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Development in an African Context

The resource curse and conflict minerals

  • 3 things to know
  • Component 3 Section B

Overview

Resource curse, dutch disease and pula Fund.

What you need to know

Answer each one before you reveal it.

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Numbers

Define the resource curse.

Key term

Explain Dutch disease.

Key term

How has Dutch disease affected Nigeria?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Define the resource curse.

    Model answer

    The resource curse is the tendency for resource-rich countries to grow more slowly than resource-poor ones. Richard Auty gave the idea its name in 1993.

  2. 2

    Explain Dutch disease.

    Model answer

    Large mineral exports raise demand for the local currency and push up its value. Manufactured and agricultural exports then become uncompetitive and decline.

  3. 3

    How has Dutch disease affected Nigeria?

    Model answer

    Nigeria exported groundnuts, palm oil and cocoa before the oil boom of the 1970s. Oil revenue lifted the naira and those agricultural exports collapsed.

  4. 4

    Why does revenue volatility damage a resource-dependent state?

    Model answer

    Government budgets rise and fall with a price the country cannot control. Projects begun in a boom are abandoned when the price falls, so the investment is wasted.

  5. 5

    State two political mechanisms behind the resource curse.

    Model answer

    Mineral rents can be captured by officials with no need to tax citizens. Accountability weakens as a result, and control of the resource becomes worth fighting for.

  6. 6

    Explain how Botswana avoided the resource curse.

    Model answer

    Botswana taxed diamond revenue through a state partnership and saved a share of it in the Pula Fund. Fiscal rules tied mineral income to investment rather than to consumption.

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