April 14, 2014 The Resource Curse. A catalyst for bad governance. The Case of Equatorial Guinea The Resource Curse- a Catalyst of Corruption? Richard Day, an economist with a post graduate degree from the London School of Economics analyses the benefits of abundance of natural resources to African countries and why it is not the main reason for corruption. Richard makes a case for some of the top oil producers in the world which includes the Northern part of America which produces more oil than all African countries combined yet on the good governance scale it scores very highly. Canada is one of the least corrupt countries yet is one of the top ten oil producers in the world.(Day, 2014) Resource Rich Countries and Weak Institutions: The Resource Curse Effect Mohammed Ali Alayli’s paper discusses how it is important to realize that it is not natural resources that are the problem; rather, it is lack of good governance and democracy. Alayli using Equatorial Guinea as a case study, he discusses how few people have benefited from the oil riches and the country ranks near the bottom of the UN human development index. He however suggests that one solution will be to increase the transparency of resource payments by firms to governments and increasing government transparency in the management of resource revenues.(Alayli, 2005) Critique Richard Day’s paper makes a very good point with respect to the fact that resource curse is not the root cause of corruption but rather just a
Isn’t the invention of the cotton gin beautiful, almost a miracle that it could produce more cotton without as much work there was to be executed? This was true, until slave owners in the 1800’s decided to buy even more slaves to increase their profits more than ever before, much like how the industry of blood diamonds worked. Blood diamonds have erupted to the scene as a major problem in the African nation known as Sierra Leone, causing the major issue of government corruption. Ever science Siaka Stevens inflicted the type of government that would allow for such a resource to become a weapon, diamonds became the most sought out product in all of North-western Africa. The reason why blood diamonds have stuck around and isn’t just a quick boost in the economic flow of money is because it forms an evident and vicious cycle, along with the concept of blood diamonds spreading. Things such as law enforcement, poor leaders, and poor overall structure of government has made this the weak nation it is today. The way this country has resided in diamonds to quickly fix poverty has proven its unhealthy reliance on a resource, eventually causing a civil war. As blood diamonds become more prominent and vital to the African government, the diamonds have increased the spread and level of political corruptions, much like how the cotton gin had caused a vicious cycle of the need for slavery.
Countries that do not promote accountability and state competence to benefit from resource booms are at risk of the resource curse. The resource curse is when resource-rich countries benefit from its wealthy natural resources (i.e. oil) and do not help with its people welfare. Its government officials are less likely to meet the demands of its people because they are too busy pocketing the cash. These countries are more deceptable to authoritarianism, low levels of economic growth and stability. Wealthy natural resources can promote power conflicts and corrupt governments. Countries that have a resource curse are more likely to transition to democracy when its large revenue comes from citizens ' taxes.
Chad has gone through decades of corruption and poverty due to lack of transparency with oil revenues from the government.
First off is how resources fuel corruption an example of this is money. Money is gotten from resources and money can be used to buy thing for one owns gain and if someone of power has lots of money they can use that money for their own gain or there countries gain or whatever it is they are in control of.
Oil and other natural resources are an important source of wealth. States and their leaders are eager to get access to the highly-valued resources, perhaps gain control over them. However, lack of democracy in the oil-rich countries could be explained by the European colonization in the region,
In 1994, Equatorial Guinea was one of the most impoverished countries in Africa. During that time, the country had an incredibly low life expectancy of just 46 years, and the inhabitants were forced to survive on only $1 a day. Then, in 1995, they discovered a natural resource that would have the potential to change their economic well-being and quality of life forever. In this year, Equatorial Guinea discovered an immense amount of oil right off the coast of the country. Just nine years after this finding, all major US oil companies, notably Exxon-Mobile, Marathon Oil, and Amerada Hess, were drilling for oil in this once poverty-stricken country. After this notable discovery, Equatorial Guinea was generating $4 billion in revenue per year solely from the oil drilling industry. However, the inexperienced leaders that governed the country entered into a contract where they agreed to give 80%
Moreover, regarding corruption as an innate quality of human culture undermines the hope for any improvement and is inherently fatalistic, serving as an excuse for creating cultures of corruption” (source: iDebate.org)
There were many unsolved problems in a lot of the African countries, and the issue of the rise of corruption was disturbing. The fear of fraud leads to restrict movement of documents in offices, slow traffic on the highways, port congestion, ghost workers syndrome, queues at passport offices, police extortion toll gates, gas stations and vote irregularities among others all throughout Africa. So many people believe corruption is the bane, the cause of great distress, of many African countries. Corruption was the main reason why Africa’s economy got knocked down and slowed down its
Imagine if you, living in the United States, lacked basic healthcare, and a basic education. Though this may sound absurd to many, it is a reality for most of Angolan citizens. Angola is an African nation located on the South-west coast of Africa. Angola is North of Namibia, West of Zambia, and South of the Democratic Republic of Congo. Angola’s government type is a unitary state. In a unitary government, the power is held by one central authority, but in a federal government, such as: the United States, Canada and Australia, the power is divided between national (federal) and local (state) governments. The president of Angola, Jose Dos Santos, has not focused on the healthcare or education of his country’s citizens throughout his 36 years in power. Dos Santos has lead Angola through a brutal civil war that ended in 2002. It does not take much work to make sure that money is going to where it is truly needed. Many say “It doesn’t take new discoveries to cure easily preventable illnesses such as malaria and malnutrition.”
Today, China attempts to lawfully purloin African resources with an extremely self-promotional strategy. The country aims to maintain access to Africa’s sought after natural resources, regardless of the detrimental consequences for Africa. Some argue that the increase in exporting that China creates will help Africa’s economy develop, however these specific resources can hurt the economy long term. This is seen in examples such as Nigeria and Angola, Sub-Saharan Africa’s two largest oil exporters. Oil and mining are not labor intensive industries, therefore while these natural deposits may create impressive growth figures, they do not translate into widespread job creation. In fact, an economy solely based upon large oil and mineral reserves distorts the local currency. The prices of other exports then increase and it makes them hard to sell overseas, a phenomenon labeled the “Dutch disease.” Without careful management, something China has not provided, the oil and mineral revenue will
Unfortunately, most African countries that are so rich in natural resources are countries that are forced into deep poverty, diseases and quarrels. The roots of these actions are actually grows from corruption. What African people need to start doing is changing the mentality of Africans and this can only be attempted through education and training within the home. Firstly, Africans need to focus on the younger generations and show them a good example of political behaviour. And they, in turn should be aware that wealth comes through hard work and being responsible, not by stealing public funds. Africans should start implementing courses about corruption and society in schools to educate people on the negative outside corruption that makes an impact on society. According to Pollock (2010), it is strongly needed to teach law legislators, who easily participate in corruption (para. 3). Secondly, the poor and miserable conditions in which most Africans are, is the next cause of the appearance of corruption. And most important action that should be taken in consideration is to fight with poverty. What is needed is a force to change mentality. Moreover, the belief that one can buy anything with money has enlarged corruption in all levels of life. The only way to destroy corruption is to do a massive campaign like they are doing in Kenya and that would take some time to produce results. There, in South Africa, exists such culture of an
Despite Chad’s affluence from oil, its population remains impoverished. Notwithstanding these evident issues, the World Bank did not act to remedy the situation (Wysham, 2013). The United Nations and the European Union had planned many missions of intervention to improve the humanitarian crisis and to placate the war in Chad. However, these institutions have never truly focused on plans to increase the level of transparency of oil revenues in the country. The only move in Chad that can be construed as an improvement in transparency was the joining of the Extractive Transparency Initiative. While in 2010 Chad failed 12 out of 20 requirements and in 2013 was nominated “not compliant”, Chad re-joined the initiative again in 2014 and was finally declared compliant to their standard of transparency of oil revenues in 2015 (Transparency International, 2014). Though results from 2016 are still missing, this initiative has proved in numerous countries, including the United States, that their requirements for compliance are not sufficient for true oil revenue transparency (Vandeveer, 2016).
It is pertinent to note that corruption affects the security situation of the countries in Southern Asia and the entire world (Lewis 2011). It is because crime entails the misuse of power to achieve selfish gains to the detriment of the poor and the innocent people. As such, it negatively affects the economic situation of a country and weakening their stability at all levels. When the economic conditions of a country are not doing well, then it will be difficult to perform the duties required of them. It is because most of the funds will be lost in corrupt activities hence hindering the final output to the people. Additionally, corruption weakens the legal system of any country hence making it difficult for the people to receive justice.
Corruption can be defined as the use of entrusted power to accumulate public wealthy for personal benefit. Corruption is not peculiar to any country, continent or state; it is sure a global issue which is an endemic to all government all over the world. However, corruption is prevalent in the Niger delta region of Nigeria; public officers in this oil producing state of Nigeria are corrupt. Consequently, it has defied the Niger delta from developing politically and economically which has left the states reputation in a mess. Radicalization of youths, abject poverty and -political instability are the three leading effects of corruption in the Niger delta region of Nigeria.
The negative economic impacts of corruption have grown rapidly, and major international organizations have claimed that corruption hinders economic growth (world bank 2006). Although there are claims that corruption is harmful to economic growth, economists have not really agreed with the argument from a theoretical point of view. Theoretical studies suggest that corruption may counteract government failure and promote economic growth in the short run, given externally determined suboptimal bureaucratic rules and regulations. As government failure is itself a function of corruption, however, corruption should have