Cursed are those blessed with resources
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. • •