The Resource Curse Thoughts on How Resource-based Poor Countries can break the Curse

Abstract

The relationship between natural resources and economic development has long been a subject of debate, with empirical evidence revealing a complex reality that challenges the conventional wisdom. This phenomenon, known as the " Resource Curse, " refers to the underperformance of resource-rich economies compared to those with fewer resources. This study delves into the factors contributing to the Resource Curse, including Dutch Disease, crowding out effects, unclear property rights, environmental degradation, and deteriorating terms of trade. Understanding these factors is crucial for mitigating the curse and promoting sustainable economic development in resource-based poor countries. The study proposes several strategies to break the resource curse, such as diversified industrial development, rational resource exploitation,establishment of natural resource revenue funds, political system changes, and strengthened environmental governance. However, each solution must be carefully evaluated for feasibility and potential limitations. By addressing the challenges posed by the resource curse, policymakers and stakeholders can work towards fostering long-term economic growth and resilience in resource- rich developing countries.