Abstract
Large capital infusions may actually retard economic growth, structural change and spatial decentralisation in pluralistic countries in the early stages of nation-building. This is because the prudent deployment of commodity windfalls is hampered by political pressures which promote overrapid absorption. Nigerian oil windfall absorption fuelled inflation and in the absence of a compensating devaluation biased consumption in favour of imports. Inefficient resource-based industry (RBI) implementation and Overregulation retarded industrial diversification while the neglected rural sector experienced severe ‘Dutch disease’ effects. In contrast, Cameroon made fewer poor RBI investments and maintained a resilient agriculture. However, this owes less to prudent windfall deployment and more to the shorter duration of its oil boom than is commonly supposed. Neither country succeeded in using RBI for spatial diversification and their efforts merely added to the inefficiency of RBI investment.
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