GED Social Studies TestGeography and the WorldHard
A geographer is investigating a situation where a country's economic development is heavily dependent on the export of a single primary commodity, making it vulnerable to price fluctuations in the global market. What term describes this economic vulnerability?
- AEconomic Diversification
- BResource Curse
- CDependency Theory
- DComparative Advantage
Show answer & explanationAnswer & explanation
Correct answer: B. Resource Curse
The 'Resource Curse' (or paradox of plenty) describes how countries with an abundance of natural resources tend to have less economic growth and worse development outcomes than countries with fewer natural resources, often due to over-reliance on a single commodity and associated issues like corruption or price volatility.
Why the other options are wrong
- A. Economic diversification is a strategy to reduce such vulnerability, not the vulnerability itself.
- C. Dependency Theory is a broader theory about core-periphery relationships, not specifically the vulnerability of single-commodity economies.
- D. Comparative advantage explains why countries specialize in certain goods, but doesn't describe the vulnerability of over-specialization.
Resource Curse
The paradox that countries with an abundance of natural resources (like oil or minerals) tend to have less economic growth, less democracy, and worse development outcomes than countries with fewer natural resources, often due to over-reliance on the resource and associated governance issues.
- Paradox of abundance leading to poor development
- Often linked to single-commodity dependence
- Can cause price volatility, corruption, lack of diversification
- Impacts economic stability and political development
Memory trick: Rich in one, economic fun, turn to curse when it's done.