Special Feature. Global Minutes: Oil Purse Or Oil Curse? Dharmapuri Vidyasagar, MD. Journal of Perinatology (2005) 25, 743â744. doi:10.1038/sj.jp.7211375.
Special Feature Global Minutes: Oil Purse Or Oil Curse? Dharmapuri Vidyasagar, MD Journal of Perinatology (2005) 25, 743–744. doi:10.1038/sj.jp.7211375
Oil and natural resources of a country are often considered to be national assets. Indeed, they should be economic bedrocks for the country. The record, however, shows that this is not true, say the analysts. The wide dichotomy of oil wealth and lack of social benefits has come to be known as ‘‘The Oil Curse.’’1 The ‘‘Oil Curse’’ or the ‘‘Resource Curse,’’ as it is aptly known, is a reality. There are 34 less-developed countries that are rich in mineral and oil resources and natural resources constitute 30% of their total export revenues. In a third of these countries, however, the per capita income remains less than $1 per day. Their health indices are poor. Infant mortality is high literacy rate is low and life expectancy is low. Women’s health status is poor. Why do oil and natural wealth undermine societies? Analysts provide several explanations for this anomaly. Fluctuations in global prices create dangerous, unpredictable economic cycles so that governments cannot plan for social development. Particularly when they spend wildly in times of economic boom and simply run dry when the oil prices fall, leading to economic bust. A second explanation is known as Dutch disease. When resources are discovered, the country becomes a strong economy. The currency becomes stronger. When the country’s currency becomes stronger, its products become expensive in the world market. The result is lower export and lesser revenue. Then, the country suffers from economic slump with its accompanying fallouts. The most important and plausible explanation, however, is the lack of strong political and economic institutions in the resource rich countries. Two-thirds of the oil- and resource-rich countries are not democratic. Of those that are democratic, only three, Ecuador, Sao Tome, and Principe, Trinidad, and Tobago, are in the top half of Freedom Houses world ranking of political freedom. As Birdsall and Subramanian,1 experts in international economics, note: oil richness awards great benefits to the country, more than can be achieved through human efforts. It results in a
subset of population becoming rich and powerful and controlling the larger poorer population. The state with abundance of wealth has no incentive to protect property rights of the citizens. On the other hand, since citizens do not pay taxes, they have no incentive to hold the government responsible for its erratic public policy behavior leading to unchecked abuse of power. In this case, the state and the subset of rich people controlling the resources are apt to become corrupt. How much does the ‘‘Oil Curse’’ hurt the children and the people of the country? Researchers2 have found, as shown in the (Figure 1a and b), for each increase in mineral dependency of five points, the mortality of children under five tends to rise by
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0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 Oil/Mineral Exports to GDP
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Division of Neonatology (MC 856), University of Illinois at Chicago Medical Center, Wood Street, Chicago, IL, USA. Address correspondence and reprint requests to Dharmapuri Vidyasagar, MD, Division of Neonatology (MC 856), University of Illinois at Chicago Medical Center, 840 S. Wood Street, Chicago, IL 60612, USA.
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 Oil/Mineral Exports/GDP
Figure 1. (a) Impact of oil and mineral dependence on infant and child mortality (deaths per thousand). (b) Impact of oil and mineral dependence on life expectancy at birth.
Journal of Perinatology 2005; 25:743–744 r 2005 Nature Publishing Group All rights reserved. 0743-8346/05 $30
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Table 1 Effects of High Oil and Mineral Dependency on Countries* General variables Low HDI ranking Social and economic Low economic growth Low health spending Low primary school enrollment Low secondary school Education low adult literacy High income equality Vulnerability to economic shocks Variables related to governance High corruption Authoritarianism Lack of effective government Civil war High military spending *Modified from Slack.2
12.7/1000. Similarly, for each five-point increase in oil dependency the under-five mortality increases by 3.8/1000. The effect on life expectancy is similar: both mineral and oil dependency decrease life expectancy as shown in graphs. Oil- and mineral-rich countries also suffer from social and government-related problems. According to the World Bank reports only one percent of Nigeria’s population benefits from 80% of the country’s oil and gas revenues. While the rest of the 99% of the population is dependent on the remaining 20% of the revenues! Since the health of a country is a reflection of its wealth, one would expect that oil-rich countries would enjoy a cogent health status and would rank high in human development index (HDI). Nothing could be further from truth. The HDI compiled by the World Bank shows that the 34 countries known to be oil rich do poorly in HDI ranking (Table 1). It is disturbing to note that oilrich countries have very high impact on health (IMR). Does democracy affect the health of the people of a country? This question was the focus of the study of Franco et al.3They
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studied 170 countries, covering 98% of the world’s population and 75% of countries. They categorized them according to Freedom House classification: Free, Partially Free, and Not Free. They compared health indicators among these three groups and found very interesting results. Health indicators were best among the countries that were free, followed by those that were partially free and not free. There was a linear correlation of freedom indicators with health indicators, life expectancy and IMR for example. Maternal mortality showed lesser correlation. It is hypothesized that democracy allows more capital, more opportunities for empowerment, and better recognition by the government of people’s needs. The authors conclude that the way societies organize themselves through their political regimes and their policies would have important IMR. Democratization may be a way to contain the deleterious effects of unequal distribution of wealth on health. This study strongly corroborates the earlier observation that in oil- and mineral-rich countries without strong political and economic institutions, IMR continues to be high in spite of their national wealth.
CURE FOR THE CURSE Efforts should be directed to increase democratization and increase governments’ commitment to invest their wealth in privatization, creation of oil funds, and distribution of oil wealth directly to the people. Caution: ‘‘High oil and mineral resource can be hazardous to your country’s health.’’!!!
References 1. Birdsall N, Subramanin A. Saving Iraq from oil. Foreign Affairs 2004;83:77– 89. 2. Slack K. Policy Advisor October. 2001, www.oxfamnamerica.org. 3. Franco A, Alvarez-Dardet C. Effect of democracy on health: ecological study. BMJ 2004;329(7480):1421–3 (December 18).
Journal of Perinatology 2005; 25:743–744
