In Natural Resources, a Pattern of Problems

By Im Sothearith, VOA Khmer
Original report from Washington
10 September 2009

[Editor’s note: VOA Khmer recently spoke with specialists in the field of natural resource management in developing countries and learned that Cambodia is not alone in struggling to use natural resources to benefit its citizens. The resource curse, where natural riches fail to help the poor, is a worldwide scourge, the global experts told VOA Khmer in numerous interviews. Below is the first part of a weekly series.]

The natural resources in developing countries around the world—timber, oil or even tourism—are typically exploited by the political and economic elite, who experts say benefit financially while millions of average citizens gain little.

“It’s quite a common problem,” said Paul Collier, an Oxford University economics professor and author of “The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It.”

“Elites tend to run off with natural resources,” he told VOA Khmer by phone. “That’s one reason why they don’t do much good. So, obviously, the benefits of natural resources belong to citizens, not just to elites.”

Politics affects the exploitation of natural resources, and vice versa, he said.

The problems are common in countries spread from Africa, the Americas and Asia, specialists explained in a series of interviews with VOA Khmer in recent weeks.

Dozens of low- and middle-income countries rich in natural resources face the same problem, according to the World Bank, countries as diverse as Indonesia, Nigeria, Congo, Equatorial Guinea, Cameroon, Sudan, Chad, Sierra Leone, Uganda and Bolivia.

Different countries approach management of these resources in different ways. Some governments try to benefit directly, while others offer the resources as concessions to private companies.

But either way, the problem is the same: corruption and unfair practices tend to dominate, according to Glen Matlack, an environmental professor at Ohio University.

In fact, not many developing countries succeed in managing their natural resources efficiently or effectively, Matlack said, though there are many that face problems.

“I have plenty of bad examples,” he said. “I am trying hard to think of successful examples. Indonesia has had weak government with a strong military for two or three decades. The concessions for resource extraction, whether they’ve been minerals, tourism, lumber, have gone straight to private contractors, and the government has [spent] much money that’s never seen again.”

At an extractive industries conference in Washington this year, Robert Zoellick, president of the World Bank, noted that some resource-rich countries have political instability and increased poverty, corruption and inequality, in part due to the mismanagement of natural resources.

“Some of these countries are already suffering from the effects of the resources curse,” Zoellick said. “And instead of the opportunity for economic growth, the natural assets have forced political instability and corruption, greater inequality, high rate of poverty, and weaker long-run growth.”

William Ascher, author of books like “Why Governments Waste Natural Resources” and “Bringing in the Future,” told VOA Khmer in a phone interview that conflicts of interest over natural resources lead to civil wars and political instability in some developing countries.

“The sad example is Congo, where civil war has broken out over natural resources,” Ascher said. “Nigeria has been highly unstable because of the conflict over oil. In fact, many years ago, there was a civil war in Nigeria because of this, where the southern part of Nigeria tried to secede because they sold the resources in their region and yet other regions were draining away their resources from them.”

In “The Bottom Billion,” Collier identifies fifty-eight countries as the world’s poorest. Most of them are in Africa and Central Asia. Other countries include Haiti, Bolivia, Laos, Cambodia, Yemen, Burma and North Korea. Some of these low-income countries are rich in natural resources.

Regardless of how many natural resources a country has, if they are mismanaged they don’t contribute to the national economy and therefore do not benefit the populace.

Africa, for example, produced 13 percent of the world’s oil last year, but it’s economic growth remains considerably lower than other parts of the work.

Ian Gary, senior advisor for extractive industries at Oxfam America, told VOA that because of poor management, Africa’s resources rich countries generally have lower growth rates than those with fewer resources.