The Never-ending Resource Curse

The Guardian recently released an article claiming that resource-rich African countries have failed to make a large dent on their poverty levels, and countries without many resources actually have less poverty. The resource curse that has stricken many African countries for centuries, beginning with imperialism, continues to be an issue. The World Bank’s chief economist for Africa reemphasizes that “resource-rich African countries have to make the conscious choice to invest in better health, education, and jobs;” it will not happen on its own.

Nigeria specifically has immense reserves that have resulted in massive inequality and corruption by elite government officials, and it is capable of continuing production at these levels for over 40 more years. Foreign direct investment remains strong in these countries, only fueling the process. The World Bank reports that “oil-rich countries systematically perform worse than any other country groups in terms of voice and accountability, political stability, rule of law and the control of corruption.” An evident solution is higher transparency in natural resources and the government, but this is currently optional under the Extractive Industries Transparency Initiative.

This argument is one that has been documented and addressed endlessly over the past decades and each argument formulates its own proposals. However, it seems that no deliberate actions have been taken against these operations in African countries. Policy remains opaque and direct investment remains high without international governance. This goes back to one of Stiglitz’s main arguments of multilateralism and the need for an overarching system to address the injustices of these resource-rich countries.

Curiously, the IMF website seems to have motives parallel to the needs of Nigeria and other African countries, as it strives to step into developing countries to enhance their economy in order to reduce their poverty and dependence on resources. They aim to create sustainable economic growth, unlike resource usage growth, and promote employment and reduce poverty at the same time. The motives and future projects of the IMF include supporting developing countries and reinforcing multilateralism, but we have yet to see tangible outcomes of these efforts. Their aims seem to be parallel to Stiglitz’s and go beyond foreign aid to the sphere of development and sustainability as an international institution. However, there may not be an international system in place strong enough to implement IMF efforts; governance may exist without implementation.