The Oil Curse: How Petroleum Wealth Shapes the Development of Nations

Citation:

Ross, Michael L. 2012. The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. Princeton, NJ: Princeton University Press. 

Author: Michael L. Ross

Abstract:

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? In this groundbreaking analysis, 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. Ross traces the oil curse to the upheaval of the 1970s, when oil prices soared and governments across the developing world seized control of their countries' oil industries. Before nationalization, the oil-rich countries looked much like the rest of the world; today, they are 50 percent more likely to be ruled by autocrats--and twice as likely to descend into civil war--than countries without oil. The Oil Curse shows why oil wealth typically creates less economic growth than it should; why it produces jobs for men but not women; and why it creates more problems in poor states than in rich ones. It also warns that the global thirst for petroleum is causing companies to drill in increasingly poor nations, which could further spread the oil curse. This landmark book explains why good geology often leads to bad governance, and how this can be changed.

Annotation:

• Size is not as important as source: Cursed states fluctuate and easily hide revenue because it is not based on taxation, in contrast to European states -- Availability of rents means oil-producing states are 30% less reliant on taxes ($6 in Canada vs. $42 in Nigeria)

• MNCs create physical and economic enclaves and use own resources or employ expatriates to live on the oil rigs, creating little to no impact on economic growth for the region

• Defies two trends: wealthier without more democracy or progress toward gender equality

• When women work outside the home, they develop crucial networks, conversations, confidence and income to increase their bargaining power in the household and society. 

• TNOCs are more likely to hire men when it requires strength, expensive training, or domestic markets

• Dutch Disease crowds out manufacturing opportunities, and domestic manufacturers are more likely to employ men

• When oil booms do create jobs, they are usually in the service sector, which is good for women if they can obtain these jobs -- “In countries where women face barriers to working in the service sector, oil wealth is liable to retard their economic, social and political progress” (118)

• Number of working women is 23% lower in oil states (smaller ratio in the rest of the developing world) (120)

• Non-oil states have more export manufacturing jobs

• Oil countries are 50% more likely to have a civil war -- Oil makes governments larger, less accountable, and dominated by men, but cause of civil war is related to citizens (146)

Quotes:

“As countries get richer, women typically gain more opportunities – both economic opportunities in the workplace, and political opportunities to serve in government. Yet this has not occurred in countries that get rich by selling petroleum. The benefits of oil booms usually go to men.” (111)

“The long-run economic success of oil-rich states seems to depend partly on their success in drawing women into the labor force, which reduces fertility rates and the demand for migrant labor, and thus population growth; and partly on the government’s capacity to maintain countercyclical policies that smooth out booms and busts.” (230)

Topics: Armed Conflict, Development, Economies, Extractive Industries, Gender, Women, Gender Roles, Gendered Power Relations, Patriarchy, Gender Equality/Inequality, Globalization, Governance, Households, Livelihoods, Multi-National Corporations, Political Economies, Political Participation, Religion, Rights, Women's Rights

Year: 2012