"Curses, Curses..."

The second trap is that of an abundance of a particular natural resource such as oil in Nigeria or Forests in Togo.

Abundant natural resources are not a trap in and of themselves; they become a trap when the resources and the profits from the resources are mismanaged.

Mismanagement can take several forms:

1. resources can be depleted from overzealous extraction
2. the focus of development and technology is solely on that specific resource which retards or completely halts development of other resources which may be more beneficial in the country's eventual development potential
3. funds from the resources can be mishandled in that they are used unsparingly without necessary constraints during "boom" periods. with any boom comes a "bust" which is usually catastrophic because of the unrestrained spending during better times.

Collier notes that abundant resources are not only a trap for the poorest nations. He points out that nations like Russia and Venezuela are also vulnerable to this trap. Collier uses "Dutch Disease"** to illustrate the pitfall for any nation in relying on one resource to the exclusion of all other resource developments.

Collier's research suggests that resource-rich countries switching from autocratic to democratic governments are likely to see a decrease their annual growth rate by 3%. Collier theorizes that this is due to two key facts: newly democratic resource-rich countries (Iraq, for example) have a tendency to invest too little (and make poor choices when they do) and the switch from a minimalist autocratic government to a large democratic government can prove unmanageable; which in turn leads to poor decision-making, corruption and a host of other development hindering problems.

As an example of a fantastically successful resource-rich nation, Collier describes the economic situation in Norway. The reason that Norway has avoided the resource trap is that its system of controls was in place before the country began to exploit its oil resources. The resources in turn have served to strengthen the system of controls.

While the developing resource-rich nations do not have the option of starting over to build a system of controls before exploiting their resources, they can be given sound advice on how to put these controls in place before the resources are depleted or before the market makes those resources less valuable.

**Read about "Dutch Disease" in the "knowledge" section**