Resource Curse

The resource curse posits a negative relationship between resource abundance and economic performance. Also known as the “paradox of plenty,” it suggests that nations with bountiful quantities of extractable natural resources such as oil, timber, and precious [Page 350]metals are associated with disappointing rates of economic development and are more likely to become mired in political violence.

Intellectual interest in this phenomenon began in the 1920s and 1930s, sparked by the decline in Latin American economies hit hard by a global slump in commodity prices. Postwar scholarship suggested that this negative relationship between resource wealth and economic performance was independent of price fluctuations. Economists tested this hypothesis using repeated regression analysis, which compared resource intensity and economic growth data. Nations with abundant natural resources (such as ...