Overcoming the Burden of Resource Wealth

Suman Bery writing in the Economist:

With the two exceptions of Malaysia and Indonesia these countries did not enjoy rents from significant mineral resources. As such they were not subjected to the so-called “resource curse” of a struggle for control of these rents, the problems of an appreciated real exchange rate, and lack of competitiveness of the tradables sector. Also, at the time of their fast growth episodes, most of the Asian countries were well into their demographic transition, with the dependency ratio declining as the labour force expanded. This led to a rise in their saving rates, complemented in many cases by significant foreign aid.
As Angus Maddison pointed out a decade ago (in his "The World Economy: A Millennial Perspective") Africa’s underlying circumstances are much less favourable. (His discussion includes Mediterranean Africa, while I will restrict myself to sub-Saharan Africa.) Several of its major economies enjoy enormous mineral riches, which the world over pose tremendous problems for economic management. The prices for these minerals fluctuate violently in global markets causing volatility in revenues; the easy availability of mineral revenues inhibits the growth of a domestic taxation culture essential for the development of accountability to the citizenry; the struggle for illegal control of the mineral resources has been a source of fierce conflict and corruption; while the easy foreign exchange revenues the mineral exports make available boost the real exchange rate. This inhibits the growth of labour-intensive manufacture, which was the source of Asia’s growth.