The Resource Curse is an economic phenomenon observed in some developing countries with an abundance of natural resources, such as oil, minerals or other important substances. Despite having abundant natural resources, these countries underperform economically compared to countries with fewer resources. The resource curse is also known as the paradox of plenty.

Rather than a boon, the resource curse affects countries in many adverse ways. Nations suffering from the resource curse may become very dependent on the price of a particular commodity, making it difficult to continue developing the economy and creating wealth. Poor countries with access to natural resources tend to have fewer incentives to develop the institutions needed to create a strong and diversified economy. As a result, they become over-reliant on their natural resources and are vulnerable to price fluctuations, making it difficult to achieve economic growth.

While the resource curse affects many countries, two notable examples are Angola and Saudi Arabia. Angola is a country in Southern Africa with a long history of foreign intervention and civil wars. Despite this, its economy is heavily reliant on income from its oil sector. About 95% of Angola’s annual budget comes from oil revenues and this overwhelming reliance on just one resource has had a negative effect on its economy. Similarly, Saudi Arabia’s wealth largely comes from its oil reserves and this has hindered diversification and the growth of private sector organisations.

Avoiding a resource curse requires a diversified economy, which can be achieved through government support and investment in education, institutions and technology. This has been the case in Saudi Arabia, whose reform and diversification plan, Vision 2030, has seen the economy strengthen and diversify. Angola has taken similar steps, introducing reform plans to diversify the economy and reduce economic inequality. As a result, it is making progress in its efforts to break free of the resource curse.

In conclusion, the resource curse affects many countries, preventing them from achieving economic growth. To break free of the resource curse, countries need to develop diversified economies and create strong institutions to ensure long-term success. As we have seen from the examples of Angola and Saudi Arabia, governments must be willing to invest in diversification strategies in order to achieve economic growth and prosperity for their citizens.