The Presource Curse
Publisher: International Monetary Fund
Author(s): James Cust and David Mihalyi
Date: 2017
Topics: Conflict Causes, Extractive Resources, Governance
Every year there are major discoveries of oil and gas deposits around the world. Government officials and citizens alike are jubilant, anticipating the prosperity these discoveries herald. But that exuberance can often be misplaced. Some countries have experienced growth disappointments after major oil finds, and economic problems have set in shortly thereafter.
The world has long recognized that countries with abundant revenues from oil and other natural resources often tend to have less economic growth and more social problems than do less-endowed countries—a phenomenon dubbed the resource curse.
But it turns out that in many cases, especially in countries with weak political institutions, economic growth begins to underperform long before the first drop of oil is produced, an event we call the presource curse.