Overcoming the ''Resource Curse''

Prioritizing Policy Interventions in Countries with Large Extractive Industries

by Amber Linea Moreen

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Natural resource extraction brings with it many incentives for resource wealth to be diverted to non-productive uses. The purpose of this research is to develop contingent guidelines for state and non-state actors interested in improving the management of natural resource revenues. In particular, it seeks to distill guidelines regarding the design and management of policies to mitigate the political and economic risks often accompanying natural resource windfalls in less-developed countries, thereby enabling implementation of well-understood macroeconomic and welfare improvements in such resource-endowed countries. The research focuses on ensuring that the relationships underlying the mismanagement of natural resource revenues are well understood, evaluating the available policy options, and discerning the policy levers accessible to state and non-state actors interested in resource-dependent countries. The analysis lends new insight into how to keep these countries on the road to prosperity, or redirect them toward it. The author provides policy options to guide bureaucrats, international institutions, aid agencies, investors, and nongovernmental organizations seeking to help developing countries hedge against the dangers that can accompany large surges of wealth.

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This document was submitted as a dissertation in October 2006 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Steven Popper (Chair), Robert Klitgaard, and Mark Bernstein.

This report is part of the RAND Corporation dissertation series. Pardee RAND dissertations are produced by graduate fellows of the Pardee RAND Graduate School, the world's leading producer of Ph.D.'s in policy analysis. The dissertations are supervised, reviewed, and approved by a Pardee RAND faculty committee overseeing each dissertation.

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