Avoiding the resource curse

Traders in the Ghanaian Stock Exchange World Bank Photo Collection

By Elly Jupp, Research Associate, IISS-Middle East

Today Economist readers voted in the newspaper’s latest debate that Africa’s rise is real. But the margin was ‘surprisingly narrow’. This is a resource-rich continent where economic growth has often been hampered by corruption and poor governance. Indeed, countries such as the Democratic Republic of the Congo, Nigeria and Uganda have all at times faced what is commonly called ‘the resource curse’, where the discovery and sale of oil or valuable minerals benefits only a small percentage of the population, and dominates the economy to the detriment of other industries.

In such situations, an influx of foreign investments can push up the value of the local currency, making other exports uncompetitive and depressing the wider economy. The jobs created for local people in resource-extraction tend to be relatively few and low-skilled, with the processing and manufacturing of the raw product moved abroad. Exporters are also vulnerable to the vagaries of the commodities markets, whose violent price swings affect the poorest hardest and make growth unsustainable. Sometimes the profits from commodities simply disappear into the pockets of kleptocratic regimes.

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Norway to freeze China out of the Arctic?

By Jens Wardenaer, Research Analyst and Editorial Assistant

Relations have been frosty between Oslo and Beijing since October 2010, when the Norwegian Nobel Committee awarded a jailed Chinese dissident, Liu Xiaobo, that year’s Nobel Peace Prize. Is the two countries’ row now spilling over into the Arctic, a strategic region in which China has a growing interest?

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The Arctic ‘race for cooperation’

Swedish Foreign Minister Carl Bildt speaks on Arctic security

By Sarah Johnstone, Assistant editor, online

Russia’s planting of a flag under the North Pole in 2007 was a ‘magnificent’ bit of PR, Sweden’s Foreign Minister Carl Bildt said at the IISS this week, but it wasn’t typical of international relations in the Arctic.

At the launch of the institute’s Forum for Arctic Climate Change and Security, Bildt highlighted the need for nations and companies to work together in the polar region. Rapid climate change – twice as fast in the Arctic than elsewhere – was opening up new maritime routes and opportunities for resources exploration. However, he insisted, it remained a harsh environment that made cooperation necessary.

This relatively benign assessment surprised some of his London audience, one of whom said the issue of Arctic security normally in the UK focused warily on what the Russians were doing. Bildt admitted that Vladimir Putin’s election manifesto was ‘not entirely in tune with what I’m saying’. However, he stuck by his earlier assertion that the Arctic region had become much less militarised since the end of the Cold War.

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