OIL RICH OR ECONOMICALLY POOR: THE PUZZLE OF THE RESOURCE CURSE By: Imani Sherrill

Source: Google Photos

Motivation The economic models that I have learned thus far focus are European and American centric growth models. Many economic models do not focus on developing nations. Oil is a globally desired commodity, however nations with a quantifiable percentage of oil in their GDP have economic inequalities What we do not know about the resource curse is the process of how it works

Research Question Despite oil being such a prominent resource in respective areas, why do oil wealthy nations have varying levels of economic development?

What is the Oil Resource Curse? The Resource Curse My research question addresses a well-known theory in the economic and political world called the resource curse The resource curse is a paradox: abundance of natural resources have less economic growth, less democracy bad development outcomes What is the Oil Resource Curse? In this case, prominent oil wealth that tends to lead to poor economic performance What my thesis hopes to provide to the oil resource curse: The politics and process of nationalization through the institutions that history has developed leads to varieties of the resource curse and overall differing economic outcomes

Terms to Know Nationalization- the process of the confiscation of oil from private sectors to obtain more revenue for the governments of oil rich/producing nations Institution- Rules, norms, and procedures that guide behavior (political and economic) Path Dependency- an idea that explains how repeated historical events and preferences shapes institutions then and now

Existing Literature Sachs and Warner 1995 Ross 2015 Acemoglu and Robinson 2012 Ross 2015 Sachs and Warner 1995

Alternative Hypothesis Existing literature suggest that THESE alternative hypothesis are causal factors of the resource curse: Alternative hypothesis #1: Structural and demographic variables: ethnic fractionalization, culture and geography Alternative hypothesis #2: Economic variables: cleaner and greener resources and the Dutch Disease

Politics of the Resource Curse Blessing Inclusive Economic and Structural Variables Type of Nationalization Curse Extractive Good nationalization Bad nationalization

Theory of Nationalization Nationalization of oil supplies is the de-privatization of oil production and operations The general purpose is to: obtain and transfer the revenue to the oil producing countries create a concession system which eliminates private international companies from controlling oil and resources within an oil producing country

Venezuela’s Nationalization Source: Google Photos

Current Economic Outcomes in Venezuela Source: Google Photos

Saudi Arabia’s Nationalization Source: Google Photos

Current Economic Outcomes in Saudi Arabia Source: Google Photos

Norway’s Nationalization Source: Google Photos

Current Economic Outcomes in Norway Source: Google Photos

Combination of Politics and Economics Conclusion Combination of Politics and Economics Nationalization Solow Growth Model