Why resource rich countries are actually poor

It is a true fact that most of the resource rich countries are actually poor, one might be wondering why this is the case and it is likely that this may be like this for so many years to come. Generally, mostof the poor countries, have some resources like oil, gas, mineral which could have helped them to improve their economic situation, however the opposite is the situation. Let us take for example the Sub Sahara African countries, like Nigeria, Liberia, DRC but also Venezuela, Russia where there are a lot of mineral resources and yet more than half of the population lives on less than a dollar, have poor transport systems, dont have access to clean water and sanitation, dont have access to electricity and have poor education and health facilities.

 

 

 

 

One of the cities in a oil rich countries Nigeria

 

 

 

This being the situation, we need to assess why? Is it bad policies? Laziness, lack of capacity or is it financial resources? Some development theories have explained why this is the situation and i will try to ellaborate basing on these policies but also on my on opinion as someone who has grew up in one of the poor countries. One of the biggest issues is the continuous overextraction of the resources in these poor countries by mutlinational companies from rich countries with very minimum benefits for the poor countries.

 

 

 

 

 

 

 

Mining in Namibia

 

 

 

 

Usually these multinational usually extract the minerals , process them and then sell to thses poor countries at very huge profits.  Most of the times, these multinational companies come with promises things like investiment, technology transfer and capacity building which unfortunately are not fullfiled, hence no win-win situation, leaving these poor countries more poor and with no resource, no investment no technology transfer and no capacity. Since many of these poor countries lack the financial muscle, technical skills as well as human skills to process these resources into valuable assets or wealth, they are subjected to manupulations by multinational companies. It is also unfortuante that even where they try to process the mineral into valuable assets, they still face a lot of competition on the market and sometimes are forced to sell the products at very low profits which can not improve the countries economic situation.

On the other hand there are also issues and challenges within these poor countries which affects their ability to use their resources to achieve sound development, and the major one being corruption due to poverty, weak policies and institutions but also poor governance. This results in over exploitation of the resources be it financial or non financial by some individual leaders at the expense of the majority of the population. In some countries this selfiness ends up in civil wars which disrupts everything and increases the levels of poverty of the majority.

 

In addition to corruption, poor countries are faced with more challenges like climate change impacts, HIV Aids which also affects their economic growth as compared to rich countries and these problems are becoming the major focus in these countries and deviate from the development agenda.

 

Floods in Kenya

In conclussion, it is not only the mineral resources that is imporant for a country to become economically rich and well developed but rather the capacity to process these into valuable asset or wealth which can be used for social economic activities in those poor countries. In current situations where these poor countries lack the capacity to process the resources, then we are far away from  alleviating global poverty.

Sources

http://www.independent.co.uk/news/world/politics/african-bioresources-exploited-by-west-466824.

Resource rich countries and weak institutions; htmlResource Rich Countries and Weak Institutions:  The Resource Curse Effect

 

 


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