Resource-rich States Research Articles

Revisiting Development Disparities across the Indian States: In Quest of Evidence of Resource Curse

Despite a large number of studies going into the issue of income and developmental disparities across states in India, the possibility of resource curse being at the root of some states persistently lagging in development has rarely been probed. The present paper is aimed at filling this void in the literature. Economic common sense and writing of some eminent development economists suggest that regions endowed with resources should be in the advantaged position to grow fast and develop quickly. In reality, however, regions endowed richly with natural resources have often tended to lag– a phenomenon that has given rise to the resource curse hypothesis. Countries/regions rich in natural resources can be cursed if the easy and abundant resource revenue breeds moral hazards causing institutional weaknesses that allow rent-seeking and other anti-developmental processes to flourish. In the Indian context, persistent lagging behind of the resource-rich states of Odisha, Madhya Pradesh, Chhattisgarh, Assam, Jharkhand, and Bihar hints at resource curse casting a spell over these states. Using panel data on 17 major Indian states at decennial intervals from 1981 to 2011, evidence for probable resource curse has been explored while controlling for some common determinants of development. Results confirm evidence in support of resource curse dragging overall development attainment in most of the resource-rich states. On a positive note, however, it has been found that development attainment across India has advanced progressively, especially in the post-reform decades.

Strengthening subnational institutions for sustainable development in resource-rich states: Decentralized land-use planning in Peru

Abstract Weak institutions have been identified as a principal cause of the poor developmental outcomes of many resource-rich states. Research has largely focused on national-level institutions and governance, whereas their subnational equivalents remain understudied. Subnational governments, partially empowered by decentralization reforms, have increasingly sought to use existing institutions to influence mineral resource governance although they have no formal authority over such resources. This article examines the implementation of land-use zoning and planning in three Peruvian regions (2007–2016). It focuses on how and when subnational governments seek to influence mineral governance and under what conditions they succeed in strengthening institutions for inclusive and sustainable development. Theoretically, the article draws on the literature on decentralized forest governance and empirically it is based on extensive ethnographic research carried out in the three regions, written primary sources and 139 semi-structured interviews. Our analysis suggests that, whereas regional governments have strong incentives to use land-use zoning to influence mineral governance, they often lack capacity, accountable representation, and support from the central government. Still, land-use zoning has provided regional governments with information about natural resources that has been used in negotiations with mining companies, but also to improve regional planning. To have durable impacts on development, profound state reform to achieve sectoral integration and political decentralization is, however, needed. Our findings add to debates about extractive governance by showing how subnational governments, without having formal authority over mineral resources, still play an important role in shaping the developmental outcomes of resource extraction. Our paper also provokes important questions regarding how subnational governments could be included in extractive governance and which mechanisms for reconciling different interests are likely to be most effective. All told, a better understanding of how inclusive subnational institutions are effectively enforced and gain stability is crucial for transforming resource wealth into sustainable development.

Manufacturing Consent: Mining, Bureaucratic Sabotage and the Forest Rights Act in India

ABSTRACTThis article traces how substantive decision-making power over extractive projects is denied to India’s indigenous and forest-dwelling communities, even as they have clinched rights to ownership and consent under the landmark Forest Rights Act of 2006. By examining the consent mechanism provided under the act, we contend that the possibilities, and limits of such mechanisms are shaped by the larger architecture of the state-bureaucratic apparatus and practices that govern the process of transferring forests (“forest diversion” in bureaucratese) from rural communities to corporations. By analyzing a case of a forest diversion proposal for an iron ore mine in India’s resource-rich state of Odisha, we argue that consent provisions are derailed by “bureaucratic sabotage,” i.e. the power of corporations and state officials to control and manipulate the movement and circulation of documents through different tiers of government. In conclusion, we offer some thoughts on the weaknesses of the FPIC mechanism and the possible ways to address some of these. However, ultimately, the larger implication of such sabotage is the headlong collision between FPIC provisions and the principle of eminent domain. For FPIC to be meaningful, in India and globally, this fundamental contradiction must be confronted and resolved in favor of resource justice.

Unpacking the extractivist state: The role of weak state agencies in promoting institutional change in Peru

When a resource boom has begun it is often challenging to develop institutions for governing natural resources in an inclusive and sustainable manner. Whereas existing studies on resource-rich states have focused on political elites or social mobilization for explaining attempts to strengthen such institutions, we know less about the role of less influential reform-oriented agencies (e.g. environmental agencies, subnational governments), and what explains how and why on rare occasions they are surprisingly effective in driving institutional change. Theoretically, we draw on theories on institutional weakness and change. Based on 139 interviews, we analyze the outcomes of different strategies adopted by the Peruvian Environmental Ministry (MINAM) to enforce a participatory zoning and land-use planning (LUP) reform between 2008 and 2016. We argue that weak agencies are dependent upon strategic ability, here referring to the skill of an agency to adapt its strategies to reigning political opportunities, thereby contributing to defending or expanding its autonomy vis-á-vis powerful groups and building alliances with societal actors that could defend it from opponents. By unpacking the dynamics within a resource-rich state, we contribute with a nuanced analysis of the challenges of building and effectively enforcing institutions in a context of expanding extractive industries.

Key determinants of wind energy growth in India: Analysis of policy and non-policy factors

Wind energy has been considered as an important resource to meet the energy needs of India in a sustainable manner, with over 30 GW installed capacity as on December 2017. However, the wind sector has witnessed a temporal and spatial asymmetrical growth in India over the last decade, attributed to policy inconsistency. We analyzed wind growth in six resource rich states of India from 2003 to 2016, using panel data regression, considering 16 exploratory variables categorized under policy, geographic, economic, social, technical and commercial heads. Contrary to expectation, both policy variables FIT and RPO came out as insignificant factors. The existing wind capacity and its share in the total generation capacity came out as significant drivers. Commercial factors like industrial tariff and utility's performance got reflected as other determinants. Stark variations were observed in state-wise analysis, with wind growth in some states responding to infrastructure factors like road network. Scaling up wind deployment in resource rich Indian states would require policy instruments contextualized to their economic profile, energy resources and power market.

The political economy of banking in Angola

From inauspicious beginnings in a post-socialist, highly dysfunctional financial system, Angolan banking grew in less than a decade after the end of the country’s long civil war into one of Africa’s largest. Fuelled by the country’s oil boom, banks became crucial in articulating Angola’s interactions with the international system as well as a domestic agenda of oligarchic consolidation by the ruling MPLA’s elite. This article describes and analyses this growth trajectory in its historical and institutional context and seeks to understand the reasons why it did not lead to either a significant expansion of credit outside the elite or a contribution towards economic diversification outside the oil sector. Important as a study of the political economy of finance in Africa’s third largest economy, the article also contributes to the growing literature on the nexus between banking and politics in resource-rich states.

Energy producers in sub-Saharan Africa: beyond the gatekeeper state?

This article examines how gatekeeper states develop by comparing Nigeria, an archetypal gatekeeper state, with Chad, a more recent oil producer. It considers what emerging producers may learn from established ones, to thereby avoid the resource curse and thus move beyond the limitations of the gatekeeper state. Gatekeeping might be mitigated by transparency and governance initiatives promoted by International Financial Institutions, Western governments, civil society organisations, and even emerging producer governments themselves. But established gatekeeper states are also likely to endure and to emerge among new producers. Thus, the gatekeeper state concept, and its utility in analysing resource-rich states, endures.

Resource Wealth, Democracy and Mobilisation

The impact of resource wealth on society remains highly contested in the literature. Some perspectives suggest that resource wealth is associated with political apathy, while others indicate that resource wealth fosters violent civil conflicts. We leverage these seemingly contradictory impacts of natural resources on society by expanding the scope of inquiry to explore different types of resource wealth (oil and minerals) as well as other dimensions of political life (protest). Utilising a global dataset for the period 1950–2006, we test the impact of resource wealth on mobilisation. We find that while oil wealth demobilises citizens in all regime types, mineral wealth strongly correlates with higher levels of mobilisation in democracies, though not in autocracies. In addition, using survey data, we examine individual-level attitudes toward protest participation in two resource-rich states, Peru and Ecuador. The results indicate that an individual living in a mineral-rich country like Peru is more likely to participate in a protest compared to an individual living in an oil-rich country like Ecuador. Our findings highlight the contributions of the resource activism framework for understanding the connection between natural resources and mobilisation.

Natural resources and education outcomes in the United States

Existing development literature has argued that natural-resource endowments “curse” economic prosperity by reducing expenditures on education. According to this theory, public and private agents lack sufficient foresight to make optimal economic decisions and become poor as a result. Using a panel of U.S. state-level data, this paper offers evidence to the contrary. Public spending on education in resource-rich states greatly exceeds that in resource-scarce ones, and private education services are imperfectly crowded out as a result. Analyzing a broader set of public education outcomes reveals that relative teacher salaries, public enrollment rates, and teacher–student ratios tend to move pro-cyclically with resource booms and busts. Weaker evidence is provided that graduation rates fall in response to resource booms, perhaps reflecting a rise in the opportunity cost of going to school for working-age students.

Trade, Tarsands and Treaties: The Political Economy Context of Community Energy in Canada

Governments today are increasingly looking to non-state and bottom up community actors to help achieve climate change mitigation targets. Canada is a resource rich state with one of the highest per capita greenhouse gas footprints in the world. It is also a state where issues of political will, geographic scale and incumbent industries contribute to a challenging context for broad community participation. Despite this, a long history of co-operative and municipal activity exists in the energy sector, exhibited in diverse ways across its provinces and territories. Provincial variation in energy sources and actors illustrates a far more nuanced picture than exists at the national level, providing a case rich with both promising and cautionary tales for the community energy sector. This article examines the emergence of community energy in the context of broader energy sector moves towards increasingly powerful trade agreements, privatization, and conflicts over Indigenous rights in Canada. It argues that significant potential exists to strengthen the role of local actors in Canadian energy governance, but that macro-level political and economic developments have also created significant challenges for widespread community energy transitions.

Economic diversification in resource rich countries: History, state of knowledge and research agenda

Is economic diversification desirable for a resource rich country? Our knowledge on this issue is at best partial. This paper revisits the literature on diversification in resource rich states. It maps the history of diversification, identifies gaps in the literature and documents some trends in the data. In particular, it exposes limitations in the data and catalogues trends in non-oil exports and non-oil private sector employment. It concludes with an agenda for research.

Foreign mining investment regime in Indonesia: regulatory risk under the revival of resource nationalism policy

The resource nationalism policy over natural resources is the existing policy affecting resource rich states nowadays. This policy has greatly affected mining regulation and foreign mining investment in developing states. Indonesia as one of the resource rich states is not sterile from the influence of resource nationalism policy by basing this policy on the Article 33 of the 1945 Constitution (fourth amendments). The revival of resource nationalism policy has substantial impact upon the foreign investment regulatory regime in Indonesia. There has been a tendency that new mining law and its implementing regulation have shifted to the adoption of the resource nationalism policy. This study will firstly analyse the extent to which the policy of resource nationalism has affected mining regulatory regime in Indonesia. This study also demonstrates that the resource nationalism policy has resulted in the increase of state control over mining resources and the limitation of foreign ownership over natural resources in mining industry. The adoption of resource nationalism policy which is coupled with the lack of regulatory governance has increased regulatory risk in foreign mining investment in Indonesia. Accordingly, this will also have a significant implication on the bilateral investment treaty (BIT) that has been established between Indonesia and other jurisdictions globally. Therefore, this study proposes policy recommendations for resolving this issue.

What Do We Know About Economic Diversification in Oil-Producing Countries?

Countries dependent on oil and mineral exports are often advised to diversify their economies, yet surprisingly little is known about how this can be done. This paper reviews the recent literature on diversification in resource-dependent states and suggests it has been constrained by missing and inconsistent data, and a reliance on diversification measures that are relatively uninformative for resource-rich states. It then uses an improved measure of export concentration from Papageorgiou and Spatafora to document three empirical patterns over the last half-century: the divergence between oil-producing states and non-oil states; the reconcentration of exports in most oil and mineral producing states since 1998, caused by the boom in commodity prices; and the heterogeneity of the oil producers, marked by greater diversification in Latin America and Southeast Asia, mixed performances in the Middle East, and greater concentration in Africa and the former Soviet Union. While change in the former Soviet Union was spurred by large new discoveries, the diversification failure of all oil-producing states in both North and sub-Saharan Africa is striking, and stands in contrast to the region’s non-oil producers. The paper concludes with a research agenda for deepening our understanding of this issue.

Economic development via dam building: The role of the state government in the sarawak corridor of renewable energy and the impact on environment and local communities

Since 1970, as a consequence of Malaysia’s New Economic Policy (NEP) and its integration into the global economy, the development achievements and per capita GDP growth of the resource-rich state of Sarawak have been impressive—although not without problems. Since timber and petroleum resources are exhaustible, and there is a concern with finding new sources of growth and revenue, the federal and state governments advocated industrial diversification in 2008 via the development of a multibillion-ringgit regional development corridor called the Sarawak Corridor of Renewable Energy (SCORE). Central to the success of the huge developmental corridor was cheap hydroelectric power (HEP). For the Sarawak government, SCORE’s launch and eventual success were based on the availability of abundant water resources and suitable hydropower dam sites in the state. Yet, SCORE is likely to contribute to further environmental degradation and impact negatively upon the livelihoods and welfare of local communities. This paper examines this recent development trend and its consequences. Specifically, it examines the role of the Sarawak state government in advocating the construction of numerous HEP dams, the role of foreign and local investment in SCORE, and their collective impact upon the environment and local communities. What this paper reveals is the nexus of close relationships that binds key politicians in the state administration with crony businesses associated with foreign-linked contracts that has proven to be destructive socially and environmentally

To disclose or not to disclose: How global competition for foreign direct investment influences transparency reforms in extractive industries

In the last decade, the Extractive Industries Transparency Initiative (EITI) has grown in both popularity and influence. The ascendance of EITI is surprising because traditionally, leaders of resource-rich states prefer to tightly control their extractive industries. This paper investigates the underlying causes of EITI membership in order to understand its acceptance, even among some of the most authoritarian regimes. The paper argues that leaders of resource-rich countries use the EITI to consolidate their international prestige as eager reformers, which serves to both maintain and lure foreign investment. The cross-national and interrupted time series analyses reveal that EITI members not only have higher FDI levels compared to non-members, but these investments increase once countries join the initiative.

Un « petit État » accède à la scène internationale : la trajectoire du Qatar

The Emergence of Qatar as a Small State Actor A lthough Qatar is a clear example of a small state, it has successfully risen as a prominent international foreign policy actor using its considerable clout as one of the largest exporters of liquefied natural gas (LNG). This has made Qatar a unique example among smaller resource rich states. It has notably and intensely deployed soft power and mediation for ambitious security objectives, internal development, and visibility. Qatar’s foreign policy diverges from the norm of small state actors’ usual multilateralism, which is explainable by two factos. First, the role of energy relationships has proved very important in defining Qatar’s bilateralistic approach. Qatar supplies liquefied natural gas (LNG) on long-term contracts, allowing it to have strategically unique energy security relationships on a bilateral basis. Additionally, Qatar has personalized its foreign relations decision making processes rather than maintaining a bureaucratic structure, rendering classical and formalized multilateralism incompatible with Qatar’s current foreign policy approach. ■

Impact of Infrastructure Availability on Industrial Development- a Micro and Macro Level Analysis for Resource Rich State of Jharkhand, India

Most of the relevant researches conducted so far, have been at national or state level, either to find out the ranking of the states or how these rankings have changed over time. Assumption of the whole state area as a homogeneous unit is not true, and this study feels that the 'District' should be the level at which the research should be based. The paper formulates different composite indices using Principal Component Analysis (PCA) technique. Various development models formulated tries to analyze the impact of various infrastructures on level of industrial development using multivariate OLS regression techniques. The results show that the availability of Physical Infrastructure (PI) and Social Infrastructure (SI) are comparatively in a better condition. However, Banking Infrastructure (BI) needs immediate intervention.

The ball may be round but football is becoming increasingly Arabic: oil money and the rise of the new football order

In 1977 the United Arab Emirates (UAE) recruited the former Leeds United and England manager, Don Revie, to manage the national football team. Revie’s recruitment heralded the Gulf States’ entry into football’s international sphere, which has reshaped the game’s political economy. Confronted by the need to diversify oil monies housed in sovereign wealth funds, Gulf States, most notably the UAE and Qatar, have invested broadly in football. This investment has reshaped football boundaries globally, though not without controversy. It has fuelled allegations of corruption in the bidding process for the 2022 World Cup, inflated player salaries and helped create super-elite European clubs. In doing so, it has eroded the significance of traditional national based competitions and cups. The continuation of this trend will eventually remould elite club football into a competition between mega club brands, either sponsored or owned by resource-rich states like the UAE and Qatar.

Natural resource rent and stakeholder politics in Africa: towards a new conceptualisation

This paper critically revisits the debate on natural resource rent, curse and conflict, interrogating some of the key assumptions that have become received knowledge in extant discourses. The paper demonstrates how orthodox theories’ preoccupation with issues of resource rent and resource curse tend to be marred by slants of ahistoricity and state-centricity. Adopting a stakeholder approach to the issues of resource rent and conflict in Africa, the author argues that natural resource rents produce and attract a multiplicity of competitive stakeholders, both domestic and external, in the resource-rich states. The competition and jostling of stakeholders for access to, and appropriation of, rentier resources is too often an antagonistic process in many emerging economies that has consequences and implications for violent conflict. The paper attempts a new conceptual explanation of how natural resource rents dialectically generate stakes, stakeholders and political conflict. The paper concludes by proposing the need for the more conflict-prone African rentier states to transition to a more functional state model, the transformative state.

More heat, less light! The resource curse & HIV/AIDS: A reply to Olivier Sterck

We reported fairly robust results suggesting that resource rich countries did less well containing HIV/AIDS than resource poor states (de Soysa and Gizelis, 2013). We argued that public action to prevent the spread of disease was going to be weaker in resource rich states because rulers would have less incentive to fight disease. Olivier Sterck (this issue) criticizes our study on several grounds, arguing that resource rich states can provide anti-retroviral therapy (ART) and thereby fight the AIDS epidemic. He, however, finds no relationship between resource wealth and HIV/AIDS. We argue that his reanalyses do not fully address the theoretical association between resource wealth and the spread of HIV/AIDS and that his argument about ART is more wishful than a realistic expectation. Future research should probe more carefully why resource wealth has not been deployed more effectively for fighting disease—a point we can all agree on.