The Resource Curse: The Cases of Botswana and Zambia

A puzzling correlation has been observed over the last thirty years between slow or negative economic growth and countries with large export dependence on natural resources. This correlation has been dubbed the resource curse. It has been argued that resource wealth has an inherently negative effect on the economic growth of developing countries. Zambia is such a country in which resource-dependence has been coupled with poor economic performance; Botswana, however, is an important exception to this phenomenon. The question is: Why or how has Botswana surmounted the effects of the resource curse while Zambia has not? A comparative case analysis using Mill\u27s method of agreement has been used in this study to assess this question. A variety of causal mechanisms have been proposed to explain this correlation. Among them are: (1) declining terms of trade, (2) commodity price volatility, (3) the enclaved nature of the mining industry, (4) Dutch disease, (5) the implementation of poor resource rents management policies, (6) the presence of weak state institutions, (7) the presence of rent-seeking and corruption, (8) the development of authoritarian regimes, and (9) the presence of social conflict. Of these nine hypotheses, those advancing commodity price volatility, the nature of rents-management policies, the strength or weakness of state institutions, the degree of rent-seeking and corruption, and the extent of social conflict as causal variables are found to be most important in accounting for the difference in outcomes between these two cases