The Resource Curse, which is also known as the Paradox of Plenty, describes a state whereby resource rich countries, despite an abundance of natural resources, are economically weak and poverty stricken. As such, these resources are an economic curse; what should be a source of wealth and prosperity for countries actually make them weaker. The reasons for this are widely debated. One of the common reasons cited is that the governing agencies of these countries, which are often third world, are corrupt and mismanage resources for their own benefit. Other reasons include unstable marketplaces for the resources the country produce, a lack of competitiveness in other economic sectors and poor management of resources by a countries leadership.
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It is clear that, in order to overcome this phenomenon, some of the profits that are made from the mining need to be reinvested into the country itself. Many people cite Norway’s handling of their oil export funds as an example of how resource rich countries could handle themselves. They invest a large share of their wealth in a national pension that is worth billions of pounds. Joseph Stiglitz in the book Making Globalization Work addresses the issues related to the Resource Curse and describes how the best way for the global society to assist in overcoming this phenomenon is to ensure that a share of the value of the resources with the people of the country. Whilst this is very difficult due to the profit optimization of the mining companies and corrupt practices, Stiglitz believes that the first world have to play a part in this. Stiglitz argues that the western corporations who are mining these materials have to change the way they do business with these countries, giving them fairer prices for their resources and behaving more ethically. They should employ local people where possible in jobs that are safe and offer them an opportunity to work for a fair salary. In addition to this foreign companies should invest in education within these countries, assisting the local people to develop skills and knowledge that can help them develop themselves and rise out of their poverty.
Stiglitz, J. E (2006) Making Globalization Work New York: Norton