Skip navigation
Skip navigation

Oil, gas and conflict: a mathematical model for the resource curse

Cai, Yiyong; Newth, David

Description

Oil and natural gas are highly valuable natural resources, but many countries with large untapped reserves suffer from poor economic and social-welfare performance. This conundrum is known as the resource curse. The resource curse is a result of poor governance and wealth distribution structures that allow the elite to monopolize resources for self-gain. When rival social groups compete for natural resources, civil unrest soon follows. While conceptually easy to follow, there have been few...[Show more]

dc.contributor.authorCai, Yiyong
dc.contributor.authorNewth, David
dc.date.accessioned2015-10-22T23:39:44Z
dc.date.available2015-10-22T23:39:44Z
dc.identifier.issn1932-6203
dc.identifier.urihttp://hdl.handle.net/1885/16040
dc.description.abstractOil and natural gas are highly valuable natural resources, but many countries with large untapped reserves suffer from poor economic and social-welfare performance. This conundrum is known as the resource curse. The resource curse is a result of poor governance and wealth distribution structures that allow the elite to monopolize resources for self-gain. When rival social groups compete for natural resources, civil unrest soon follows. While conceptually easy to follow, there have been few formal attempts to study this phenomenon. Thus, we develop a mathematical model that captures the basic elements and dynamics of this dilemma. We show that when resources are monopolized by the elite, increased exportation leads to decreased domestic production. This is due to under-provision of the resource-embedded energy and industrial infrastructure. Decreased domestic production then lowers the marginal return on productive activities, and insurgency emerges. The resultant conflict further displaces human, built, and natural capital. It forces the economy into a vicious downward spiral. Our numerical results highlight the importance of governance reform and productivity growth in reducing oil-and-gas-related conflicts, and thus identify potential points of intervention to break the downward spiral.
dc.description.sponsorshipYiyong Cai gratefully acknowledges financial support from Australian Research Council Discovery Grant DP0988281.
dc.format10 pages
dc.publisherPublic Library of Science
dc.rights© 2013 Cai, Newth. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
dc.sourcePLoS ONE
dc.subjectoil
dc.subjectnatural gas
dc.subjectresource curse
dc.subjectuntapped reserves
dc.subjectpoor economic and social-welfare performance
dc.subjectmonopolize
dc.subjectelite
dc.subjectgovernance
dc.subjectwealth distribution
dc.subjectmathematical model
dc.titleOil, gas and conflict: a mathematical model for the resource curse
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume8
dcterms.dateAccepted2013-05-13
dc.date.issued2013-06-27
local.identifier.absfor140205
local.identifier.ariespublicationu4430637xPUB22
local.publisher.urlhttps://www.plos.org/
local.type.statusPublished Version
local.contributor.affiliationCai, Yiyong, College of Asia and the Pacific, CAP Crawford School of Public Policy, Crawford Administration, The Australian National University
local.contributor.affiliationNewth, David, CSIRO, Australia
dc.relationhttp://purl.org/au-research/grants/arc/DP0988281
local.identifier.essn1932-6203
local.bibliographicCitation.issue6
local.bibliographicCitation.startpagee66706
local.identifier.doi10.1371/journal.pone.0066706
local.identifier.absseo960699
dc.date.updated2015-12-08T03:15:38Z
local.identifier.scopusID2-s2.0-84879512489
CollectionsANU Research Publications

Download

File Description SizeFormat Image
01_Cai_Oil,_gas_and_conflict:_a_2013.pdfPublished Version1.54 MBAdobe PDFThumbnail


Items in Open Research are protected by copyright, with all rights reserved, unless otherwise indicated.

Updated:  19 May 2020/ Responsible Officer:  University Librarian/ Page Contact:  Library Systems & Web Coordinator