full of sound and fury, Signifying nothing

The resource curse, Evo Morales edition

After a Twitter exchange earlier today, I’ve been thinking about this whole concept of ‘resource curse‘, what with it being one of the criticisms still levelled at Bolivia for its dependency on gas revenues. The basic argument goes something like, “Evo wouldn’t have been a success if he didn’t have the gas revenues”, then morphs to, “and Bolivia’s still very dependent on the gas revenues, where’s the diversification?”, which implies in the words of detractors that Evo’s just been lucky (and of course with the assumption that one of these days his luck will run out).
Let’s start with the easy one: If Evo hadn’t nationalized YPFB (and many will recall as I do the “it’ll never work” criticisms at the time, all from the usual suspects) the gas revenues would still be leaving the country and placed in the treasuries of large, private oil and gas companies. Instead, the dollar revenues go to the Bolivia Central Bank, which has seen its international currency reserves balloon in the eight years of Evo. He was elected because he said, out loud, that if made President he’d stop the money being made by YPFB from leaving the country by nationalizing the company and then use that money for the greater good of the nation. Eight years later, here we are.
As for that diversification, what makes you assume that you need to diversify into secondary or complementary industries in order to satisfy the appetites of the Economic Gods? Why does “diversification” only conjure up the image of physical structures, such as factories or new plants or new industrial sectors? It strikes me that investing in a country’s population is at least as good a diversification as setting up a phosphates plant next to a natgas supply, or insisting that somebody who wants to buy Bolivia’s lithium builds the battery factory in the country, too. It’s probably better in the long run in fact. After all, you invest in children by giving them free school meals, which means they’re encouraged to go to school and stay there, which means they get to read and write and add and subtract and all kinds of other things. Or pregnant mothers get a cash payment for turning up at a hospital clinic for their regular pre-natals, which get them into the formal heathcare service for the first time, which means more living and healthy babies. That also strikes me as an excellent way of diversifying a country’s wealth, the only difference being the capital isn’t controlled by private concerns that are focussed on making profits for their shareholders.
After it went round my head for a while, the conclusion drawn isn’t whether a country has or has not a source of wealth to tap, it’s much more about what the country’s leaders do with the revenue coming from the resource be it renewable or not, primary or tertiary, any other combo you’d care to imagine. Greedy and self-centred leaders are the curse, not the resource nor any cash delivered by it.

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