Essays on Green Accounting
Advances in Ecological Economics series
Chapter 18: The ‘resource curse’: institutions and Dutch disease
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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