According to the Council on Foreign Relations (CFR), how can the 'resource curse' best be avoided?

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BlackTom AI · Accepted Answer

The question asks about CFR’s view on avoiding the 'resource curse,' so we need to evaluate how different strategies relate to that concept. 
Option 1: 'By finding large export markets for the resource' This could boost revenue, but expanding markets alone does not address governance, accountability, or the risk of rent-seeking and corruption that fuel the resource curse. In many cases, more buyers simply multiply opportunities for price volatility and opportunistic behavior rather than solving underlying issues. 
Option 2: 'By fixing prices of the resource' While price stabilization can reduce volatility, price fixing is often impractical, can discourage production, and does not inherently build institutions or reduce governance problems associated with resource wealth. It also risks market distortions and black markets, which can worsen the curse rather than prevent it. 
Option 3: 'Through increased foreign investment' Foreign investment can bring capital, but without strong institutions, it may exacerbate extractive practices, enable corruption, and crowd out domestic accountability. Investment alone does not guarantee that resource rents are managed transparently or used for broad development. 
Option 4: 'By having robust democratic institutions in place' This aligns with CFR analyses that emphasize good governance, rule of law, transparency, and accountability as core protections against the resource curse. Strong institutions help ensure revenue is managed for the public good, reduce incentives for rent-seeking, and promote diversification. 
Option 5: 'Through the election of a socialist government' While some theories argue for state-led resource management, CFR framing typically stresses institutional quality over ideology; simply electing a socialist government does not automatically prevent the curse and may introduce its own governance challenges. The core preventative mechanism remains robust institutions rather than a particular political ideology. 
In summary, options 1, 2, 3, and 5 either fail to address governance weaknesses or rely on specific conditions that CFR literature cautions against. Option 4 directly targets institutional quality as the key antidote to the resource curse, making it the best-aligned choice.

OLES1602 (all) Topic 7: Economic apocalypse

According to the Council on Foreign Relations (CFR), how can the 'resource curse' best be avoided?

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