The Oil and the Glory

O&G Book Review: Pauline Jones Luong’s and Erika Weinthal’s Oil Is Not a Curse

In the discovery and development of the Jubilee oil field in Ghana, much media coverage has focused on how the west African nation might avoid the dreaded “resource curse.” Also called the “paradox of plenty,” the malady is thought to explain why countries richly endowed with oil often suffer from weak economies, corruption, and instability. ...

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In the discovery and development of the Jubilee oil field in Ghana, much media coverage has focused on how the west African nation might avoid the dreaded “resource curse.” Also called the “paradox of plenty,” the malady is thought to explain why countries richly endowed with oil often suffer from weak economies, corruption, and instability. The resource curse, according to the popular narrative, is about as immutable as gravity.

In their new book, Oil Is Not a Curse: Ownership Structure and Institutions in Soviet Successor States, Pauline Jones Luong and Erika Weinthal call this assumption into question, and put it under the microscope for close scrutiny. Luong and Weinthal — professors at Brown and Duke universities, respectively — argue that such countries suffer not from their resources, but from their institutions. The deciding factor in the success or failure of a petrostate, Luong and Weinthal write, is who owns the oil.

The authors make their case with a study of five former Soviet states: Azerbaijan, Kazakhstan, Russia, Turkmenistan, and Uzbekistan. Given the numerous variables at play in any global assessment of this issue, the approach cuts down the complexity by providing a clear and level starting point for evaluation. They assess the years between 1990 to 2005 — a period they argue is largely neglected in resource curse literature — and explore the different outcomes when the state owns the oilfields, and when it is turned over to private hands. Their findings? When oil is in private hands, the resource curse does not rear its head — Kazakhstan being a prime example.

While we are all ultimately cursed by the finite quantity of resources on the earth, Luong and Weinthal argue that countries can make the institutional choices necessary to optimize them — that well-endowed states are not victims of the resources themselves, but rather of their own failure to opt for fiscally strong ownership options. Among other petrostates, this is good news for relatively well-governed Ghana, as it seeks to become Africa’s seventh-largest oil producer.

Angela Osborne is a graduate student in Georgetown University’s Security Studies Program.

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