–8 Hydrocarbon Boom
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Since gaining in dependence in 1962, Trinidad and Tobago has experienced three hydrocarbon booms (1974–78, 1979–81, and 2004–8). The first two booms each conferred an additional 35 to 39 percent of non-energy GDP in revenue annually, and the most recent windfall conferred an average extra 59 percent of non-energy GDP annually. The over-rapid domestic absorption ...
4. The Illusion of Unlimited Supply: Iran and Energy Subsidies
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Iran, one of the world’s largest energy producers, also has some of the world’s lowest domestic energy prices. This would seem to be an economic advantage, but the Iranian government has kept energy prices artificially low through a series of subsidies. These subsidies have created significant distortions in Iran’s economy, including an inflation rate that reached 25.4 ...
5. Challenges Facing Central Banks in Oil-Exporting Countries: The Case of Azerbaijan
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Central banks have evolved over time. Whereas the Swedish Riksbank and the Bank of England of the late-seventeenth century were established to finance war expenditures of their governments, modern central banks function as regulators of a nation’s money supply and as monopoly providers of legal tender. They pursue a variety of goals, such as price stability, output ...
6. Power to the Producers: The Challenges of Electricity Provision in Major Energy-Exporting States
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It may seem intuitive that petrostates, whose economies and federal revenues are based on oil and natural gas, would have energy to spare at home. In fact, many petrostates have persistent trouble keeping the lights on. Their electricity sectors are plagued by low reliability, poor quality power, and high transmission and distribution losses. This phenomenon is limited neither ...
Part II: Energy Exports, Society, and Politics
7. The Impact of Energy Resources on Nation- and State-Building: The Contrasting Cases of Azerbaijan and Georgia
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The demise of the Soviet Union gave birth to fifteen new states, all with a similar set of basic interests to pursue. Given the diverse material conditions these states were born into, however, the combination of resources and the mechanisms they could choose to utilize to address their interests was particular to each newborn republic. The latter reality, in turn, has worked to ...
8. Education Reform in Energy-Exporting States: The Post-Soviet Experience in Comparative Perspective
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A significant literature has emerged that seeks to explain the economic, political, and institutional underpinnings of the resource curse—that is, why countries that export natural resources such as oil tend to grow more slowly and underperform economically over time compared with those that do not. This chapter investigates the challenges that energy-rich countries face ...
9. Is Norway Really Norway? Ole Andreas Engen, Oluf Langhelle, and Reidar Bratvold
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For many researchers in economics and political science, Norway serves as the archetypal state that has avoided the resource curse. When discussing whether a state’s policies will lead it to become a successful or unsuccessful energy exporter, the common refrain is whether it would like to be “Norway or Nigeria.” Hence, Norway appears to be a successful example of how it is ...
Part III: Energy Exporters in the International Political System
10. Energy Exporters and the International Energy Agency
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The International Energy Agency (IEA) was established in 1974.1 The creation of the IEA followed the 1973–74 oil crisis and was a firm and effective response to this challenge. At its establishment, the IEA encompassed the major oil-importing states and aimed to limit oil exporters’ potential economic and political power. ...
11. Resource Nationalism and Oil Development: Profit or Peril?
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The beginning of the twenty-first century was marked by a return to resource nationalism and empowerment of national oil companies that is transforming international relations among major nations and affecting the supply and price of oil. Resource nationalism finds its roots in the ideology that the natural resources of a country belong to the nation and exist as a national ...
12. Natural Resources, Domestic Instability, and International Conflicts
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The resource curse literature, which the present volume builds upon and contributes to, highlights the counterintuitively negative consequences of resource richness. This debate over the “curse of the plenty” has tied the presence of abundant resources to a myriad of undesirable consequences from weak state-society linkages 1 to authoritarian regimes,2 to slow economic ...
13. Petroleum, Governance, and Fragility: The Micro-Politics of Petroleum in Postconflict States
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Contemporary political economy research suggests that whether a country falls prey to the resource curse depends on a number of structural and economic factors. The cumulative body of large-N analyses of resource-rich developing countries indicates that the quality of existing institutions is perhaps the key factor that mediates a resource-rich country’s economic ...
Conclusion: Constant Perils, Policy Responses, and Lessons to be Learned
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This volume is an attempt to draw closer attention to the particular and consistent challenges facing resource-exporting states and to contribute to a better understanding of these perils through a number of recent case studies. It aims to add to a growing number of new studies that shed light on specific developmental problems of resource-rich states around the globe. As was ...
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The idea of Beyond the Resource Curse was first conceived at a research workshop organized and sponsored by the Azerbaijan Diplomatic Academy (ADA), July 10–12, 2009, in Baku, Azerbaijan. We would like to thank ADA for its generous support and assistance throughout the making of this volume. Special thanks go to ADA Rector, Ambassador Hafiz Pashayev—a scholar ...
Page Count: 512
Publication Year: 2011