resurssikasta

Resurssikasta (resource curse) on economic development refers to the paradox where countries rich in natural resources sometimes experience slower growth and worse development outcomes than resource-scarce peers. The term highlights how resource abundance can be associated with poor governance, greater volatility, and underinvestment in other productive sectors.

Key mechanisms include Dutch disease (currency appreciation and manufacturing decline), revenue volatility due to commodity price swings, and governance challenges such as rent-seeking, corruption, and weak institutions. Large resource rents can reduce incentives for taxation and accountability, crowd out other sectors, and fuel conflict over control of rents.

Empirical literature finds mixed results; some cases show negative outcomes, especially where institutions are weak. Oil-rich countries in parts of Africa have faced slower diversification and macroeconomic instability. By contrast, some nations with strong governance and prudent management, such as Norway and Chile, have used resource wealth to fund diversification and social programs.

Policy responses emphasize governance reforms, macroeconomic stabilization, and diversification. Tools include sovereign wealth funds (for example, Norway's fund), stabilization funds, long-term fiscal rules, transparent revenue management (extractive industries transparency initiative), and strong institutions to tax and manage rents. Encouraging investment in non-resource sectors and revenue transparency can offset negative effects.

Related topics include Dutch disease, sovereign wealth funds, and the extractive industries transparency initiative.