Avoiding the “Dutch Disease” and “Resource Curse” Maladies through Strategically Deployed Infrastructure and Business-to-Business Economic Development Projects

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Susan Smith Nash

Abstract




Recent critiques of countries that have entered into massive amounts of debt for large infrastructure projects, even when they did not seem to have any need for projects of that scale, have alarmed economists and conspiracy theorists alike. In accepting such loans, the vulnerable poor countries seemed to totally disregard E. F. Schumacher’s now-classic notions of “appropriate technology” and “small is beautiful” in the realm of economic development, especially of African economies. Although it may seem unprofitable to invest in infrastructure that is not directly related to the main export product (usually a mineral or oil), it is actually quite dangerous to limit the investment in the primary industry. By not investing in infrastructure that benefits multiple industries and communities, energy and mineral-rich countries will be unable to transform their resources in a way that uniformly benefits their country. Critics questioned the motives of the donors and raised questions of the ultimate sovereignty of the borrower nations. Apologists of the loans pointed out that the countries needed the infrastructure as a foundational first step toward diversification and improved international trade. Few solutions or next steps have been proposed, however. This essay proposes solutions and next steps toward developing a balanced approach that strategically leverages existing infrastructure for a diversified economy and sustainable growth.




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