Cursed are those blessed with re­sources

Finweek English Edition - - Economic trends & analysis - HOWARD PREECE

A RE­PORT IS­SUED by the In­ter­na­tional Mone­tary Fund (but not re­flect­ing a for­mal IMF view) is gen­er­ally hos­tile to the “nat­u­ral re­sources are a curse” ar­gu­ment.

A grow­ing num­ber of economists – the ubiq­ui­tous Jef­frey Sachs of the United States among them – have ar­gued that in re­al­ity a great many re­source-rich coun­tries fared dis­mally com­pared with plenty of in­trin­si­cally bar­ren lands.

It was noted, es­pe­cially, that over the pe­riod 1965-98 av­er­age an­nual real eco­nomic growth was neg­a­tive in the oil-pro­duc­ing Opec group, against +2,2% in the de­vel­op­ing world as a whole.

Fur­ther in­di­rect sup­port to this approach was also sup­plied by economists such as Peter Bauer, who main­tained that for­eign aid had over­all done more harm than good.

A sharp con­trast was drawn be­tween the huge eco­nomic suc­cess of economies with min­i­mal re­sources (eg, Sin­ga­pore, Hong Kong, Tai­wan, South Korea) and decades of fail­ure in such in­trin­si­cally rich and var­ied na­tions as Rus­sia, Congo DRC, Ar­gentina, Peru and the Opec mem­bers.

A healthy in­jec­tion of ba­sic com­mon­sense has now, how­ever, been sup­plied in an IMF re­port by Rabah Arezki and Fred­er­ick van der Ploeg. This reaches two key con­clu­sions: That re­sources are in­trin­si­cally ben­e­fi­cial but they have led many coun­tries to pur­sue self-de­struc­tive, wealth-squan­der­ing eco­nomic poli­cies. But where, as in the United States, re­source-riches have been com­bined with broadly sound long-term eco­nomic poli­cies, the out­come has been colos­sally suc­cess­ful, the re­port con­cludes. • •

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