Abstract:
Oil booms have brought unprecedented wealth and development to some
countries while in others this has not been the case. The latter is attributed to
the resource curse phenomenon which has been explained by the Dutch disease
and more recently by poor quality institutions. This paper is a three
country comparative assessment of how countries have utilised their oil revenues
and the extent to which key policy environments, such as institutional
and political aspects, may have influenced different outcomes. Evidence shows
that in Nigeria, oil has been more of a curse because institutions have not
been strong enough to efficiently manage the vast oil revenue to have a positive
impact on the economy and for the benefit of its people. In Norway, the
management of oil resources reflects the view of decision makers that the resources
belong to current and future generations, and therefore the development
of the industry should benefit both generations. Appropriate institutions
and policies such as the Petroleum Pension Fund, Sovereign Wealth Fund, a
more diverse economy and a fiscal rule for controlling, and more targeted,
expenditures were implemented. These, in addition, to a very stable democratic
political environment and effective legal system meant that oil has become
a blessing to Norway. The UAE has a similar but different approach to
Norway, by using oil as a basis for sustained development. It has a Sovereign
Wealth Fund, and focuses on distribution of the oil-wealth and investment in
social and economic infrastructure leading to a more diverse economy. The
nature of its political stability, although essential to avoiding the curse, is different
from Norway’s and there is potential for tension and conflict. For developing
countries in general, good governance, accountability, high government
effectiveness, appropriate regulations and anti-corruption policies will
help link natural resources with high sustained economic growth and turn the
resource from a curse to blessing.
