What is it about?
The resource curse is a seeming paradox where places that are abundant in natural resources often face worse economic growth, and higher political corruption and instability than resource-poor places. This study develops a mathematical model to explore various explanations for the resource curse and gain insight into why the resource curse happens in some cases and not others, and whether it is possible to escape. The resource curse has been studied for a long time, but because it is a multi-dimensional problem emerging from many different factors interacting, empirical studies have struggled to pin down when and why it occurs . The type of modeling done in this study, which draws on complexity science, allows for disentangling these different factors and how they contribute to the resource curse. We find that 1) higher initial human and social capital makes a place more likely to benefit from resource abundance, and 2) the influence of extractive industries on institutions is critical to explaining why the resource curse is so prevalent and difficult to avoid.
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Why is it important?
While the model is theoretical, it offers practical insight into a very general and common problem. Examples of the resource curse exist all over the world, from Nigeria to Venezuela, to parts of the U.S. and Canada. Additionally, the study has important implications for facilitating a just transition. Our study shows that an infusion of investment into human, social, and physical capital can ‘push’ places that have already fallen into the resource curse – like many fossil fuel-based economies – into a more diversified outcome. On the other hand, for places that are becoming new frontiers of extraction (e.g., for critical minerals), strong institutions and democratic safeguards are necessary to ensure that the extractive dynamics of a fossil-fuel-based economy are not replicated.
Perspectives
This work was motivated in large part by field work in the coalfields of Appalachia, which begged the question of why, amongst such natural wealth, was the region so poor? The more I explored the answer to this question, the more I realized it was a general problem, but not an unavoidable one. At the end of the day, this study reinforces why it is important for communities to have meaningful input on their own development, and the value of strong and democratic institutions in ensuring that they share in the wealth that they help generate.
Nusrat Molla
Princeton University
Read the Original
This page is a summary of: Institutional dynamics produce resource curse traps, Proceedings of the National Academy of Sciences, April 2026, Proceedings of the National Academy of Sciences,
DOI: 10.1073/pnas.2520474123.
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