International Monetary Fund
6. Jan, 2011

Beyond the Curse

Editors: Rabah Arezki, Thorvaldur Gylfason, and Amadou Sy


Countries with an abundance of natural resources, many of which are in sub-Saharan Africa, often show a record of relatively poor economic performance compared with non-resource-rich countries. The chapters in this volume explore the potential challenges to countries with abundant natural resources and ways to manage these challenges so as to reap the benefits of resource wealth while avoiding the pitfalls. The book is divided into five sections, which explore commodity markets and the macroeconomy, economic diversification and the role of finance, fiscal policy, exchange rates and financial stability, and governance. The ideas in this book were first presented at a seminar in November 2010 that was aimed primarily at policymakers in sub-Saharan Africa and brought together ministers, central bank governors, other senior policymakers, and well-known academics.

Christine Lagarde

1. Overview
Leslie Lipschitz

Part I. Commodity Markets and the Macroeconomy

2. Natural Resource Endowment: A Mixed Blessing?
Thorvaldur Gylfason, University of Iceland

3. Primary Commodities: Historical Perspectives and Prospects
Marian Radetzki, Luleå University of Technology

Part II. Economic Diversification and the Role of Finance

4. Economic Diversification in Resource Rich Countries
Alan Gelb, Center for Global Development

5. Finance and Oil: Is there a Natural Resource Curse in Financial Development?
Thorsten Beck, Tilburg University

6. The Economics of Sovereign Wealth Funds: Lessons from Norway
Thomas Ekeli, Ministry of Finance, Norway
Amadou Sy, IMF Institute

Part III. Fiscal Policy

7. What Can We Learn from Primary Commodity Prices Series which is Useful to Policymakers in Resource Rich Countries?
Kaddour Hadri, Queens University Management School

8. Sustainable Fiscal Policy for Mineral-Based Economies
Kirk Hamilton and Eduardo Ley, World Bank

9. Fiscal Policy in Commodity Exporting Countries: Stability and Growth
Rabah Arezki, IMF Institute

Part IV. Exchange Rates and Financial Stability

10. How Can Commodity Exporters Make Fiscal and Monetary Policy Less Procyclical?
Jeffrey Frankel, Harvard University

11. Natural Resources Management and Financial Stability: Evidence from Algeria
Mohammed Laksaci, Governor, Bank of Algeria

12. Copper and Macroeconomic Fluctuations in Chile
José De Gregorio, Governor, Central Bank of Chile

Part V. Governance and Institutional Aspects

13. The Political Economy of Reform in Resource Rich Countries
Ragnar Torvik, Norwegian University of Science and Technology

14. Terms of Trade and Growth of Resource Economies: A Tale of Two Countries
Augustin Fosu, UNU-WIDER
Anthony Owusu Gyapong, Penn State University-Abington

Published by the International Monetary Fund, Washington, DC, September 2011. Available for purchase.

Back cover text

With a group of talented and insightful authors, Beyond the Curse: Policies to Harness the Power of Natural Resources brings clarity and structure to the complex task of managing natural resource wealth effectively, avoiding the many pitfalls, and creating the foundations of sustained inclusive growth. This book is admirable for its sound economic foundations, its pragmatic approach to complexity, and its freedom from orthodoxies. It is a major contribution to a centrally important challenge for much of Africa.

Michael Spence, Professor of Economics, Stern School of Business, New York University

Winner of the 2001 Nobel Prize in Economic Sciences

Surprisingly (isn’t more always better?) natural resource discoveries, especially in poor countries, have been found to be, more often than not, a problem, rather than a blessing.  Beyond the Curse is a manual on the nature of the problems they spawn, and the policies that will avoid them.  It thus gives guidelines for how natural resources, and their revenues, should be handled.  It is immensely useful, and is the right book on the right problem at the right time.

George Akerlof, Guest Scholar, International Monetary Fund, and Koshland Professor of Economics, University of California Berkeley

Winner of the 2001 Nobel Prize in Economic Sciences

Natural Resource bonanzas can finance the transformation out of poverty. But harnessing them for development has proved very difficult. The premium on good policy choices makes the practical guidance in this volume invaluable.

Paul Collier, Professor of Economics, Oxford University

Natural resource wealth holds both promise and peril for developing countries. This first-rate book brings together some of the world’s leading researchers, who carefully probe the evidence on the most challenging financial and fiscal issues in resource-rich countries. Their insights, and policy recommendations, are enlightening, accessible, and important.

Michael L. Ross, Professor of Political Science, University of California, Los Angeles