Countries that are rich in petroleum have less democracy, less economic stability, and more frequent civil wars than countries without oil. What explains this oil curse? And can it be fixed? Michael L. Ross looks at how developing nations are shaped by their mineral wealth–and how they can turn oil from a curse into a blessing. Ramin Nassehi recommends this book to scholars of development or Middle Eastern Studies, and in particular, researchers who share a passion for studying oil.
The paradoxical idea that oil is a curse for economic prosperity has become increasingly influential in the last three decades. Advocates of this idea claim that oil weakens political institutions, harms private sector promotion, increases economic volatility, hinders industrialisation, and fuels civil wars. However, recently, the ‘oil curse’ literature has been undergoing a process of ‘creative destruction’- whereby new ideas are replacing old ones- thanks to the falsification of some theories and emerging methodological criticism. Michael Ross’s recent book The Oil Curse, fits into this revisionist trend.
Drawing on statistical analysis and qualitative case studies, Ross shows that some of the oil curse theses are incorrect. For instance, in Chapter Six, he finds no evidence for oil acting as a curse for economic growth in the long-term, highlighting the similar long-run growth rates between oil-rich and oil-scarce countries during the past five decades. Although, he emphasises that economic growth has been more volatile in oil-rich countries. The author also challenges the studies that have found a negative relationship between oil and the quality of institutions (rule of law and effectiveness of public administration) on methodological grounds.
Nonetheless, as its name suggests, the book still defends many ideas in the oil curse literature and adds some revisions. The author stresses that the oil curse is a new phenomenon, which came into effect only after the 1970s, the period when oil was increasingly nationalised in the Global South. This period also experienced OPEC’s rise to power and also the breaking down of the Bretton Woods regime. All these changes, according to the author, increased the size and volatility of oil revenues for petro-states from the period of the 1980s, leading to many economic and political impediments. Each chapter deals with one of these impediments. Continue reading