Deepening or Dampening the Resource Curse? The effects of Chinese lending on the resource curse in African countries

Abstract: Natural resource abundant countries, especially ones rich in oil, tend to suffer from political and economical problems as an effect of their resource wealth. This phenomenon has been observed and studied by many scholars and has been labelled the “Resource curse”. The occurrence of resource curses is mainly observed in countries that are not wealthy, aside from the wealth they have accumulated from their main natural resource meaning that they are largely dependent on exports of this abundant resource. There are many countries in Africa that fall into the category of suffering from a resource curse, as many states rich in oil can at the same time struggle to democratise, gain economic growth and build reliable and quality institutions. This study finds that countries rich in, and dependent on, oil have received significantly more lending from Chinese financiers to initiate different projects. The paper goes on to examine the case of Angola, finding that investments from Chinese banks have contributed greatly to the prosperity of the state-owned oil company Sonangol, which is known to be the most important rentier tool for the Angolan regime. Thereby the Chinese lending to Angola, at perhaps also other oil-dependent states in Africa, can be said to have contributed to the deepening of the resource curse.