Synopses & Reviews
The wealth derived from natural resources can have a tremendous impact on the economics and politics of producing countries. In the last quarter century, we have seen the surprising and sobering consequences of this wealth, producing what is now known as the resource curse. Countries with large endowments of natural resources, such as oil and gas, often do worse than their poorer neighbors. Their resource wealth frequently leads to lower growth rates, greater volatility, more corruption, and, in extreme cases, devastating civil wars.
In this volume, leading economists, lawyers, and political scientists address the fundamental channels generated by this wealth and examine the major decisions a country must make when faced with an abundance of a natural resource. They identify such problems as asymmetric bargaining power, limited access to information, the failure to engage in long-term planning, weak institutional structures, and missing mechanisms of accountability. They also provide a series of solutions, including recommendations for contracting with oil companies and allocating revenue; guidelines for negotiators; models for optimal auctions; and strategies to strengthen state-society linkages and public accountability.
The contributors show that solutions to the resource curse do exist; yet, institutional innovations are necessary to align the incentives of key domestic and international actors, and this requires fundamental political changes and much greater levels of transparency than currently exist. It is becoming increasingly clear that past policies have not provided the benefits they promised. Escaping the Resource Curse lays out a path for radically improving the management of the world's natural resources.
Many countries that are rich with natural resources fall victim to poverty, corruption, civil war, or deep economic crises. This volume examines the paradox of the resource curse by addressing its root causes& mdash; a buyer's unfair advantage over a supplier; governments that unwisely live off their capital; insufficient investments in education; theft by political leaders; grievances in producing regions-and what can be done to resolve these issues. Contributors lay out a broad framework suggesting how willing governments might obtain a contractual advantage over oil corporations, achieve optimal expenditure and investment practices, distribute resource wealth evenly, and build healthier relationships between state and society.