The Resource Curse and Oil Revenues in Angola and Venezuela

Abstract

According to the theory of the resource curse, poor countries with large endowments of natural resources, especially oil, often do not achieve sustainable economic growth because the size and volatility of oil revenues encourage corruption, mismanagement, and authoritarian governments that fail to invest for the future or provide for the well-being of the majority of their populations. These are not consequences of resource riches per se, however, but of the political conditions under which they are exploited. Angola, a classic case of the resource curse, has experienced corrupt and authoritarian government since independence in 1975. Venezuela appears to have avoided the resource curse under President Hugo Chávez. The concept of resource curse, and accordingly its remedies, are multidimensional, encompassing honest government, sound economic management, and public welfare. The case of Venezuela shows that sound economic management is not sufficient to overcome the resource curse; a political and social revolution is required to serve the interests of the population as a whole.