Resource Curse and Economic Diversification in Nigeria and the Rest of the World

A controversial issue in the argument of resource-curse countries advanced by Zainab Usman in her book, "Economic Diversification in Nigeria," and Leif Wenar in his book, "Blood Oil: Tyrants, Violence, and the Rules that Run the World," is that both authors, in my opinion, made a compelling argument. According to Zainab, Nigeria's political structure is unbalanced, which prevents it from implementing strong policies that would increase the likelihood that it would be compared favorably with nations like Dubai. While Leif maintained that any nation that relies heavily on profits from the extraction of raw commodities, such as minerals and fossil fuels, is doomed because instability will plague that nation.

For example, Zainab claimed that, despite Nigeria having gone through some of the worst crises since independence, most notably the Nigerian civil war and insurgency posed by Niger-Delta militants, a region from which Nigeria extracts its main source of revenue, Boko Haram in the North-East, and the recent rise of banditry in the North-West-Central, the problem is not one of resources-curse but rather one of inadequacy in the distribution of political power. Besides the incessant corruption cases, she made a strong case that if Nigeria had managed to soften the lines of the division that was acknowledged as the primary cause of the nation's instability, it would be standing shoulder to shoulder with the world's superpowers.

Furthermore, she stated that Nigeria may easily cross any barriers to its advancement if the proper distribution of power is put in place and by making every region's feelings important in national discourses. This is how new groundbreaking ideas spread. She used some stark and obvious examples, such as the fact that Nigeria was once the world's top oil producer and recently had the biggest economy in all of Africa. Again, she said that Nigeria is more likely to diversify its economy and be at the top of its game if it can balance its power among the six geopolitical zones. Because every region will be willing to participate in changing the course of the economy from inertia.

Leif, on the other hand, stated that the great majority of nations that exploit fossil fuels are more likely to be corrupt, have poor institutions, and lack societal trust. He cited classical economists such as Adam Smith and Karl Marx as saying that any government that is reliant on oil and resource earnings destroys nations and condemns populations to death and other tragic events. He included the Congo, Iran, Iraq, Libya, Syria, Algeria, Angola, Nigeria, Colombia, and other nations as examples. He contended that the majority of these nations' affairs are precariously balanced and subject to authoritarianism, or as he described it, "Petrocrat."

Leif, the author of "Oil Money:Tyrants, Violence, and the Rules that Run the World," acknowledges that some nations, like Chile in Latin America, Botswana in Africa, and Norway in Europe, are doing exceptionally well in managing their natural resources. Although they are all emerging nations with middling incomes, each of these nations has sound policies that give their people a bright future. Therefore, why can't Nigeria with its large landmass and abundant natural resources accomplish it if these countries can make it happen in their own country? You see, the path of history is subject to alteration.

You can see that both authors have strong points when you consider both sides of the debate objectively. If you flip the coin and say that dictatorships rule in Russia, Sudan, Syria, Iran, and Iraq, you will see that Nigeria has been transitioning to democracy since 1999. Nigeria has had military coups and dictatorships in the past, but those events took place in the past.

For this reason, Nigeria's economy is today in a position to fully realize its potential and be the real and sustainable greatest economy in Africa. Nigeria's leaders' inability to use resources effectively and diversify the economy away from dependence on oil is what is causing the country's current problems, not a resource curse. As one of the world's leading producers and exporters of oil, Saudi Arabia has recently undergone significant upgrading. Because the world is entering a new age in renewable energy and most importantly due to fluctuations in the price of oil, Crown Prince Muhammad Bin Salman, more often known as MBS, is drastically altering the trajectory of his country's financial streams.

There you go. Have a great Friday!