UW News

October 27, 2016

Book by political scientist Victor Menaldo debunks notion of ‘resource curse’

UW News

    "The Institutions Curse: National Resources, Politics, and Development," by UW political scientist Victor Menaldo.

“The Institutions Curse: National Resources, Politics, and Development,” by UW political scientist Victor Menaldo.

A “resource curse” is the idea that countries with lots of nonrenewable natural resources such as hydrocarbons and minerals historically tend to be burdened with corrupt governments and underdeveloped economies. Wikipedia also calls it “the paradox of plenty.”

A new book by Victor Menaldo, UW associate professor of political science, takes a different view, as its title suggests. “The Institutions Curse: Natural Resources, Politics, and Development” argues that institutions formed early in a resource-rich country, before they ever discover oil or minerals, can inhibit economic development and the formation of effective government.

“Institutions and problems inherited by developing countries from their recent and long-ago past — including geographic adversity and colonial legacies — have pushed these countries to cultivate their natural resource sectors,” Menaldo said. “This often becomes their default economic and fiscal strategy.”

These inherited institutions and problems “make it impossible” for such countries to build modern, diversified economies based on sound law, innovation and educated workforces, he said: “Therefore, these bad institutions and associated dysfunctions are both the cause of the presence of an intensive natural resource sector and the cause of their political and economic underdevelopment.”

A reviewer in the International Trade Journal wrote: “Menaldo maintains that resources discoveries don’t lead to bad institutions. Instead, institutional badness leads to resources discoveries.”

Menaldo added, “Indeed, dysfunctional state institutions are what gives developing countries an edge over stable, developed countries in the resource development game. Weak governments are wont to give foreign oil companies costly concessions to support oil and mineral discoveries.”

He said the book also demonstrates that, despite being “cursed” by their institutions, “developing countries are blessed by their natural resources. Oil and minerals can play an integral role in stimulating state capacity, capitalism, industrialization, and democracy — even if resources are themselves a symptom of underdevelopment.”

Menaldo said this could apply to such countries as Congo, Angola, Nigeria, Saudi Arabia, Iran, Venezuela and Russia.

“The Institutions Curse” was published in September by Cambridge University Press.

###

For more information, contact Menaldo at vmenaldo@uw.edu.

Tag(s):