Poor little rich countries: another look at the ‘resource curse’

This article may be used for research, teaching and private study purposes. Any substantial or systematic reproduction, redistribution , reselling , loan, sub-licensing, systematic supply or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material. Resource-rich countries are plagued by macroeconomic crises known as 'Dutch Disease', which is associated with the inflation of local currencies on account of a large influx of foreign exchange and a dip in labor supply for non-traded goods. In developing countries, the historical context of state formation is often such that the revenues generated by natural resource exports bolster the stability of authoritarian regimes, and the dominant state actors consolidate their power by managing boom–bust cycles to avert crises. In the context of oil resources, with their special geopolitical significance, relevance for the environment, and enclave character, the primary producers face even more challenges, especially if they are relatively new players and are buffeted by geopolitical power games. Using Mexico, Venezuela and Angola as paradigmatic cases, the relevance of outside forces, domestic policies, and the opportunistic forms of engagement with external power chosen by local actors that produced tragic outcomes in each of these instances are examined. Introduction A nation endowed with mineral wealth is far less privileged than one might imagine, especially if it is unlucky enough to be in an already underdeveloped region. Consider a poor country in Latin America or sub-Saharan Africa, with a history of exploitation by colonial rule and local elites, caught up in vicious circles of institutional decline, having inadequate access to healthcare, education and jobs, and already wholly dependent on foreign exchange revenue from marginal earnings from agricultural commodity exports. The sudden discovery of significant quantities of mineral resources under its control will jolt its political and economic elites into reorganizing themselves into stewards of an extractive economy that relies primarily on external expertise to