A2 Curse of resources

Topic

The resource curse is an anomaly that arises within the resources/extraction sector when the share of resources in GDP or total exports exceeds a threshold of excessive dependence. As long as that share remains below the threshold, the resources/extraction sector coexists with the rest of the economy without distorting it.

The resource curse is triggered when the resource share of GDP or total exports crosses the threshold of excessive dependence; at that point, the excessive dependence begins to distort the rest of the economy—not because the resources/extraction sector is producing more or less, but because the rest of the economy becomes organized around that excessive dependence on resources rather than developing on its own merits.

Monitoring the share of resources in GDP and total exports relative to the threshold of excessive dependence is, therefore, a direct way to anticipate the resource curse: once that share remains above the threshold, the rest of the economy becomes increasingly distorted by a dependency that the resources/extraction sector cannot reverse on its own.

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