Djibouti's unusual resource curse

Abstract

An extensive literature on the ‘resource curse’ posits that abundant natural resources ‘curse’ countries possessing them with negative economic, social and political externalities. Usually, scholars identify tangible resources like oil, diamonds or timber, rarely questioning whether other kinds of resources might have the same impact, and under what conditions. This paper examines how little-studied Djibouti's non-tangible resources – geo-strategic location and aid-inspiring poverty – have produced ‘curse’ effects; with an economy dominated by US and French military spending (and concomitant aid) and rents on trade passing to and from Ethiopia, tiny Djibouti suffers from this curse. It draws four conclusions. First, resource curse effects can derive from non-traditional sources. Second, leaders' policy decisions matter at least as much as the presence or absence of resources. Third, advanced countries' spending patterns in their less-developed allies often produce unintended consequences. Finally, even tiny countries can provide scholars and policy makers with new insights.

Agricultural Systems in IGAD Region — A Socio-Economic Review

“…Some improvements in the growth rates of the GDP and social indicators were reported over the period 2004 -2006. Despite this encouraging progress, the evaluation report mentioned that the priority actions included in the poverty reduction strategic paper have not been satisfactorily implemented [50]. Djibouti's HDI is below the average of 0.493 of the countries in the low human development group and of 0.682 for countries in the Arab States [43].…”

“…As well, Djibouti earns rents from several foreign military bases especially French and American ones, alongside considerable bilateral assistance aimed at fighting endemic poverty [50]. The country is faced by several environmental and biodiversity threats such as poverty, decreasing vegetation, overgrazing, deforestation, increased development around the coastal zones, depletion of mangrove forests, and continuous loss of wildlife habitat [46].…”

The Governance Agenda in Long Term Perspective: Globalisation, Revenues and the Differentiation of States

“… Transhipment and re-export of goods: most property development polities began as ports serving a wider region. 27 See Brass's (2008) account of the effects on politics in Djibouti of the high rent that can be drawn from American and French military bases and control of trade from Ethiopia. 28 The case of the Panama Canal illustrates the complexities of the analysis here and the ambiguities of the concepts.…”

“…See Brass's (2008) account of the effects on politics in Djibouti of the high rent that can be drawn from American and French military bases and control of trade from Ethiopia.…”

Redefining Natural Resources in Economic Research

“…Natural resources and natural resource rents have become important factors that are being used to explain different things in the literature such as economic development (Auty, 2004), stock market development (Billmeier and Massa, 2009), institutions (Mehlum et al 2006) human capital accumulation (Stijns, 2006), governance, conflict and wars (Bannon and Collier, 2003;Collier and Hoeffler, 2005;De Soysa and Neumayer, 2007;Bjorvatn and Farzanegan, 2013;and Farzanegan et al 2018) as well as economic growth in the sense of the resource blessing or curse (Sachs and Warner, 2001;Guetat, 2006;Makdisi et al 2006;Brass, 2008) among many other uses of natural resources and natural resource rents in the economic literature. The World Bank (2019) offers reliable data with regards to natural resource rents and defines them as "Total natural resources rents are the sum of oil rents, natural gas rents, coal rents (hard and soft), mineral rents, and forest rents".…”