Comparative Political Economy of Resource Extraction

by

Moises Arce, Adrian Siefkas

• LAST REVIEWED: 15 January 2019
• LAST MODIFIED: 15 January 2019
• DOI: 10.1093/obo/9780199756223-0264

Introduction

The bulk of the existing literature on the resource curse emphasizes the pervasive and negative outcomes that are typically associated with a country’s abundance of natural resources, such as poor governance, low levels of economic development, civil war, and dictatorship. The worldwide correlation between natural resource wealth and autocratic governance is well-known, and scholars have tried to explain this outcome in a variety of ways. One explanation is rentier state theory, which argues that resource wealth inhibits the growth of civil society because resource (oil) rents allow governments to relieve social pressures through a mix of low taxes and patronage spending. Oil rents thus undermine citizens’ motivation to mobilize, demand representation, or hold political leaders accountable. However, while much of the resource curse literature focuses on the adverse effects of oil wealth, oil makes up only one portion of extractive industries. A growing comparative political economy literature focuses on resource extraction (e.g., precious metals like gold and silver; base metals like copper; and energy resources like coal and uranium) and explains why it leads to conflict among local populations, corporations, and national governments. The extraction of these resources has the opposite effect of oil in that it tends to generate political activity as opposed to political apathy or quiescence. By political activity, we mean the different mobilizations and collective action strategies of challengers near the extractive frontier. While the literature treats this political activity as conflict, it is nonetheless distinct from the resource–civil war debate from the resource curse literature. Case studies and quantitative research support the observation that mineral wealth leads to conflict. The quantitative literature examines the variation of resource (mineral) conflicts cross-nationally and subnationally. Some studies have examined the relationship between mineral wealth and conflict; other studies have explored the relationship between geo-referenced extractive areas and conflict. Mineral extraction is different from oil extraction in terms of the labor intensity of extraction processes, the state ownership of the resource, and the amount of revenue each resource generates. Conflicts over mineral wealth can occur at different stages along the commodity chain: the point of resource access (e.g., when agricultural producers and extractive industries clash over land and water use), the extraction stage itself (e.g., when extractive industries are expanded), the processing and transportation of oil and minerals, and the waste management stage (e.g., the failure of tailing dams or oil pipelines). This comparative political economy literature has also begun to explore the consequences of conflicts, which can result in different political interactions between local communities and corporations, the extension of consultation rights as well as other participatory practices at the grassroots level.

The Limits of the Resource Curse and Oil

Much of the resource curse literature is preoccupied with the effects of oil wealth. Ross 2015 reviews this literature and shows that petroleum does have adverse effects on democratic governance, such as supporting authoritarian governments, increasing corruption, and creating civil wars. Numerous studies challenge the political dysfunctions associated with resource wealth, and the causal mechanisms linking natural resources with these outcomes remain poorly understood. For instance, Haber and Menaldo 2011 rejects the existence of the resource curse altogether, arguing that scholars should stop applying the term so broadly. Fjelde 2009 examines the interaction of corruption in the relationship between oil wealth and civil war and finds that corruption can reduce the risk of civil conflict. Paler 2013 offers an experiment to test the rentier state theory that windfalls reduce citizen participation in government due to the reduced need to tax. Karl 2007 proposes a social contract to solve the oil curse. Basedau and Lay 2009 suggests that both resource wealth per capita and resource dependence should be taken into account to explain the conflict-promoting effects of oil wealth (also known as the resource–civil war debate). Arce, et al. 2018 takes the discussion away from oil, suggesting that mineral wealth has different effects on society. Conde and Billon 2017 sorts through literature seeking to explain why some communities resist mining projects and others do not. Arellano-Yanguas 2008 and Arellano-Yanguas 2010 show how the international policy agenda has moved the resource curse from the national to the local level.

• Arce, Moises, Rebecca E. Miller, Christopher F. Patane, and Marc S. Polizzi. “Resource Wealth, Democracy, and Mobilisation.” Journal of Development Studies 54.6 (2018): 949–967.

  DOI: 10.1080/00220388.2017.1311408

  Examines the effects of oil and mineral wealth on mobilization around the world.

• Arellano-Yanguas, Javier. A Thoroughly Modern Resource Curse? The New Natural Resource Policy Agenda and the Mining Revival in Peru. Brighton, UK: Institute of Development Studies, 2008.

  Examines how the “new natural resource policy agenda” pushed by international organizations has led to localized conflict.

• Arellano-Yanguas, Javier. “Local Politics, Conflict and Development in Peruvian Mining Regions.” PhD diss., University of Sussex, 2010.

  The author uses survey data and various quantitative methods with two original comparative data sets to assess how the “New Extractive Industry Strategy” affected Peruvian mining communities.

• Basedau, Matthias, and Jann Lay. “Resource Curse or Rentier Peace? The Ambiguous Effects of Oil Wealth and Oil Dependence on Violent Conflict.” Journal of Peace Research 46.6 (2009): 757–776.

  DOI: 10.1177/0022343309340500

  The authors use multivariate cross-country regressions and a macro-qualitative comparison of oil exporting countries to exemplify a more accurate approach to studying oil dependence and conflict.

• Conde, Marta, and Philippe Le Billon. “Why Do Some Communities Resist Mining Projects While Others Do Not?” The Extractive Industries and Society 4.3 (2017): 681–697.

  DOI: 10.1016/j.exis.2017.04.009

  Literature review that identifies factors that lead communities to either resist mining projects or not.

• Fjelde, Hanne. “Buying Peace? Oil Wealth, Corruption and Civil War, 1985–99.” Journal of Peace Research 46. 2 (2009): 199–218.

  DOI: 10.1177/0022343308100715

  Finds that oil-rich states can use corruption to decrease civil conflict by paying off chosen groups.

• Karl, Terry Lynn. “Ensuring Fairness: The Case for a Transparent Fiscal Social Contract.” In Escaping the Resource Curse. Edited by Macartan Humphreys, Jeffrey D. Sachs, and Joseph E. Stiglitz, 256–285. New York: Columbia University Press, 2007.

  The author analyzes different approaches taken by international organizations and national governments to reduce negative outcomes of resource wealth and offers new suggestions.

• Haber, Stephen, and Victor Menaldo. “Do Natural Resources Fuel Authoritarianism? A Reappraisal of the Resource Curse.” American Political Science Review 105.1 (2011): 1–26.

  DOI: 10.1017/S0003055410000584

  Argues that omitted variable bias has contributed to the theory that there is a resource curse and uses original data sets, time series-centric techniques, and specified counterfactuals to show that a resource blessing may indeed exist.

• Paler, Laura. “Keeping the Public Purse: An Experiment in Windfalls, Taxes, and the Incentives to Restrain Government.” American Political Science Review 107.4 (2013): 706–725.

  DOI: 10.1017/S0003055413000415

  Shows that Indonesian citizens living in areas benefiting from windfalls care just as much about officials misusing government funds as those living in areas benefiting from taxes.

• Ross, Michael L. “What Have We Learned about the Resource Curse?” Annual Review of Political Science 18.1 (2015): 239–259.

  DOI: 10.1146/annurev-polisci-052213-040359

  Reviews the effects of oil wealth on regime type, corruption and violent conflict.