Rising China and Africa's development: oil
Rising China and Africa's development: oil

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Rising China and Africa's development: oil

4 More than an institutional fix: politics matter

The resource curse thesis focuses on both economic and political factors, but the prescribed solutions are generally political and institutional. Rooted in the logic of ‘good governance’ they are loosely fashioned around the experience of Norway, whose governance of its own oil is held up as a model of best practice. While such a model has been questioned, the more recent policies derived from it as part of a package to avoid the resource curse includes separation of the national oil company’s operational role from the wider regulation of the sector, establishing transparent institutions for developing oil strategy, and setting up a sovereign wealth fund to accumulate oil rents for national programmes of investment.

For countries in the global South, like Nigeria, these institutional fixes are seen as a way of enhancing the transparency of the sector and, so the logic goes, if oil contracting and revenue spending are achieved in the public gaze then they are more likely to enhance national development. Such policy prescriptions have much appeal and should theoretically be encouraged, but it is virtually impossible to take one country’s particular institutional history and transplant it into another country. Prescribing ‘good’ governance fails to account for the embedded politics in the producer country such that any suggested solution is negotiated, contested and reworked. Moreover, powerful vested interests who benefit from the resource curse can seemingly follow good governance procedures while all the time subverting such prescriptions. One example that will be discussed in this and next session is the issue of ‘fronting’, whereby the laws of Ghana and Nigeria state that indigenous firms should have a stake in a joint venture with an IOC, but in practice this is simply a paper exercise with silent partners acting as ‘fronts’ for what are essentially external investments.

In these cases, the governance arrangements on paper are perfectly good, but in practice they are subverted through informal institutional mechanisms, often linked to questions of political patronage. This section looks at how we understand these informal political institutions and how they shape oil governance.


Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371