Sustaining Development in Mineral Economies: The Resource Curse Thesis

Routledge
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It is widely believed that natural mineral resources are desirable. However there is growing evidence that this may not always be the case. Indeed, it seems that natural assets can distort the economy to such a degree that the benefit actually becomes a curse.
In Sustaining Development in Mineral Economies, Richard Auty highlights these drawbacks and the devastating effect they can have on developing economies. With reference to six ore-exporters (viz. Peru, Bolivia, Chile, Jamaica, Zambia and Papua New Guinea) he outlines how things can go badly wrong. He particularly stresses the need to avoid `Dutch Disease' whereby competitiveness is drained out of the agriculture and manufacturing sectors so that in the long term growth falters.
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Additional Information

Publisher
Routledge
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Published on
Sep 26, 2002
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Pages
288
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ISBN
9781134867899
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Language
English
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Genres
Business & Economics / Economics / General
Business & Economics / General
Science / Environmental Science
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This content is DRM protected.
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Since the 1960s the per capita incomes of the resource-poor countries have grown significantly faster than those of the resource-abundant countries. In fact, in recent years economic growth has been inversely proportional to the share of natural resource rents in GDP, so that the small mineral-driven economies have performed least well and the oil-driven economies worst of all. Yet the mineral-driven resource-rich economies have high growth potential because the mineral exports boost their capacity to invest and to import. "Resource Abundance and Economic Development" explains the disappointing performance of resource-abundant countries by extending the growth accounting framework to include natural and social capital. The resulting synthesis identifies two contrasting development trajectories: the competitive industrialization of the resource-poor countries and the staple trap of many resource-abundant countries. The resource-poor countries are less prone to policy failure than the resource-abundant countries because social pressures force the political state to align its interests with the majority poor and follow relatively prudent policies. Resource-abundant countries are more likely to engender political states in which vested interests vie to capture resource surpluses (rents) at the expense of policy coherence. A longer dependence on primary product exports also delays industrialization, heightens income inequality, and retards skill accumulation. Fears of 'Dutch disease' encourage efforts to force industrialization through trade policy to protect infant industry. The resulting slow-maturing manufacturing sector demands transfers from the primary sector that outstrip the natural resource rents and sap the competitiveness of the economy. The chapters in this collection draw upon historical analysis and models to show that a growth collapse is not the inevitable outcome of resource abundance and that policy counts. Malaysia, a rare example of successful resource-abundant development, is contrasted with Ghana, Bolivia, Saudi Arabia, Mexico, and Argentina, which all experienced a growth collapse. The book also explores policies for reviving collapsed economies with reference to Costa Rica, South Africa, Russia and Central Asia. It demonstrates the importance of initial conditions to successful economic reform.
At the dawn of the twentieth century, a great confidence suffused America. Isaac Cline was one of the era's new men, a scientist who believed he knew all there was to know about the motion of clouds and the behavior of storms. The idea that a hurricane could damage the city of Galveston, Texas, where he was based, was to him preposterous, "an absurd delusion." It was 1900, a year when America felt bigger and stronger than ever before. Nothing in nature could hobble the gleaming city of Galveston, then a magical place that seemed destined to become the New York of the Gulf.

That August, a strange, prolonged heat wave gripped the nation and killed scores of people in New York and Chicago. Odd things seemed to happen everywhere: A plague of crickets engulfed Waco. The Bering Glacier began to shrink. Rain fell on Galveston with greater intensity than anyone could remember. Far away, in Africa, immense thunderstorms blossomed over the city of Dakar, and great currents of wind converged. A wave of atmospheric turbulence slipped from the coast of western Africa. Most such waves faded quickly. This one did not.

In Cuba, America's overconfidence was made all too obvious by the Weather Bureau's obsession with controlling hurricane forecasts, even though Cuba's indigenous weathermen had pioneered hurricane science. As the bureau's forecasters assured the nation that all was calm in the Caribbean, Cuba's own weathermen fretted about ominous signs in the sky. A curious stillness gripped Antigua. Only a few unlucky sea captains discovered that the storm had achieved an intensity no man alive had ever experienced.

In Galveston, reassured by Cline's belief that no hurricane could seriously damage the city, there was celebration. Children played in the rising water. Hundreds of people gathered at the beach to marvel at the fantastically tall waves and gorgeous pink sky, until the surf began ripping the city's beloved beachfront apart. Within the next few hours Galveston would endure a hurricane that to this day remains the nation's deadliest natural disaster. In Galveston alone at least 6,000 people, possibly as many as 10,000, would lose their lives, a number far greater than the combined death toll of the Johnstown Flood and 1906 San Francisco Earthquake.

And Isaac Cline would experience his own unbearable loss.

Meticulously researched and vividly written, Isaac's Storm is based on Cline's own letters, telegrams, and reports, the testimony of scores of survivors, and our latest understanding of the hows and whys of great storms. Ultimately, however, it is the story of what can happen when human arrogance meets nature's last great uncontrollable force. As such, Isaac's Storm carries a warning for our time.
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