Natural resources are traditionally considered a boon to any country. They’re pools of “free” value that can be dug up and sold, often under the promise of helping the entire population.
Yet we know that resources are not a golden ticket to prosperity: some of the world’s poorest, most miserable nations have been blessed with valuable stocks of recoverable minerals and fossil fuels.
Of the 19 nations that produced more than 1 million barrels of oil per day in 2013, only 3 could be considered to enjoy particularly “good” governance: the United States, Canada, and Norway.
The remainder, including Saudi Arabia, Venezuela, and Mexico, have endured decades of one-party or autocratic rule, weak development in other sectors of the economy, and general dependence on oil revenues for a major share of state spending.
The “Resource Curse” theory has long held that countries with natural resource endowments, such as oil or minerals, tend to have worse development outcomes than those without them. There are many reasons for this, from currency exchange rates (the so-called Dutch disease) to the fact that resource revenues are highly dependent on volatile world market prices.
While the issues of currency or volatility are very real, I would argue that there’s something more insidious that goes on in resource-dependent states.
Money for Nothing?
It comes back to the idea of treating resources as inherently “national” endowments. When resources are treated as though they should benefit everyone in a nation, government’s are encouraged to use them as a means to provide handouts to the population at large, and claim credit for the services provided.
By building a culture around the “rents” that the resource endowment provides, otherwise bad governments can look like they are succeeding by delivering public goods and services that they could never provide without the “free” money from mining or pumping oil.