Occasional Paper

Political Economy Models of the Resource Curse: Implications for Policy and Research

“A number of studies suggest that natural resources can have a negative impact on countries’development prospects. This paper reviews political economy models of the resource curse and examines the implications of these models in terms of policy and research priorities. The term ‘impartiality-enhancing institutions’ is introduced to distinguish conditions under which negative effects of resources can be mitigated. The paper further examines current donor policies vis-à-vis resource-rich countries and argues that these policies reflect the conclusions of the resource curse literature only to a limited extent. Moreover, the paper
suggests that the prevalent focus of resource curse studies on resource abundance rather than rents and net effects of resources has put us on the wrong track. Finally, the paper concludes that more work is needed to identify more precise policy implications in terms of the institutions required to mitigate the effects of the resource curse and the reform of such institutions.”