Countries that heavily rely on commodity money to fuel their economies often face numerous challenges. In autocratic regimes, this wealth is often used to maintain power and cater to certain groups, making it difficult for the general population to benefit. However, there are exceptions to this trend.
Norway, Australia, Canada, Chile, and Botswana have all demonstrated that resource wealth can lead to prosperity and democracy. These countries have strong institutions and a functioning democracy that ensure the responsible investment of resource revenues towards long-term growth.
Iran and Russia are examples of countries where a small elite benefits from the wealth generated by natural resources while the general population struggles. Despite their resource wealth, both countries face economic challenges due to issues related to political institutions and corruption. The gap between the elite and the rest of the population in these countries is significant, leading to social and economic issues.
To escape the resource curse, countries like Russia and Iran need to address these issues head-on. They must invest in diversification of their economies and ensure that resource revenues benefit everyone equally. Civil society plays a crucial role in demanding transparency and accountability from political leaders. By doing so, they can build a more stable and prosperous future for themselves and their citizens.
In conclusion, while commodity money can be a blessing in some cases, it can also be a curse if not handled responsibly by governments. Countries need strong institutions, functioning democracies, transparency, accountability from political leaders as well as diversification of their economy to escape this curse.