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Political Economy of Natural Resource Development

Vak 2014-2015

Tags

[BSc], GED, ID, PSc

Admission requirements

  • Classes of 2013-2016: 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.

Course 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.

Weekly overview

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

Learning 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

Contribution to:

  • class discussions and exercises (15%)
  • weekly online discussions (15%)
    A case study report (1500-2000 words, 20%, Week 4)
    Group project (2000-2500 words):
  • paper (15%)
  • formal presentation and discussion (5%, Week 7)
    Final research essay (2500 words, 30%, Week 8)

Compulsory textbook

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

The following book is required:

  • Humphreys, Macartan, Jeffrey D. Sachs, and Joseph E. Stiglitz, eds. 2007. Escaping the Resource Curse. New York, NY: Columbia University Press.

Two other books are recommended, although not required:

  • Bain, Caroline. Guide to Commodities: Producers, Players and Prices, Markets, Consumers and Trends. Hoboken, NJ: Wiley.
  • Ross, Michael L. 2012. The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. Princeton, NJ: Princeton University Press.

Contact information

Instructor: Anar K. Ahmadov (a.k.o.ahmadov@luc.leidenuniv.nl)

Preparation 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.