The Park Place Economist


As is well documented in the media, the standard of living in many African countries is extremely low. In fact, in the most recent edition of the Human Development Report, released by the United Nations Development Programme (UNDP), thirty-seven of the forty-one countries classified as “low development” (the lowest ranking on the development scale), are African nations. It is equally well-known that many African nations are ‘blessed’ with valuable natural resource endowments that should bring enormous revenues to these countries. The disparity between theory and reality leads one to wonder, why do these revenues not raise the standard of living for a country’s inhabitants? The natural resource curse hypothesis attempts to explain why the revenues are not allocated efficiently.