By the end of the 1990s, under the incentive of Eurozone entry, most peripheral European countries were busy undertaking structural reforms and putting their fiscal houses in order. This column argues that the arrival of the euro, and the subsequent interest-rate convergence, loosened a tide of cheap money that reversed the incentives for further reforms. As a result, by the end of the euro’s first decade, the institutions and governance in the Eurozone periphery were in worse shape than they were at the start of the decade.
Jesús Fernández-Villaverde, Luis Garicano, Tano Santos, 30 April 2013
Ton van den Bremer, Rick van der Ploeg, 14 December 2012
Many countries experience substantial revenue windfalls from natural resources. The consensus is that these should not be consumed but put in a fund to smooth the benefits across generations. This column examines how policy recommendations may differ among oil-rich countries, here Norway, Ghana and Iraq. It suggests that oil exporters may need to accumulate not only an intergenerational fund but also a liquidity fund to cope with oil price volatility and a domestic investment fund to alleviate the burden of capital scarcity.
Rabah Arezki, Thorvaldur Gylfason, Amadou Sy, 08 July 2012
The presence of natural resources poses a number of potential economic challenges, especially for developing countries. This column argues resource-rich countries need to look beyond the so-called resource curse and put into action innovative policies and institutions to confront their many challenges and reap the benefits of widely shared natural-resource wealth.
Rabah Arezki, Markus Brückner, 15 June 2012
Booming commodity prices generate large foreign currency inflows for exporting nations. This column argues that in countries with executive constraints and political competition windfalls from commodity booms lead to a significant reduction in external debt. In autocratic regimes, on the other hand, the windfalls are used to increase consumption expenditures.
Erwin Bulte , Christa Brunnschweiler, 28 May 2012
The so-called resource curse suggests that resource booms are bad for development. One reason put forward is that fighting over resource rents leads to armed conflict. This column argues the evidence identifying resources as a cause of conflicts is weak and that the policy focus should be on institutional reform, rather than on resources per se.
Michael L. Ross, 20 April 2012
Michael Ross of UCLA talks to Viv Davies about his book, ‘The Oil Curse: How Petroleum Wealth Shapes the Development of Nations’. They discuss the irony of how those countries with the greatest social and economic deficits are also the most vulnerable to the oil curse and as a result grow less quickly than might be expected given their wealth. [Also read the transcript]
Guy Michaels, Yu-Hsiang Lei, 01 December 2011
Do natural resource windfalls, such as those arising from the discovery of giant oil fields, increase the risk of internal armed conflict? This column argues that giant oil field discoveries, which are largely down to chance, significantly increase the incidence of conflict. This is especially so in countries with recent histories of political violence, where locals may have little to gain from such discoveries
Antonio Cabrales, Esther Hauk, 17 June 2011
The natural-resource curse is now a staple in the development economist’s diet. Natural resources have tended to lead to lower economic growth, except in democratic countries or those with robust institutions. This column presents a political economy model to explain this phenomenon, focusing on the threat of revolutions.
Kevin K. Tsui, 21 May 2011
It has been widely argued that natural-resource wealth is a curse that leads to corrupt politicians, closed and illiberal societies, and defunct economies. This column presents new evidence on the political impacts of oil wealth. It argues that the effects depend on geology and history, shedding light on the recent uprisings in the Middle East and North Africa.
Thorvaldur Gylfason, 27 March 2011
Ghana is about to become a major oil producer. The country’s newfound oil is expected to bring in many billions of dollars, changing the face of its economy. Ghana is the first African country where a major oil discovery is greeted by a well-functioning, albeit young, democracy. This column outlines how it can avoid the resource curse and take full advantage of this historic opportunity.
Nikola Spatafora, Irina Tytell, 24 March 2010
How do commodity-price booms affect the economic performance of commodity exporters? This column presents comprehensive new data on country-specific commodity terms of trade. It finds that, on average, countries grow nearly 2 percentage points faster during booms than during busts. But policy plays an important role – sharp currency appreciations and large government deficits are associated with lower growth.
Fernanda Brollo, Guido Tabellini, Tommaso Nannicini, Roberto Perotti, 10 March 2010
Is the discovery of natural resources necessarily a good thing? Examining data from Brazil, this column finds that a 10% windfall in government revenues leads to a 12 percentage point increase in corruption and a 3 percentage point reduction in the probability that politicians have a degree. The chance that an incumbent is reelected raises by over 4 percentage points.
Milan Brahmbhatt, Otaviano Canuto, 02 March 2010
How important are primary commodities for economic development? This column suggests that primary commodity prices are likely to ease over the next five years. Nevertheless, commodity revenues will remain high, raising challenges that, if not addressed, can harm long-run development. With good governance, however, such revenues can also be a valuable resource to help accelerate overall development.
Francesco Caselli, Guy Michaels, 20 January 2010
Does the “resource curse” exist? This column presents new evidence from Brazil. Municipalities that receive oil windfalls report significant increases in spending on infrastructure, education, health, and transfers to households. However, the windfalls do not trickle down and much of the money goes missing. Indeed, oil revenues increase the size of municipal workers’ houses but not the size of other residents’ houses.
Sambit Bhattacharyya, Roland Hodler, 13 November 2009
Resource-rich countries are often cursed by corruption and governance problems. This column shows that the natural resource curse burdens non-democracies, but countries with better democratic institutions are not corrupted by such endowments. For governments accountable to their citizens, resources can be a blessing.
Mare Sarr, Erwin Bulte , Christopher M. Meissner, Timothy Swanson, 27 September 2008
It is well known that resource wealth may be a “curse” for some countries, as resource booms are translated into lingering ill effects. This column blames unstructured financial investments.
Susan Ariel Aaronson, 12 July 2008
The resource curse has stymied development in numerous oil-rich economies. This column introduces the Extractive Industries Transparency Initiative and explains how transparency by firms investing in resource-rich countries might help alleviate the curse.