- Teaching Notes
An economic mystery plagues several developing nations. The mystery is why some nations with significant mineral wealth such as oil, iron ore, gold, and diamonds also tend to have extremely high rates of poverty. A prime example of this paradox is Nigeria. It is one of the largest African economies with an estimated gross domestic product (GDP) of over US$500 billion, yet the poverty rate is estimated at 60% of the population. Some economists call this paradox the natural resource curse. By understanding the causes of the curse, investors and businesses can determine when and where to invest in these nations. In this case study, we analyze the political and economic factors that may cause the natural resource curse in Nigeria. We then use these factors to identify the opportunities, threats, and strategies that businesses must consider before investing in mineral rich/high poverty nations.