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Economic policies cannot succeed in an institutional vacuum
Dear Editor,
The recent article by Peeping Tom, “The resource curse is a disease of economics before it is a disease of institutions” offers a flawed premise by fighting a strawman; no serious economist claims that a physical asset like oil lithium is inherently cursed. The article therefore conflates an asset with a process where both economics and governance intersect. Instead, the real “curse” is a predictable process of systemic distortion triggered when sudden and massive windfall or capital inflow overwhelms a country with weak absorptive capacity that includes both economic and institutional foundations.
The author mistakenly tries to isolate economics from governance, yet the two are completely inseparable. Corruption in petrostates perfectly illustrates this intersection: a sudden flood of oil cash is an economic event, but how it is spent is a governance event. The most prominent manifestation of this is corrupt public procurement ― a standard crisis in petrostates where public officials rig massive infrastructure contracts. This simultaneously drains the national treasury (an economic blow) and eviscerates the rule of law through bribery and lack of competitive bidding (an institutional collapse). For Guyana, pointing to Norway as a model is deeply misleading; Norway’s success was entirely built on strong, democratic institutions that predated its oil boom by generations. Let this point sink in.
The true, urgent templates for Guyana are resource-rich developing nations where weak institutional foundations allowed immense wealth to fuel systemic corruption and economic stagnation. The development literature is full of examples. While the author correctly notes that we must build structures to transform natural wealth into human development, the article’s own logic collapses by underestimating the very governance frameworks needed to achieve this. We cannot separate the management of our oil from the strength of our state institutions.
If Guyana is to escape the paradox of plenty ― the resource curse ― we must stop pretending that economic policies can succeed in an institutional vacuum.
Sincerely,
Terence M. Yhip
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