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Political Economy of Development: Natural Resource Wealth Management

Vak 2013-2014

Tag(s)

[BSc] Ec, ID, PSc, WP

Admission Requirements

The prerequisite for this course is Numeracy or equivalent. Basic understanding of economics and politics (as evidenced, for example, by completion of a 100-level course) is highly desirable, but not required. If you are not sure, please feel free to contact the instructor before registration.

Description

In this survey course, we will dissect one of the key puzzles in the development of countries increasingly recognized by academic and practitioner communities alike – paradoxically, countries that are endowed with abundant natural resources can be prone to having worse development records than those without such riches. We will look at this phenomenon, dubbed the “resource curse,” under a magnifying glass by striving to answer several questions:

  • Is natural resource wealth a curse or a blessing for the country that owns it?
  • How do natural resources affect economy, governance and human development?
  • Why do policymakers in resource-rich countries manage their countries’ riches the way they do?
  • Do different natural resources have different economic, political and social effects?
  • Under what conditions is natural resource wealth harmful and under which, conducive to development?
  • How to manage natural resources prudently and what preconditions does this require?
    We will start with an exploration into the operation of global markets for key primary commodities. We will then analyze the effects of natural resource wealth on economic development, governance, political regime, propensity for domestic and international conflict, and human development. Next, we will look into potential causes of the “resource curse.” We will conclude by scrutinizing the effectiveness of key proposed remedies. While our discussion will be more pertinent to developing countries, advanced industrialized countries, as we will see, are not immune to the challenges we will explore. And although we will often devote our attention to petroleum wealth as our case study, many of the lessons will be useful for understanding other primary commodities.

Course Objectives

We will strive to broaden our knowledge and hone our tools to dissect, understand, and debate key challenges to sustainable development arising from natural resource wealth.
Successful completion of this course should enable you to:

  • understand and discuss key issues in the political economy of natural resource management;
  • critically apply existing theoretical frameworks to evaluate specific country experiences;
  • empirically identify existing or potential sources of challenges for specific resource-rich countries, their neighbors, partners and foes,
  • work toward developing tailored remedies for such challenges and present findings to stakeholders and informed non-specialists.

Mode of Instruction

We will meet for two 2-hour seminars each week, starting each class with a brief recap and following with a discussion of a specific topic based on assigned readings. Most of our discussions will take the form of a structured interaction, including case-based debates, role-plays and simulations, so as to channel our brainstorming and musing productively, efficiently and in a fun way. Collaborative “experiential learning” exercises should help us apply our theoretical knowledge, hone analytical skills in simulated real-life settings, perceive the “reality” from the perspective of actors whose behavior we want to understand, and foster productive team work. Two films and smaller multi-media material should help us connect the dots among various ideas and phenomena. Your preparation, research, contribution and reflection are essential for your success in this course, for the quality of our interaction and, ultimately, the learning of the whole group.

Assessment

Assessment: Contribution to: plenary class discussions (10%), in-class exercises (10%) and weekly online discussions (10%)
Percentage: 30%
Deadline: Ongoing

Assessment: A case study report (1500-2000 words)
Percentage: 20%
Deadline: Week 4 (Sunday midnight)

Assessment: Group project (2000-2500 words): paper (15%), formal presentation and discussion (5%)
Percentage: 20%
Deadline: Week 7 (Friday midnight)

Assessment: Final research essay (2500-3000 words)
Percentage: 30%
Deadline: Week 8 (Friday midnight)

Detailed Contribution: Four things on your end are essential for your success in this course, for the quality of our interaction and, ultimately, the learning of the whole group: preparation, research, contribution and reflection.

A case study report: The report should be a critical application of existing theoretical frameworks on the effects of natural resource wealth to evaluate the experience of a specific country.
Choice due: The case should be chosen by the end of Week 2 (Sunday midnight).
Report due: The report should be 1500-2000 words in length and submitted via the SafeAssign on Blackboard by midnight of Week 4 Sunday.

Group projects: The product of group project will be a short paper of 2000-2500 words. The country cases should be chosen and group composition confirmed by the end of Week 3. Groups will present their findings on Week 7 and finally submit the paper by Week 7 Friday by midnight.

Final research essay: You will be expected to submit a 200-250 word proposal for the instructor’s approval and feedback by the end of Week 5 (Sunday midnight). The final research essay should be 2500-3000 words in length and submitted by Friday midnight in Week 8.

This course has a zero-tolerance policy toward plagiarism and academic dishonesty. All articles of the Honour Code and Academic Rules & Regulations as specified in LUC Student Handbook 2013-2014 apply.

Literature

Links to most course readings (journal articles) will be placed on Blackboard.

The following books are required:

  • Humphreys, Macartan, Jeffrey D. Sachs, and Joseph E. Stiglitz, eds. 2007. Escaping the Resource Curse. New York, NY: Columbia University Press.
  • Bain, Caroline. Guide to Commodities: Producers, Players and Prices, Markets, Consumers and Trends. Hoboken, NJ: Wiley.
    I suggest you own a copy of the first book and share a copy of the second.

Two other books are recommended, although not required:

  • Ross, Michael L. 2012. The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. Princeton, NJ: Princeton University Press.
  • Yergin, Daniel. 2011. The Prize: The Epic Quest for Oil, Money and Power. New York, NJ: Free Press.

Contact Information

Instructor: Anar K. Ahmadov. If you have any questions before the semester starts, please write to me at aahmadov@princeton.edu and I’ll get back to you as soon as I can.

Weekly Overview

(subject to slight changes)

  • Week 1 Session 1 – Charting the Territory
  • Week 1 Session 2 – Mapping the “Resource Curse”
  • Week 2 Session 3 – Effects: Economic Growth and Dutch Disease
  • Week 2 Session 4 – Effects: State and Governance
  • Week 3 Session 5 – Effects: Political Regime
  • Week 3 Session 6 – Effects: Conflict
  • Week 4 Session 7 – Effects: Human Development
  • Week 4 Session 8 – Causes: Geography, Trade or Institutions?
  • Week 5 Session 9 – Causes: Geography, Trade or Institutions?
  • Week 5 Session 10 – Remedies: Macroeconomic Stabilization
  • Week 6 Session 11 – Remedies: Economic Diversification
  • Week 6 Session 12 – Remedies: Institutional Design and International Action
  • Week 7 Session 13 – Remedies: Dealing with Companies
  • Week 7 Session 14 – Group presentations
  • Week 8 Reading week

Preparation for first session

Please read the Introduction and Part 1, pp. 1-18, and sections Copper, Crude Oil and Fibres in Part 2-4 in the Guide to Commodities.