The Oil Curse, By Michael Ross - 1433 Words

The discovery of oil in a low-income country is often met with both excitement and dread. Many theories circle around the idea of a â€Å"resource curse† that supposedly affects countries with large amounts of resources. The resource curse essentially dictates that a country with large amounts of resources is not as likely to thrive as a country with low levels of resources. The issue with this view is that it generalizes too much; there is just as much variance in the levels of economic success between resource-rich countries as there is between them and resource-scarce countries. This is why this newly found oil in this country does not necessarily need to be met with dread, as there is a chance for success. However, this newly found potential for wealth needs to be handled with extreme care. In the following memo I will outline what the resource curse is, why some countries are affected by it and others not, and finally I will outline how this country should handle its newl y found oil wealth. Michael Ross in his book The Oil Curse, analyzes in great detail the effects of oil on a country’s economic, political, and social environment. Ross argues that â€Å"resource curse† is not the appropriate terminology; â€Å"it is more accurately a mineral curse†, as countries are generally not affected by other types of resources. (Ross, p.1) In fact, oil and natural gas tend to be the most common villains of the resource curse. Humphreys, Sachs, and Stiglitz hypothesize that â€Å"countries withShow MoreRelatedThe Natural Resource Curse : How Wealth Can Make You Poor1416 Words   |  6 Pagesadvantage of abundant resources could turn out to be a fatal weakness. 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