Mitigating the Resource Curse: Economic, Governance, and Policy Considerations

This chapter provides an overview of the relevant literature on the resource curse, where countries with abundant natural resources face negative economic, social, and political consequences. We examine the main economic and political factors that contribute to the resource curse and analyse measures to mitigate the negative effects of natural resource abundance. These measures include diversifying the economy, investing in human capital, and promoting transparency and accountability in the extractive industries. We also emphasise the importance of community engagement and safeguarding local benefits. Particular attention is paid to the predictability of the resource curse phenomenon which can be linked to the historical context of colonisation. Many resource-rich countries experienced a legacy of colonial exploitation, where valuable resources were extracted for colonial powers’ interests rather than local development. This historical exploitation has left a lasting impact, shaping these countries’ governance and management of natural resources. Understanding this history is crucial in addressing persistent power imbalances resulting from colonisation. While the resource curse remains a significant challenge for many countries with extractive resources, this chapter highlights numerous examples of effective management practices to mitigate its negative effects. By following guidance from international organisations and promoting transparent and accountable decision-making involving stakeholders, countries can better leverage their extractive resources for sustainable economic growth and social development. Acknowledging the potential predictability of the resource curse enables proactive measures to prevent or alleviate its adverse consequences. In this context, the design and implementation of appropriate natural resource wealth funds should be important policy objectives.