The political economy of oil and gas in Southeast Asia: heading towards the natural resource curse?

Abstract

The notion of the resource curse suggests that countries with large caches of natural resources often perform worse in terms of economic growth, social development, and good governance than other countries with fewer resources. The theory posits that countries depending on oil or other extractive industries for their livelihood are among the most economically troubled, socially unstable, authoritarian, and conflict-ridden in the world. This article explores whether the resource curse is occurring in relation to oil and gas production in Southeast Asia, where investments in oil and gas infrastructure are expected to increase significantly. The article begins by conceptualizing the resource curse before explaining the factors believed to cause it. It then proposes metrics that can be used to identify the presence of the resource curse before testing these metrics on the five Southeast Asian countries with the largest rates of oil and gas production and reserves – Brunei, Indonesia, Malaysia, Myanmar, and Thailand – from 1987 to 2007. The article compares the performance of these Southeast Asian countries with the five largest producers in the Organization of Petroleum Exporting Countries as well as Brazil, China, India, the Russian Federation, and South Africa. The article concludes that the resource curse is not occurring in any of these countries, and that the theory may be too simplistic and deterministic to fully explain why some countries appear to be ‘cursed’ with resources while others are ‘blessed’.

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