Too many developing countries are still trapped in a vicious cycle of poverty and stagnation, despite being endowed with significant stocks of natural resources—a phenomenon often referred to as the “resource curse.” Is the problem just one of economics (e.g., the negative effect of resource-driven currency appreciation on a country’s manufacturing sector), or do we need to take a closer look at the impact of politics, governance and economic management on development in resource-dependent countries?

In this brief, we bring together different strands of evidence, including findings from the 2006 Open Budget Index, to explore the role of different factors in the “resource curse.” In addition to the correlation found between a country’s resource wealth and its level of budget transparency, Michael Ross finds that resource-dependent countries tend to have weaker democracies. This raises the question of how transparency, resource dependency, and democracy interact to affect development performance across the world.