Resource Curse In Africa Essay

CHAPTER 2 : LITERATURE REVIEW

1. Extractive Industries in Global Context

Non-renewable mineral resources play a dominant role in 81 countries, which collectively account for a quarter of world GDP, half of the world’s population and nearly 70% of those in extreme poverty . About 3.5 billion people live in countries rich in oil, gas or minerals, but all too often, these resources have turned out to be a cause of conflict rather than opportunity. Many of these countries also suffer from poverty, corruption and conflict stemming from weak governance. In some cases, resource wealth is connected with political disorder, declining standards of living, civil clash, and elite capture. This phenomenon is widely described as the “resource curse” and has been attributed to a number of factors, including weak political institutions and incentives .

What Is the “Resource Curse?

The resource curse (also known as the paradox of

Equatorial Guinea is a small oil-producing country on the continent’s west coast. In 2010, an estimated 75% of the population lived on less than $700 a year, but the average per capita income was almost $35,000, the continent’s highest. Instead of creating prosperity, resources have too often fostered corruption, undermined inclusive economic growth, incited armed conflict and damaged the environment.

Corruption is endemic in many of Africa’s most resource-rich countries. Rather than invest resource revenues into infrastructure and education, crooked politicians, often in collusion with the companies mining the resources, siphon proceeds from the continent’s mineral and petroleum wealth into their own