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Throughout societys existence, natural resources have played an enormous role. Nowadays, countries without natural resources can be in the same economic position as countries without them and, in some cases, even outpace them in terms of development. Despite this, a proper balance of governance and resources is increasingly important. The efficiency of a country depends on institutions of extraction and redistribution, so their development is necessary.
The resource curse can be defined as the economic notion that some countries with substantial reserves of natural resources are less economically developed than countries with few or no natural resources. It is since an increase in revenues from natural resources makes other sectors less competitive. The Dutch disease is a situation in which the strengthening of a countrys currency negatively affects the economy by increasing the supply of raw materials. Revenues from the extraction and export of raw materials devalue human capital (Cheng et al. 230). If the Dutch disease in the economy continues in the country for a very long time, the local commodity-producing industry is no longer competitive in the world market. Manufacturing companies cannot afford investments, and the money received by the country goes to support the extractive industry (Cheng et al. 230). Due to this, the state begins to lag noticeably behind other countries in industrial development.
There are two theories of the relationship between the availability of rich resources, the quality of institutions, and development. One of them declares that high incomes harm state institutions and development (Amundsen 170). The reason for this is the forces that emerge from the abundance of resources and begin to block the development of the institutional apparatus. Politicians can destroy them only because they extract rents for private purposes. At the same time, the second theory is based on the assumption that weak institutions negatively impact the economy and negatively affect resources in the long term (Amundsen 170). Weak institutions cannot manage resources to benefit the country and cannot encourage companies to produce. It leads to dysfunctional projects and unproductive investments. The two positions complement each other, but they provide diverse visions.
The distinction between the institutions of extraction and redistribution is analytically significant, because they serve distinct aim. The institutions of extraction are those structures on which the extraction of resources and revenues depends. Their function is to enable the government to extract rents from the mineral sector and the institutions necessary to protect those resources, such as checks and balances (Amundsen 171). Distributive institutions have different aims because they separate powers and distribute incomes. Despite their different functions, it is not as easy to identify the differences between the two options. Nevertheless, it is essential to note that their main difference lies in their relationship with the ruling elite, which is more interested in the institutions of extraction (Amundsen 171). At the same time, the distribution institutions are often the objects of political manipulation.
Consequently, they differ in governance and the level of political protection. Both institutions are essential for the Angolan regime. However, it is important to note the critical role of the president, who has extensive powers and is not limited by constitutional norms (Amundsen 176). At the same time, the ruling party still determines most aspects of political life in the country. Moreover, the oil company Sonangol and the apparatus of coercion are among the Angolan institutions of extraction (Amundsen 175). The oil corporation has established itself as a tax regulator and protector of the regimes prosperity. At the same time, the coercive apparatus has sufficient raw resources to protect vital interests.
From this, it can be concluded that the country is governed efficiently, but this is not valid because of the underdeveloped redistribution institutions. The ruling elite has failed to direct the allocation of economic and political resources, and the parliaments activities can be characterized as passive. Moreover, concerns such as censorship of the press, restrictions on social organizations, and lack of feedback from citizens and the government, which certainly harm the development of Angola, should be noted.
Works Cited
Amundsen, Inge. Drowning in Oil: Angolas Institutions and the Resource Curse. Comparative Politics, vol. 46, no. 2, 2014, pp. 169 189.
Cheng, Zhonghua, Xiang Li, and Meixiao Wang. Resource Curse and Green Economic Growth. Resources Policy, vol. 74, 2021, pp. 230 235.
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