1. Dimensions of the Oil Curse A Framework for Assessing Africa’s New Resource Producers Dr. Robert Looney Naval Postgraduate School

2. Oil Curse Overview
Several generalizations are possible concerning the oil or resource curse
Economic performance among those with oil, mineral or agricultural resources
Tends to be no better than among those without,
And often worse
Long run patterns suggest that more often than not when fuels, ores and metals exports increase as a proportion of merchandise exports, GDP growth declines
This pattern is not inevitable, with many countries finding oil/resources to be a blessing rather than a curse.
A good analogy is the lottery winner.
In the past many African countries have had many symptoms of the oil curse – not inevitable that this phenomenon will characterize the future.

3. Patterns of Long-Run Growth

4. Channels of the Oil Curse
At least four main channels through which the resource curse has harmed an economy. The African countries under consideration have, at one time or another, experienced each:
Pro-cyclical fiscal and monetary policies
Crowding out of manufacturing
High volatility of commodity prices
Deterioration of governance and supporting institutions
All or combinations of these factors can lead to:
Unsustainable growth – bubble economy
Wasteful public investment programs
An over expansion of the public sector
Destruction of the agricultural sector
Lack of competitiveness outside the oil sector
Underdevelopment of the private sector
High levels of chronic unemployment

5. Variants of the Oil Curse
Main element separating the oil curse and oil blessing countries is the relative level of governance
Many aspects of the oil curse are captured in the Legatum Institute’s Prosperity index which has eight dimensions
Two of these dimensions separate the oil countries into three separate environments:
Economy
Five year growth rate (2000)
Confidence in financial institutions (% yes)
Satisfaction with living standards (% yes)
Governance
Confidence in the government (% yes)
Confidence in the judiciary (% yes)
Government Effectiveness (World Bank)

6. Diversity of Oil Economies

7. Oil Economies: Patterns of Governance

8. Oil Economies: Diversification