Resource curse thesis latin america

Resource curse countries list

That a high dependency on resource exports correlates with bad policies and effects is not caused by the large degree of resource exportation. By the year for example, the resource curse existence was argued [ 8 ]. As a result, the argument suggests that the natural-resource intensive economies ended up with more inappropriate capital on their hands than other economies. Successful natural-resource-exporting countries often become increasingly dependent on extractive industries over time. Early Mafia activity is strongly linked[ qualify evidence ] to Sicilian municipalities abundant in sulphur, Sicily's most valuable export commodity. Some communities have started protests against extracting companies and demonstrated their opposition against mining or pipeline projects in referendums. Google Scholar Wade, R. However, that is only a potential wealth for the people. It reports that their conclusions are only valid for the period before the s, but since about , there has been a pronounced resource curse.

Similarly, Venezuela enjoyed from a very fast growth led by oil exports, getting a huge share of the world market. Download as. This helps understanding that human resources, and the institutions where they intend to work according to the different periods, play a very important role and can lead to civil problems if not well treated.

natural resources in latin america

Google Scholar Buffie, E. There has been also an increasing body of literature that argues a non existent resource curse. The extractivism [ 37 ] is a particular case of Natural Resources extraction, intense or in high volumes, intended to be exported, as low processed or not processed products.

causes of resource curse

Real exchange rate increases, through capital inflows or the "Dutch disease" can make this appear an attractive option by lowering the cost of interest payments on the foreign debt, and they may be considered more creditworthy due to the existence of natural resources. If exports of primary goods and manufactures are compared, the difference among countries is easily recognizable.

Why does the resource curse happen

However, even when the authorities attempt diversification in the economy, this is made difficult because resource extraction is vastly more lucrative and out-competes other industries. It reports that their conclusions are only valid for the period before the s, but since about , there has been a pronounced resource curse. My results remain stable when running extensive models, using lagged variables and when excluding influential values from the regression. They argued that resource-based growth would be frustrated by secular decline in world prices of natural resources. No recommendation exists for overcoming the resource curse considering the issue of political feasibility. This is a preview of subscription content, log in to check access. Often times, it induces corruption. Moreover, when the types of resources are taken into account, the effects on duration and onset of civil war became clearer [ 16 ]. While resource sectors tend to produce large financial revenues, they often add few jobs to the economy, and tend to operate as enclaves with few forward and backward connections to the rest of the economy. They construct a theoretical model where the natural resources endowment has a positive and important effect on education in countries with good institutions, and a negative effect in countries with bad ones. Previous arguments also include foreign exchange income distribution, and the destination of savings, investment and capital of countries. In Figure 1, Booms and economic recessions of Latin American economy are shown; as it is possible to visualize, the periods between both states of the economy are very short and every boom always tends to fall in a more important quantity. In the case of Latin America further aspects are corruption, tendencies to authoritative governments, government ineffectiveness and violations of social and human rights.

Instead, they measure per capita oil and mining output. This tends to erode governments' abilities to function effectively. Another surprising finding is that the quality of governance does not have an effect on social development, and in turn does not condition the effect of natural resources on social development.

resource curse in india

Often times, it induces corruption.

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Resource Curse in Latin America