Rm. Auty, The political state and the management of mineral rents in capital-surpluseconomies: Botswana and Saudi Arabia, RESOUR POL, 27(2), 2001, pp. 77-86
In recent decades, the rate of economic growth in the developing countries
has been inversely related to the share of rents in GDP. The resource-poor
countries out-performed the resource-abundant ones and among the latter the
small mineral economies performed least well and the oil-exporters worst o
f all. This outcome is counter-intuitive because mineral rents can boost in
vestment while mineral exports can expand import capacity. One explanation
is that Dutch Disease effects from mineral booms trigger trade policy closu
re that distorts the economy. But most high-rent capital-surplus oil econom
ies like Saudi Arabia eschewed trade policy closure and still experienced a
growth collapse. A second explanation lies in the political economy: resou
rce-rich countries have been less likely than resource-poor countries to sp
awn developmental political states. The latter have two key features: first
, sufficient autonomy to pursue a coherent economic policy; and second, the
aim of raising social welfare. This paper compares Botswana, a rare case o
f a resource-rich country with a developmental political state, with Saudi
Arabia, which had less autonomy in policy formulation due to its role as sw
ing producer in OPEC and cultural pressures for a paternalistic deployment
of the oil rents. It argues that although Botswana experienced more success
than Saudi Arabia in deploying its mineral rents, this may owe much to its
more stable rent stream rather than to its political state alone. Moreover
, it is still premature to judge Botswana wholly successful. (C) 2001 Elsev
ier Science Ltd. All rights reserved.