Criticism of the Paradigm of Cursing Resources and its Evidence to Explain Development Policy

This article is a critical review on the topic of resource curse paradigm, which is the idea that the abundance of minerals and fuels can have negative effects on the development of less developed countries. In particular, resource cursing theory suggests that the abundance of minerals and fuels leads to the formation of government intervention that hinder growth, deepen rent-seeking, and spread corruption, all of which in terms of development policy can cause negative and consequential effects on the development and growth of a country. However according to historical evidences, recent researches, and related studies, there are other factors involved throughout the underdevelopment of countries which possess natural resources that can cause more lasting effects on the development of countries at the decision-making and policy-making levels. Certain factors such as government focus, pervasive systemic corruption, government policy-making capacity, and overall threshold effects (government financial capacity, ownership structure, and government capability in developing dual growth strategies) have the potential to negatively influence a country's development process and have it deviated towards its abyss and eventually prevent it from growing. Next to dealing with the Dutch disease, rent-seeking state, and rent-seeking version of the curse of resources, the present article concludes that these concepts are in short supply in terms of theory and evidence. This work also identifies the factors that can influence the determination of welfare threshold in developing countries, which suggests that as the threshold is lowered, the risk of cursing resources becomes higher.