Tuesday, 11 November 2014

Resources: Good or Bad for Poor Countries ?

By: Bikal Dhungel 

Having a huge reserve of resources implies the wealth of a country. The availability of Oil in the middle east and other parts of the world is the matter of envy for countries that don't have it. Middle Eastern nations like Saudi Arabia, Kuwait, Qatar etc have turned themselves from a desert to places with highest sky scrapers and enormous amount of wealth. Few other countries with rich natural resources have developed themselves to highest level. However, the question goes, is it good if a poor and undemocratic country is rich in resources ? Studies have shown otherwise. Countries in Africa and generally developing world, that are rich in natural resources are not the one where there is a stable economy and high human development level.

Actually it is the opposite. Countries that have resources are the ones that are unstable, violent and autocratic states. The Democratic Republic of Congo, which is rich in resources for example Coltan, a material that is used to make Laptop Computers is one of the most unstable countries in Africa. The struggle to get access to resources has left the country with deep ethnic conflict. This was first started by the French and Belgian colonialists in early twentieth century. When DRC gained independence, the colonialist type rule by president Mobutu Sese Seko was continued for 30 years. He did nothing at all to develop the country except enriching himself with the vast resources DRC had by selling it to western multinationals. To remain in power, Mr President did everything he can to suppress the people by preventing the Congolese to educate themselves and he did everything to impede economic growth. When a president of a neighboring country asked Mobutu for help when there was an uprising, he replied ' I told you not to build any roads, I have never built any roads in 30 years. If you build roads, then people to reach you to topple you down'.

Similarly, Somalia used to be a rich part with plenty of exotic fishes near its shores until the days when big western ships came and started to take their fishes. That drove small Somali fishermen out of business who eventually started being pirates. The business of being a pirate was so lucrative that if you are successful in hijacking a big ship, you can demand millions of dollars from western countries. In a poverty ridden place like Somalia where an average citizen struggles to survive, dreams of millions of dollars gave rise to gangs and thugs who involved in piracy. Well, this is a huge topic of discussion but one can take resources as the reason which gave rise to this mess.

What is happening in Niger Delta, Nigeria is nothing new for most of us. Nigeria has vast oil reserves and most of the western oil companies are operating there. Nigeria has second largest number of millionaires in Africa and is on the way to become largest. This can attributed to oil. The Nigerians on the other hand, like Somalis are struggling in their daily lives and the oil companies have also caused vast environmental disaster that has negative impacts on the lives of people living around Niger Delta. Oil has not done good in Nigeria. The list goes on and on when we take more examples.

However, we should also not forget that few countries have done better, for example Botswana. It has done better because it had a functioning democratic government that is capable to enforce law and order. Even if any country is democratic but not in a position to maintain law and order, and discovery of resources will give rise to groups, clans or gangs who will seek to take control over these resources which can cause violence or large scale conflicts. Countries like Norway, where Oil was discovered in mid twentieth century did extra-ordinarily well. Norwegian wealth is not only socially just i.e. Whole population get their share in the form of economic development or health care, they have also created a huge reserve from that income for a rainy day. When oil is finished, this reserve can continue helping them in the future.

Going back to the times of Colonization, also countries with more resources were colonized like India, Brazil or the United States. Unfortunately, most of the countries, even though they became independent from the colonialists, got even worse politicians from their own nations who continue to exploit them.

Conversely, everything else constant, countries with no natural resources are among the richest countries, like Germany, Switzerland, Denmark, Luxembourg, Singapore, South Korea and few other countries. Of course there are other factors that play an important role but these countries never had resources. Neither did they colonize other countries with an exception of Germany which had few colonies before World War I but had to give it to France or UK after Germany was defeated in World War I.


The aim of this article is to say that, when there is any discovery of resources in a poor or unstable country, it can be negative. It can give rise to more instability and harm the economic development. So, creating a functioning democracy with a capable justice system which is able to enforce law an order is a pre-requisite for a peaceful future.  

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