June 18, 2010
Tauseef Mustafa/AFP/Getty Images
Afghanistan, seen here, may be home to one of the world's biggest lithium deposits. That's probably a bad thing.
You remember the natural resource curse. It's the idea that being rich in natural resources — oil, gold, lithium, whatever — can actually harm a country's economic development.
On today's Planet Money, we talk to a couple economists who are pushing what sounds like a simple way to break the curse: Give the money directly to the people.
They recently took the idea on a road show to Africa, to try to convince a couple oil-rich countries to give it a try. It didn't go so well.
For more, read our post from this morning.
June 18, 2010
Afghanistan's big deposits of lithium, copper and gold have some economists worried. As we noted earlier this week, the discovery of natural resources often leads to conflict and corruption, which in turn hurt economic growth.
But a handful of economists are pushing an idea they say could break the natural resource curse.
Take all money that comes in from foreign companies — for lithium in Afghanistan, oil in Nigeria, natural gas in Bolivia — and give it to the citizens. Literally have a government official sit down with piles of cash, maybe with some international oversight, and divvy it up.
That system would create a strong incentive for the people to keep on eye on what the government's doing, says Todd Moss of the Center for Global Development.
"If you received $500 last year, and this year it's only $400, you're going to ask some pretty hard questions," he says.
But there are a few key barriers to putting the plan into action.
The first is logistics. Lots of resource-rich countries don't have national databases, clear census records or strong banking systems. That makes it tough to hand out billions of dollars to millions of people, year after year.
The second is the fact that money is power. A government that's getting lots of money by selling natural resources may be reluctant to share the wealth.
Arvind Subramanian, an economist with the Peterson Institute, recently traveled to Nigeria to pitch the idea of giving oil revenues directly to the people. The government wasn't interested.
"If the current guy in power does not want to give up power, my idea has no hope of succeeding," Subramanian said.
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