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Development, Politics of Development: issues

The resource curse:

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                                                                                                  The resource curse

By D.A Parker

Is an abundance of natural resources   an  impediment to Development?

Introduction
This paper argues that resources are not in themselves an impediment to development but over reliance on them and bad management is. There is an on-going debate amongst academics and political figures about the actual cause of the’ resource curse’. Using Botswana as an example of success contrasted against those that have fared less well it can be shown that for many people, even in the most successful resource dependent economies that have shown unparalleled development and economic growth, abundant resources can still be an unavoidable curse.
The resource poverty conflict Trap
An abundance of resources should be a blessing to a developing country however, for much of the developing world they have proved to be more of a curse than a blessing, doing more harm than good. Many parts of Africa and Asia find themselves in constant cycles of under-development, poverty and conflict (Collier, 2007).

The abundance of natural resources has been an aggravating factor against lasting peace and stability. Constant conflicts occur across the undeveloped world. Political and quasi-political forces struggle to control both extraction and supply or natural resources to finance their struggle against oppositional forces. Volatile situations arise which often involve several warring factions within a single region all fighting for autonomy over resources. Resources finance their struggles for identity, sovereignty, or political power over the whole country or specific region. Increasingly contemporary conflicts are over religious ideology. It is the natural resources that are financing these conflicts and it is the rest of the world mainly the west and increasingly China, that are buying them (Velleng, F, 2006: et al). A group that controls the resource’s and has ability to sell or trade them for arms can gain the upper hand with the obvious effect of prolonging the conflicts.

Contemporary conflicts are no longer a simple struggle between two opposing forces culminating with a single victor. Modern day conflicts involve many sides with varying ideals and philosophies often with more than just sovereignty at stake. An abundant resource adds yet another layer of complexity to theses struggles. After the fighting is over in many in cases the warring factions have to go on living side by side long after the violence subsides. To obtain any lasting peace involves a long process of negotiations, reconciliation and development. Sudden discoveries of resources have the tendency of negating efforts of reconciliation by attracting opportunist and rekindling old conflicts.

Africa is a rich and diverse continent with an abundance of natural recourse buried beneath the ground, yet it is also the poorest continent and the most violent, conflicts and tyranny reigns from the north to south. Amongst all the turmoil there are glimmers of hope, countries like Botswana for example doing considerable well out there natural resources presumably escaping the resource curse? At least that is the image that the country likes to portray to the rest of the world. However, the truth is far from that of the corporate image they portray. For the San Bushman diamonds are as big a curse as in the Congo or Liberia. For the Bushman there is as much blood on Botswana diamonds as anywhere else where resource conflicts exists, despite how much wealth the rest of the country may accumulates or spend(Good, 2005).So can Botswana truly be considering a success story or do we just forget about the Bushman and say it is?

So why do so many resources rich countries fail whilst others do apparently well. One argument blames “Dutch disease” (Ross, 1999: p8-10: Collier, 2007 : p40-42: et al). Dutch disease happens when a government fails to invest in other areas of the economy and rely too heavily on the resource. This has the effect of making other areas of the economy too costly and unprofitable. Dependency theory such as Raul Prebisch (1950) & Singer (1950) et al, (cited:Frankel, 2010: p5), suggest that over reliance on a single commodity or on natural resources means that the economy is open to market fads and fluctuations in the market mechanism. Meaning that when the international commodity prices fall the economy with too great a reliance on a single resource will fail. This as Collier (2007) suggest is part of the boom and bust cycle that many underdeveloped countries face creating cycles of peace, prosperity, poverty, and war.

Another problem suggests Collier (2007), is when a poor country suddenly discovers an abundance of resource, it is only natural that they borrow heavily and to invest in its extraction. This sudden growth in Government coffers can be another trap. For many, as in the Congo and Liberia for example, it can be seen by political opposition groups as a honeypot and an opportunity, this can lead to conflict before extraction of resource even starts.
As Kolstad and Rosser (2009) argue that it is the type and availability of the resource. The easier it is to extract the more open it is to exploitation. Comparing the Congo’s surface diamonds to Botswana deep diamonds is possible evidence for this argument. This is considered as rents the higher the cost of extraction the less likely rebel groups will invest in its extraction. Rebel groups are opportunist when it comes to gaining wealth to finance their wars; consequently they are less likely to invest in extraction technologies. Likewise oil that is onshore is harder [but not impossible], to exploit than oil found inland (Kolstad and Wiig, 2009). “The key idea in this class of explanation is that easy money corrupts”… (Sandbu, 2006: p1155). The Nigerian scenario is case in point, where whole regions are be plundered and exploited by both the corrupt government, privateers and gangs alike, with little returns going back into the state coffers, or used for further development. This along with chronic poverty and immense corruption and violence in most other areas of business leaves Nigeria and especially Lagos the capital amongst the top most dangerous places in the world to live in (Meredith, 2005).

Mineral- rich Government’s enjoying high revenues from resource exports “generally spend unusually large sums on their military forces” (Ross 2003:p25: cited: Good, 2005: p 7). This is no different of peaceful countries either. In Botswana for example, military spending increased significantly in Botswana during 1990s, rising from “P214 million (Pula) in 1992 to P625 million in 1995, representing slightly less than 5 per cent of GDP” (op. cit.). This

amount is not only higher than in any of its neighbouring countries, but is also “bigger than the United States” (ibid). Botswana is considered a peaceful country that has never been to war, perhaps it is paranoia having strong neighbour’s on one side like South Africa and weaker unstable neighbours like Zimbabwe on the other side, that makes them want to spend so much on military. As s(Rosser, (2006 ) suggest ‘resource abundance, authoritarianisms, despotism, military expenditure and civil war go hand in hand although this has yet to be fully proven it appears likely. As (Sandbu, (2006) ) suggest that by using economic measures that properly reflects the countries reliance on natural resources, rather than using absolute measure such as gross domestic product (GDP) or other percentile growth figures, there is ‘clear evidence of a resource curse’ “It manifests itself not only in slower economic growth, but also in higher risk of violent conflict” (Collier & Hoeffler, 1998: Fearon & Laitin, 2003 cited Sandbu, 2006: p1154).

So it would appear that even successful resource rich countries have blood on their hands in one way or another. Non- have completely escaped from the curse of buried wealth, not even the countries that have succeed in developing their economies and remained apparently peaceful like Botswana. The exploitation and inhumane treatment of indigenous communities by forced resettlement and pollution of their lands in order to get at and extract resource is not restricted to Botswana. In fact in most resource rich regions of the world similar treatment to that of the Bushman can be found. In Mexico, Brazil, Ecuador for example and many other parts of South America, Africa and China, blatant abuse of human rights in order to extract resources can be found. The new battle field is the Artic and the extraction of ‘oil tar sands’

concomitantly with the destruction of the environment and the miss treatment of the Inuit people and destruction of their culture; the whole of the region is under threat. The fact is that even for the most successful economies wherever there are resources, there will be found Human exploitation, environmental devastation or even war, no one place escapes these facts.
Some success
If we put aside the Bushman for one moment and consider Botswana as the success story that it is in economic and development terms, we find several factor that have boosted its development. Botswana government has made sound reinvestment into infrastructure and education some 80% of Botswana population are literate. The government has also invested heavily in roads power and water supplying remote villages and farming communities with much needed bore holes for water. They have built hospitals that supply affordable health care for all ‘Batswana ’. They have a second to none, in Africa, telecommunications network and postal service. The government encouraged diversification into other industry although they have still a long way to go. Botswana remains an exemplar for the rest of Africa on how to manage resources properly through good governance and sound partnerships.
Botswana created sensible partnership with international partners such as DeBeers rather than selling the rights and relying on taxation and ‘rents’ for wealth creation. This also involved training and education in appropriate technologies thus creating a valuable skills base for their budding industries, they are now cutting approximately 40-50% of all diamonds

they export. As Kolstad (2009), argues that it’s the ‘rents’(costs), that cause the problems attracting opportunist where low rents apply, due ease of extraction and access promising get rich quick opportunities to fuel wars and conflict. Whilst rents become a stabilising factor when they are high and where high tech extraction methods are required.
Having good neighbours goes a long way to help with developmental success. However for Botswana this had a twofold effect. When Botswana attempted to create an automotive assembly industry in partnership with Hyundai it failed because of South Africa that ironically became the impediment to Botswana industrialisation program not the reliance on resource (Good, 2005). South Africa implemented tariffs restricting shipping and importation on vehicles and goods assembled in Botswana. They attached duties and point of sale on imported goods that are also made in South Africa, thus protecting South Africa’s own automotive manufacturing industries. Success full neighbours can have twofold effects of being both good for exporting raw materials but bad for creating a manufacturing industry, because of increased competition and unfair goods transfer practise, this can hinder the development of a local manufacturing base and increasing the reliance on natural resources(op. cit.).
Being a landlocked country Botswana seemingly negates the landlocked argument held by many. More importantly it is having good relations with neighbours that allow unrestricted access to ports and transportation system goes a long way towards lifting the resource curse, as in the Botswana, South African relations. Although this is not an altogether complete reason for their success and has had some negative effects it has certainly helped their rapid

growth (Good, 2005). Despite there being a “broad agreement that the resource curse operates through causal mechanisms that are political in nature” (Ross,1999:p 558), as yet there is no common consensus about which of the particular “political mechanisms are [the] most important” (op. cit.).
Conclusion
This paper has highlighted some of problems caused by natural resources abundance. Countries that have resource abundance without strong state apparatus often end up in conflict. Resources can add another layer of complexity to already unstable political situations.
Botswana success is down to good governance with sound partnerships and a strong reinvestment policy into infrastructure health and education. Botswana is now one the leading economise in Africa despite being a resource dependent economy. However it is not without its victims in this case it is the San-Bushman.
Over reliance on resources can leave the economy susceptible to market fluctuations and presents a high risk familiar, this often leads to conflict. Most rebels are opportunist the easier the resource is to extract more chance there is of rebels exploiting it for their own needs.
Having resources abundance without a strong state leadership and good governance can lead to the exploitation of people and the detraction of the environment. This is perpetuated still further by the richer countries who insist on paying the cheapest possible prices for reassures without concern for the environmental or human cost involved.

Bibliography
Bannon, I. and Collier, P (2003) Natural Resources and Violent Conflict, Washington,
DC, The World Bank
Collier, P., Goderis, B, (2007) Commodity prices, growth, and the natural resource curse: Reconciling a conundrum, Paper 274, The Centre for the Study of African Economies Working Paper Series, Oxford University.
Collier, Paul (2007) The Bottom Billion : Why the poorest countries are failing and what can be done about it, Oxford, Oxford University Press.

Frankel, Jeffrey A. (2010) The natural resource curse: A survey. SSRN eLibrary.

Good, Kenneth (2005) Resource dependency and its consequences: The costs of botswana’s shining gems. Journal of Contemporary African Studies, 23, 27-50.

Kolstad, Ivar & Wiig, Arne (2009) It’s the rents, stupid! The political economy of the resource curse. Energy Policy, 37, 5317-5325.

Meredith, Martin (2005) The state of africa : A history of fifty years of independence, London, Free.
Prebisch, Raul,(1950), The Economic Development of Latin America and Its Principal Problems (New York).
Ross, Michael L. (1999) Review: The political economy of the resource curse. World Politics, 51, 297-322.

Rosser, Andrew ((2006) ) The political economy of the resource curse: A literature survey,. Brighton: Institute of Development Studies,, IDS Working Paper Number 268.
Sandbu, Martin E ( (2006) ’, ) ‘Natural wealth accounts: A proposal for alleviating the natural resource curse. World Development,, 34 (7) 1153-1170., 1153-1170.

Singer, Hans W, (1950) “US Foreign Investment in Underdeveloped Areas: The Distribution of Gains between Investing and Borrowing Countries,” American Economic Review, Papers and Proceedings, 40, May: 473-485.

Velleng, Frank (2006) Africa: War is business, film festival Netherlands available on line from http://www.cultureunplugged.com/play/4316/Africa–War-is-Business, accessed 12/05/2011

Development, Politics of Development: issues, Poverty

Poverty and the Kalahari Bushman: Advancing the Conceptualization of what it means to be poor.

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Poverty and the Kalahari Bushman:
Advancing the Conceptualization of what it means to be poor.

By D.A.Parker

Introduction
The purpose of this literature review is to gain a fuller understanding of the current debate and views on conceptualising poverty in the contemporary world.
The first part of this paper explores the development of the Orshansky Threshold leading up to the creation of the dollar a day poverty line the standard measure of poverty promoted by the World Bank. In the next section, the paper contrasts this approach with the constructivist approach of Sen and the development of his entitlement theory.

Part two examines the plight of the Kalahari Bush and assesses the usefulness’ of both these theories. And finally in conclusion suggest where things could be improved.

The Orshansky threshold
Two approaches are evident in the poverty debate today. The positivist approach favoured by Dollar and Kraay of the World Bank, described as lacking rigor by Sumner (2004), usually relies on ‘large scale random sample households surveys, with a preferences for consumption expenditure over income, as being more stable over time’ (Wrattern, 1995 cited,Moser,2003 pp114:Woollcock, 2007,pp01). The roots of this approach can be traced back to the advent of the ‘Orshansky threshold’ (Barrington,1997).

In 1963 Mollie Orshansky [1915 – 2007] created the ‘seminal US poverty line’ (Barrington 1997, p. 1) that has since become known as the Orshansky threshold. The Orshansky threshold is a poverty base line that relates to a basket of goods commonly consumed by the average non farming family household in America (Barrington,1997).

This basket has a Dollar value that is multiplied by three to give the minimum income needed for survival, of the average family in America in times of crises or food shortages (Hauver, et al., 1981). This system was later adopted by dollar and Kraay and modified to fit the developing world, which led to the creation of the dollar a day; the standard measure of poverty favoured by the World Bank. The data Mollie used to create this system was taken from the US department of agriculture who had gathered the data on nutrition and consumption for an emergency food plan (ibid).

The ineptness of this measure is clear to see in this extract from the New York Times (2003) ‘In Vietnam a dollar buys half a pound of rice, half a pound of potatoes and a third of a pound of ground beef’ reported Daniel Altman (2003) of the New York Times, ‘In Mexico a dollar buys a pound of rice, a pound of beef and, half a loaf of bread’ (ibid). Because of unequal distribution the buying power of the dollar can vary considerably.

Yet For the World Bank and the United Nations and many other Neo-liberal thinkers this dollar is the dividing line between being rich or poor suggest Altman (2003). However, it is easy to see from this report that in the real world it has little value in real terms.

The second approach that is prevalent in the poverty debate is the ‘Narayan approach’ (McGregor and Cantley,1992) of the constructivists favoured by Amartya Sen et al (1999) and Andrew Sumner (2004) this viewpoint ‘rejects the income/ consumption perspective as being too narrow and reductionist, serving the technocratic needs of development professionals, rather than seeking to understand the complexities and diverse local realities in which the poor live’(Chambers 1995, cited Moser 2003, p. 114).

Amartya Sen is one of the most influential thinkers in the field of development today has developed his ‘Entitlement theory’ (Sen, 1981: Sen. and Drèze, 1999) out of his study of famines both in India and Africa and born through his whish to improve conditions in his home country India. Whilst working for the United Nations Development Program he was instrumental in creating the human development index that was adopted by the UNDP in 1990 (Noorbakhsh,1998).

The change in debate that has taken place over the last decade centres around two main approaches to the conceptualisation of poverty as identified by Maxwell (1999). These approaches being the quantitative approach favoured by the World Bank and David Dollar, that recognises ‘income and consumption patterns as the as the best proxies for poverty’ (Moser 2003) and the qualitative, a more humanistic approach (Moser and McIlwaine, 2003, pp. 114-115). This approach takes into consideration basic human needs, rights, freedoms as well as considering access to entitlements and opportunity (Sen 1981). ‘Both systems use multiple subjective indicators of poverty status’ (Moser and McIlwaine, 2003).

This change in thinking has been heavily influenced by Sen’s work has led to the creation and adoption of the Millennium Development Goals. This represents an important shift away from the static poverty lines approach, moving towards an approach that recognises the ‘multidimensionality of deprivation though the analysis of assets and vulnerability’ (Moser, 1998; Maxwell, 1999).

Development and Freedom
In his book Development as Freedom Sen argues that ‘freedom is the both the primary end and the principle means of development’ (Sen, 1999, p. 31) taking this stand point Sen argues that the developing world suffers from various forms of un-freedom that restrict the process of development, this traps them in to cycles of development and un-development.

This concept is repeated in Professor Colliers (2007) book The Bottom Billion in which he argues that, for the bottom billion developments is likened to a game of snakes and ladders with the rules slightly changed hence, ‘Snakes & chutes’(Collier 2007; pp05) meaning there are considerably more ways down than there are up.

Both Sen (1999) and Collier (2007) would argue that the economic division between the rich and poor is increasing and for the people in the bottom billion, conditions have not improved much over the last decade. These people in the bottom billion are getting left behind because they are stuck in cyclic poverty traps.

Utilitarianism
In contrast to this the institutional concept of poverty expressed by Dollar and Kraay (2002) appears very different. The neo-liberal view of the World Bank as expressed by Dollar and Cray (2002) see the undeveloped world suffering in a ‘low-equilibrium trap’ (Nelson, 1956). This means that the capital stock accumulation is raising at the same rate as population growth, thus, income per worker is not increasing meaning zero per capita growth, the economy suffering from stagnation and zero economic growth (Nelson, 1956).

Not withstanding this trap David Dollar (2002) argues that the poverty gap is not increasing but decreasing with integration in the global economy. He argues that this is spreading of the wealth, a kind of trickle down affect. He goes onto suggest that it is only a matter of time before the rest catch up. He leans heavily on China for statistics to back up these claims.

The utilitarian approach of Dollar and Cray uses hedonic calculus when obtaining and manipulating data statistics. This limits itself by being concerned only with the sum-total and does not included minority or individual sufferance (Sen 1999).

There appears to be general consensus among ‘scholars and practitioners alike that the causes, manifestations and consequences of poverty are multidimensional’ (Sen 1999: Cited, Woolcock 2007, p. 1), meaning that poverty can not be defined by income alone. Although there appears some agreement between the constructivists and the positivists in that they both see poverty as multi-dimensional however, it is the nature of these dimensions that is at question.

Poverty and the Kalahari Bushman
So far this paper has examined conceptual theories that assume the standard classical economic model as conditions or preconditions required for integration into the capitalist economic system. None of these concepts discussed so far has catered for populations that choose to live outside of this system.

There have been several failed attempts to integrate the Bushman of the Kalahari into the modern world. Guenther (1977) writes of the rich white farmers of northern Botswana, who inhabit vast areas of the most fertile land in the country. The white people acquired there land around the turn of last century from the Bantu-speaking Tawana. Prior to the Tawana settlers the land was inhabited solely by the San Bushman the Tawana laid claim to the land and sold it to white settlers with no consultation to the San people. Historical evidence shows that Bushmen communities have always lived in the desert regions of the Kalahari.

The early attempts by the new settlers to employ the Bushman as farm workers all but failed from the outset. The Bushman are a nomadic people and never stay in one place for to long. Also the low wages that the new settlers paid the bushman meant that they had to supplement there income with hunting. Often after a hunting trip they would return to find no jobs as the farmer would have employed a new group of workers. Thus the cycle begun again with the new group, they never stayed long enough to learn the skills required to work on a farm (Guenther,1977).

This was the first attempts to integrate the Bushman hunters in to modern society. Unsurprisingly they clearly had no inclination to adopt a settled life style and the conditions offered by the white farmers where far from favourable they had a much better opportunity remaining as they were.

The San are but one of a number minority groups in Botswana and represent a relatively small proportion of the total population. Accurate data of the precise numbers are hard to find, with figures varying from as little as 3% (Hitchcock, 2002) up to 10% (US Bureau of African Affairs, 2007).

The people of the Kalahari have survived forced removal from there lands and found themselves for the first time in there history suffering the inflictions of modern life. Survival International reports that for the first time they now have Aids and other sexual transmitted dieses in the community and many are becoming alcoholics, inflictions that have never been seen by these people before (Survival-international 2008).

Poverty has finally overcome these people ‘In many ways, they are at the bottom of the Botswana socio-economic system. A sizeable proportion lives below the poverty datum line. They exhibit some of the highest rates of infant mortality alongside the lowest living standards and literacy rates, and in many cases have insecure access to land and resources’ (Hitchcock, 2002). Over the years the Kalahari Bushmen have remained in poverty where their richer neighbours denied them rights to the land, in both Botswana and Namibia, they have found their territory drastically reduced.

Most livelihoods approaches such as Sen’s ‘Entitlement theory’ (Sen,1981) tend to focus on economic and social aspects rather than physical dimensions such as personal safety. The concept of security itself is mostly associated with national and international territorial disputes’ only recently have there been efforts to broaden this to incorporate notions of human security focusing on basic needs and human dignity (United Nations Development Programme (UNDP), 1994: World Bank, 2000) perhaps this why tribes like the Bushman are getting left behind. Simply there is no system that caters for their specific needs.

There has been renewed attempt recently to bring the bushman into the modern world. The self stared NGO, The first People of the Kalahari, (TFKG) set up by the san peoples in order to unify and take control of the Bushman’s knowledge and fight for land rights as well as control their wealth. With the discovery in 2002 of a plant that helps combat obesity and only grows in the Kalahari Desert region, suddenly there knowledge is of some value and attempts are being made to profit from it. Coincidently Shiva Vandana has been advocating saving and protecting indigenous cultures for many years for this very reason. In order preserver diversity it is the indigenous people who hold the key, suggests Shiva (Shiva,1991).

Another attempt to integrate the Bushman them into the economy is being made by the organisation for Information and communications technologies for development (ICT) a subsidiary of the NGO Development Gateway Foundation, who suggest that the ‘Kalahari Bushmen, have become a depressed and marginalised community, excluded from their traditional nomadic range by the good intentions of those who have fenced it into national wildlife parks in which there is no place for humans, and certainly no place for those who treat these preserves of endangered species as a larder. In the past the San people’s understanding of their environment was everything they needed, but as the fences went up, that understanding became irrelevant; they lost everything and fell into poverty’ (ICT 2003). Suddenly their knowledge is of value.

Conclusion
Although there has been a lot written about the Bushman of the Kalahari, however, there is little actual evidence to be found of the extent of poverty in which they live. The reason for this must partly be because they have lived predominantly outside of the economic system. Concomitant with this the attitude of the Botswana Government has not provided for a fair assessment of the situation.

Until recently they have been consider to have no economic value other than a tourist attraction. In fact on the contrary the government has viewed these peoples as a hindrance to development and in the way of progress and diamond extraction.

This study clearly shows the need for a way of measuring the extent of poverty that these peoples endure. The pressure of modernisation and development are forcing these people into lives of hardship and poverty as before they have never seen or experienced.

Recent events with the discovery of medicinal plant that can be used in the west high lights the need to preserver these people’s knowledge customs, as well as showing their economic worth. 80% of all medicines know today originated from plants out of the rainforest and have used by indigenous tribes foe centuries (Shiva, 1991).
This paper has highlighted’ a gap in the thinking of economic theorist when it comes to conceptualising the poverty of indigenous populations. The systems that they conceptualise do not on the whole, consider the indigenous culture that live out side of the normal economic system; this paper has also shown the reason why we need to include these people in the poverty calculation.

The constructivist approach of Sen is the closet tool available to measure the poverty of these people. This approach needs to be expanded so that measuring the depth of poverty of indigenous culture that live outside the system can be achieved.

References
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