Exploring the Natural Resource Curse: Norway and Nigeria - rich in oil, but very different still

University essay from Lunds universitet/Ekonomisk-historiska institutionen

Abstract: This thesis investigates the phenomenon of the natural resource curse by making use of the resource rich countries Norway and Nigeria. The resource curse is a phenomenon where resource rich countries paradoxically have lower growth rates than resource poor countries, in spite of the growth potential offered by resource rents. Among factors contributing in creating this effect Abundance, Crowding out and Corruption are often mentioned. These three factors were investigated in connection to data and facts on Norway and Nigeria in order to establish if the resource curse exists in the two countries. Both countries were found to be resource abundant, however due to a difference in the share of resource rents in GDP only Nigeria could be concluded as resource dependent. Crowding out was found in both countries, but in different sectors. Finally corruption was concluded to have affected the Nigerian economy greatly and to be virtually non-existent in Norway. Based on these findings Norway was concluded to have escaped the resource curse, while Nigeria suffers from it. The main reason behind the difference between the two countries is concluded to rest partly in the fact that Nigeria relies more heavily on oil as a provider of financial means to the economy, but at the same time these substantial rents fail to make any impact on the lives of the average population.

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