Macroeconomics and the Environment

Macroeconomics and the Environment

Essays on Green Accounting

Advances in Ecological Economics series

Salah El Serafy

Though scientists and environmentalists have long expressed concern over the rapid deterioration of the global environment, economists have largely failed to recognize the issue’s relevance to their field. Salah El Serafy argues for an increased focus on the economic aspects of environmental degradation, calling for a fundamental shift in how economists measure and discuss national income.

Chapter 18: The ‘resource curse’: institutions and Dutch disease

Salah El Serafy

Subjects: economics and finance, environmental economics, international accounting, environment, ecological economics, environmental economics


A fairly extensive literature has grown around a dubious phenomenon called a ‘resource curse’ – a fable in my view that suggests that countries endowed with commercially exploitable natural resources would be better off without them. Belief in the resource curse and arguments for its existence provide a vivid illustration of an unfortunate blend of faulty national accounting and defective reasoning, leading to an untenable generalization that does not stand up to scrutiny. It is curious, it may be remarked, that the word ‘curse’ should at all enter the language of economic inquiry in the way it has done, and it is interesting that some of its most serious challengers have come from outside economics. In common parlance a curse usually denotes a baffling malevolent occurrence attributable to forces beyond understanding, and has to be driven out, or ‘exorcized’, by extra-human powers. The recurrent use of the expression in economic discourse gives the impression that neither its origins nor its possible cures are fully understood. Thus there is a presumption that this phenomenon is not amenable to reasoned analysis with the implicit denial that its symptoms can be counteracted with economic policy measures. The result is that several authors, observing the unsatisfactory economic performance of many natural-resource-based countries, seem to abandon economic thinking and attempt to blame what they see as adverse manifestations of extra-economic factors.

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