Date of Award

6-2012

Document Type

Open Access

Degree Name

Bachelor of Arts

Department

Political Science

Second Department

Latin American and Caribbean Studies

First Advisor

Mark Dallas

Second Advisor

Daniel Mosquera

Language

English

Keywords

exports, industry, natural resources, instability, resource stabilization funds, revenue

Abstract

Over the past three decades, the world has become highly globalized. As such, most countries around the world depend on exports for a large portion of their national income. However, some countries’ dependency on exports is extreme, especially those that heavily rely on natural resource commodities. Despite the natural resource wealth that these commodities grant countries, due to the instability of global prices and the intensive focus of the resource extraction industry, scholars have theorized this type of dependency as a “resource curse.” The resource curse is a paradox where countries that are so rich in natural resources have not been able to prosper and are more likely to suffer from economic volatility, political instability and social inequality than those without. Scholars have researched in depth the causes and effects of the resource curse but there has been little literature on how developing countries have attempted to find solutions to this predicament. This paper examines one way that countries have tried to ameliorate the resource curse and that is through resource stabilization funds (RSFs). Resource stabilization funds are generally funds established to save money when there are high revenue inflows during boom times, in order to have money to spend during macroeconomic downturns. The three select case studies of Chile, Venezuela and Ecuador are all similar in that they are highly dependent on exporting and obtaining rents from resources but they vary in the institutions they established in order to minimize the detrimental effects of their resource dependency. This paper further builds upon previous resource curse literature by not only examining RSFs but also the political and historical context upon which they originated. The expected results should demonstrate that it is not only how RSFs are established but also how the political conditions, both domestic and foreign, shape the success, stability, and permanence of resource stabilization funds.

Download

Share

COinS