Oil: Blessing or Curse?

A couple of years ago, Kenyans were very optimistic: they had found oil in the Northern part of the country! Last year, it looked like the country could become an exporter of oil. Right now, Kenya is benefiting from being a net energy importer. Is oil a blessing or a curse for a country’s economy?

Over-reliance on oil may hurt a country’s economy. Take Nigeria as an example.Roughly 2/3 of the government’s revenue come from oil and related industries. This is a curse to the country’s economy: the government doesn’t need other industries to bloom, and lacks incentives to create the infrastructural conditions necessary for development. Not that the problem is oil per se – rather, the problem is a historical combination of (1) easy-tax collection from oil, and (2)politicians who have cared more about themselves than about the well-being of their citizens. (You may learn more about this in a previous post on “Nigeria’s post-colonial impoverishment”).

(Read full article on Africa from Africa blog)

Africa Ariño

By Africa Ariño, professor in the Strategic Management Department at IESE Business School. Dr. Ariño received her Ph.D. in Management from the University of California, Los Angeles (UCLA).