The presource curse in Africa: Economic and political effects of anticipating natural resource revenues

Frynas, Jedrzej George and Buur, Lars (2020). The presource curse in Africa: Economic and political effects of anticipating natural resource revenues. The Extractive Industries and Society (Early Access).

DOI: https://doi.org/10.1016/j.exis.2020.05.014

Abstract

The notion of the ‘resource curse’ suggests that large inflows of extractive industry revenues cause many adverse macro-economic and political effects. The resource curse literature focuses on the impact of actual inflows of extractive resource revenues. However, anticipation of future resource revenues can also lead to negative macro-economic and political effects even before resource extraction takes place, which points to the role of behavioral aspects of the ‘resource curse’. Using empirical evidence from three African countries, this article investigates to what extent the anticipation of future extractive revenues led to ‘presource curse’ effects. It finds that all three countries experienced negative effects as a result of anticipation of future extractive revenues, including economic growth volatility, higher levels of national debt, eroded governance and societal conflicts. Given the phenomenal increase in oil, gas and metal ore exploration across Africa, it is likely that many countries experience the negative effects of a presource curse without natural resource extraction or long before natural resources are actually extracted.

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