Combating the Resource Curse: An Alternative Solution to Managing Mineral Wealth

Countless studies document the correlation between abundant mineral resources and a series of negative economic and political outcomes, including poor economic performance, unbalanced growth, weakly institutionalized states, and authoritarian regimes across the developing world. The disappointing experience of mineral-rich countries has generated a large body of scholarship aimed at explaining this empirical correlation and a list of prescriptions for combating the resource curse. The most popular solutions emphasize macroeconomic policies, economic diversification, natural resource funds, transparency and accountability, and direct distribution to the general population. The success of these solutions has been limited because they either presuppose strong state institutions, which are widely absent in the developing world, or assume state ownership over mineral wealth and thus the need for external actors to constrain the state. At the same time, domestic private ownership is rarely proposed and often maligned. Yet, in some countries, it would serve as a more viable way to avoid the resource curse by fostering institutions that more effectively constrain state leaders, encouraging them to invest in institution building, and enabling them to respond more successfully to commodity booms and busts. Erika Weinthal is associate professor of environmental policy in the Nicholas School of the Environment and Earth Sciences at Duke University (weinthal@duke. edu). Pauline Jones Luong is associate professor in the Department of Political Science at Brown University (paulineₗuong@brown. edu). This article is part of a long-term joint project; the authors are rotating authorship on the articles they publish, sharing equal responsibility for the content and analysis herein. They gratefully acknowledge comments and suggestions from Richard Auty, Anna Grzymala-Busse, Victoria Murillo, Richard Snyder, the Colloquium on Comparative Research at Brown University, and three anonymous reviewers.