AP® Comparative Government and Politics review sheet from Aim for Five (aimforfive.com/comp-gov/units/5/5-9)
Unit 5 · Topic 5.9
5.9 Impact of Natural Resources
Natural resources can fund a state but also weaken it. A rentier state relies on income from selling resources like oil and gas, which can lead to the resource curse: little economic variety, revenue that swings with world prices, corruption and weak links between government and taxpayers. Iran, Nigeria and Russia are the course's key examples.
Key terms
- rentier state
- resource curse
- nationalization
- economic diversification
- oil revenue
Rentier states and the resource curse
A rentier state gets a large share of its revenue from “rents,” income from selling natural resources rather than from taxing its citizens. When a government doesn't need much tax revenue, it has less reason to answer to taxpayers, and it can use resource money to buy support and pay for security forces.
Resource wealth isn't all bad: Iran, Nigeria and Russia have used oil and gas income to raise living standards and pay for government programs. The resource curse is the pattern where resource-rich countries end up with slower growth, more corruption and weaker institutions than you'd expect.
- Lack of diversification: other sectors, like manufacturing and farming, are neglected.
- Volatility: when world oil prices fall, budgets and currencies crash.
- Currency effects: resource exports can push the currency's value up, making other exports less competitive and causing trade imbalances (often called Dutch disease).
- Corruption: control of resource money is a prize worth fighting for.
- Conflict: regions that produce the resource may demand a bigger share, or fight for it.
- Weak accountability: the government depends on resource income, not on citizens' taxes.
- Inequality: the gap between rich and poor can widen.
Country examples
| Country | Resource role | Political effects |
|---|---|---|
| Nigeria | Oil provides most export earnings | Fights over revenue sharing; Niger Delta protests and militancy; corruption scandals |
| Russia | Oil and gas provide a large share of revenue | Funds the state and security; state control of energy firms; vulnerable to price drops and sanctions |
| Iran | Oil revenue is central to the budget | Funds subsidies and religious foundations; sanctions on oil exports have hit the economy hard |
| Mexico | Pemex long funded a large share of the budget | Oil is a symbol of sovereignty; Pemex now carries heavy debt |
| UK | North Sea oil developed by private firms and taxed | Oil income helped the economy but never dominated it |
| China | Major producer and processor of coal and rare earth metals | Has limited exports of some critical minerals since 2023, using resources as leverage |
Avoiding the curse
Governments try to manage resource wealth with sovereign wealth funds that save revenue for later (Nigeria created one in 2011; Russia has its National Wealth Fund), with rules that limit how much oil money goes into the yearly budget, and with efforts to diversify the economy. Nigeria's sharing formula gives oil-producing states an extra 13% of the revenue from their oil, an attempt to calm grievances in the Niger Delta. Results have been mixed.
Volatility is a real danger: when oil prices fell sharply in 2014–16, both Russia and Nigeria went into recession.
Worked examples
Try each one yourself first, then open the solution.
- Example 1
Explaining the resource curse in one country
Explain how dependence on oil revenue can weaken accountability in Nigeria.
Show the solutionHide the solution
- Step 1: Describe the dependence: oil provides most of Nigeria's export earnings and a large share of government revenue.
- Step 2: Explain the mechanism: because the state collects oil rents rather than taxing citizens heavily, officials depend less on citizens' consent and can use oil money for patronage.
- Step 3: Show the consequence: competition to control oil revenue fuels corruption, and producing communities in the Niger Delta feel excluded, leading to protest and militancy.
Answer: Oil revenue lets Nigeria's government fund itself without relying on taxpayers, which weakens accountability, encourages corruption and fuels conflict over who gets the money.
Common mistakes
- Saying every resource-rich country suffers the resource curse. The curse is a tendency, and strong institutions can limit it.
- Defining a rentier state as one that rents property. It lives off resource income rather than taxes.
- Forgetting the political side. The curse is about weak accountability and conflict, not only economic slowdown.
On the exam
- Argument essays may ask whether natural resources help or hurt states. Use Nigeria, Russia or Iran and answer the other side, such as revenue funding social programs.
- Link this topic to legitimacy and stability from Unit 1 for richer answers.
Connected topics
Videos
Check yourself
4 questions on 5.9 Impact of Natural Resources. Pick an answer to see if you got it, and why.
| Year | Average oil price (US$ per barrel) | Oil and gas share of government revenue (%) | Budget balance (% of GDP) |
|---|---|---|---|
| Year 1 | 105 | 52 | +1.5 |
| Year 2 | 98 | 50 | +0.8 |
| Year 3 | 52 | 41 | −3.2 |
| Year 4 | 43 | 36 | −4.1 |
| Year 5 | 70 | 45 | −1.0 |
Hypothetical data for Country R, an oil exporter
Which statement is best supported by the data?
The pattern in the table best illustrates which problem associated with rentier states?
Which policy would most directly reduce Country R's vulnerability to the pattern shown?
Which pattern in Nigeria is most often cited as an example of the resource curse?
0 of 4 answered