Lesson 13 - The Resource Curse

An Overview of Lesson 13

Suppose that a new and precious natural resource has been recently discovered in abundance at the same time in Nigeria and Switzerland. What would be the impact of the discovery in each country? What would the economic consequences for each of the two countries be? Would the new wealth turn out to be a curse or a blessing?

You might think that such discoveries are of great benefit to the countries where they occur. Surprisingly, researchers on this topic cannot decide whether such discoveries are blessings or curves. It turns out there are examples for both cases.

Here we will try to explain why such discoveries might be a curse rather than a blessing to a country.

What will we learn?

By the end of this lesson, you should be able to:

• understand the two features of natural resources that make them different from other economic goods;
• define what the “resource curse” is;
• list what type of resources are usually involved in the curse;
• understand the reasons why the resource curse can occur;
• understand the effects of resources curse in the countries affected.

We will focus here on Peru, a resource rich country in South America that has struggled to deal with the resource curse.

What is due for Lesson 13?

This lesson will take us one week to complete. Please refer to the Calendar in Canvas for specific time frames and due dates. There are a number of required activities in this lesson. The chart below provides an overview of those activities that must be submitted for this lesson. For assignment details, refer to the lesson page noted.

Questions?

If you have any questions, please post them to the Comments area that appears at the bottom of this page and all other pages in this lesson. I will check these comments regularly to respond. While you are on a page, feel free to go through the comments and post your own responses if you, too, are able to help out a classmate.