Term
| List oil and mineral dependent states tend to suffer from more ________. (5 Things) |
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Definition
- Corruption
- Authoritarian Government
- Government Ineffectiveness
- Military Spending
- Civil War
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Term
| Which grows faster, an economy with abundant natural resources, or an economy with fewer natural resources? |
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Definition
| Economy with fewer natural resources. |
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Term
How can an abundance of natural resources impede economic development?
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Definition
- Easier for government to control wealth.
- Revenue can be mismanaged.
- Income not shared equally.
- Institutions of democracy are not present prior to finding resource wealth.
- Lot of debt (easier for resource-rich countries to get a loan)
- "Dutch Disease" (resource windfall causes appreciation in currency, slowing down domestic production/growth; spending all the windfall at once creates inflation!)
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Term
| What does the term "White Elephant" refer to? |
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Definition
| The mismanagment of revenue (wasting money on unnecessary projects) |
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Term
| What is the Alaska system of avoiding resource curse? |
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Definition
| They give the revenue back to the populace by paying citizens directly |
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Term
| What system does Norway use to avoid resource curse? |
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Definition
| Save the majority of their revenue for future generations. Get revenue from taxes, and in the future when oil runs out, they can still make money off of it. |
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Term
| True or False: A state's reliance on either oil or mineral exports tends to make it less democratic. |
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Definition
| True; of 48 countries for which oil comprised more than 30% of total exports, nearly 50% scored in the bottom third of the United Nations Human Development Index. |
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Term
| Which country ranks number 1 in corruption? |
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Definition
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Term
| Which country ranks number 1 in conflict? |
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Definition
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Term
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Definition
What happens in countries with Dutch Disease is that the value of their currency rises, thanks to the sudden influx of cash. That then makes the country’s manufactured exports uncompetitive and its imports very cheap. The citizens, flush with cash, start importing like crazy, the domestic industrial sector gets wiped out. |
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Term
| Why do resource-rich countries often experience ballooning debt? |
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Definition
| The market prices of these resources are difficult to manage, because of their volatility. A boom experienced from the resources often unravels in the bust that follows. |
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Term
| What is the taxation effect? |
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Definition
| Resource-rich governments don't have to rely on their citizens for a source of income (taxes) when they can rely on the income from their resources. The lack of taxation leads to a lack of representation, and a lack of democracy. |
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Term
| What is the Spending Effect? |
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Definition
| Wealth leads to greater patronage spending ("White Elephant" projects that have little to do with economic development). This dampens pressures for democratic change. |
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Term
| List the impacts of Nigeria's oil dependence? (This can be applied to many nations). |
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Definition
- Higher poverty rates
- Economic stagnation
- Reliance on oil prices
- Wide social gaps and income inequality
- Corruption
- Wasteful spending (white elephant)
- Authoritarianism
- Ballooning debt
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Term
| What did the World Bank do when oil was discovered in Chad? |
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Definition
- Provided $330 million to the $4.1 billion project
- Required a Revenue Management Scheme, Environmental Assessment, Transparency, and Consulted Communities
- 10% of funds were set aside for future use
- 80 - 85% of revenue must be spent on social and economic projects
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Term
| Did the World Bank's involvement with Chad end successfully? |
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Definition
| No; Chad did not comply with key conditions |
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Term
| What are potential solutions to the resource curse issue? |
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Definition
- Oil revenue management scheme
- Save resource revenue for future generations
- Promote good governance
- Establish independent institutions
- Diversify economy
- Transparency
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