Academic Journal of Suriname 2010, 1, 59-66 Social sciences

Full-length paper

Natural resources: development’s friend or foe? The

adverse effect of natural resources in the absence of
checks and balances
Daniël A. Lachman

Applied Intellect, Paramaribo, Suriname

Abstract

The Resource Curse explains the negative correlation between on the one hand the share of
natural resources in a country’s total export and on the other hand that country’s Gross
Domestic Product, purchasing power and human development. One of the cornerstones of
development is democracy and this paper attempts to explore the influence of natural
resources on a country’s democracy. Using data from various countries (including Suriname),
a strong negative correlation (R = 0.54) was found between the share of natural resources in
total exports and the level of democracy. The explanation for this was found in corruption
within governments and private companies, emerging conflicts, influence by vested interests,
NGOs straying away from their originally intended path, all induced by the aim of various
actors to capitalize on the exploitation of natural resources. Another reason for this correlation
can be found in the lack of Government efficiency and effectiveness due to insufficient
regulation, transparency, communication, etc. It appears that resource-rich countries are more
in the need of checks and balances than resource-scarce countries, but have paradoxically
fewer of them.

Keywords: natural resources, Resource Curse, democracy, Suriname

Introduction countries are Venezuela, Bolivia, Iran, Bolivia and the

Globally, it appears that those countries that rely
more on the exploitation of their natural resources
regarding their exports, also happen to be placed lower
on human and economic development rankings. This is
better known as the Resource Curse. This paper aims to
provide a brief explanation of this Curse and to discuss
the effects of natural resources exploitation on
democracy, a topic barely touched upon in literature.
First, the Resource Curse is briefly explained, followed
by a section on its causes. Next, the adverse effects of
natural resources on democracy are explored, followed
by a conclusion.
The Resource Curse
Generally it is believed that possessing abundant
natural resources will eventually lead to development,
since exploitation of these resources leads to increased
revenues and tax incomes, and development of human
capital by means of education, training and transfer of
technology. However, when observing resource-rich
countries, it strikes that these countries do not belong
to the developed nations. Striking examples of such
Democratic Republic of Congo. This phenomenon is
better known as the Resource Curse (Chang, 2007):
countries that possess abundant (often high-value)
natural resources also happen to be the countries that
belong to the group of poor countries in the world.
In contrast, the so-called Now-Developed
Countries, such as Switzerland, Japan and Germany,
happen to have marginal natural resources. Though
some countries, like resource-rich developed countries
such as Canada and Australia, might suggest otherwise,
they are mere exceptions to empirical evidence of the
Resource Curse 1). Figure 1 shows the correlation
between the share of natural resources in the export
countries. As can be noticed, it appears that countries
with a higher dependency on natural resources tend to
have populations with a relative lower purchasing
power.
Causes of the Resource Curse
Creating a knowledge asymmetry
One of the explanations for the Curse can be
found in the fact that companies emerging from the
Now-Developed Countries have invested in resource-

Correspondence to: Daniël A. Lachman. Applied Intellect, Leiding 11A, Paramaribo, Suriname. Tel: 597 323281. E-mail:
danny_lachman@yahoo.com
Available on-line March 29, 2010

Acad J Sur 2010 (1) 1

60
rich developing countries to obtain raw materials.
These raw materials were exported from the
developing countries to the Now-Developed Countries
where through a variety of techniques and technologies
the raw materials were processed into high-value
goods. Developing countries were prohibited to copy
these techniques and technologies, so that they could
export only raw materials (Chang, 2007).
The companies that exploited the developing
countries’ natural resources also refrained from
introducing advanced techniques and technologies, and
applied these almost exclusively in their home
countries. Thus, the downstream side of the complete
value chain from raw material to end product – where
the largest profits are made – was scarcely introduced
in the resource-rich countries. It is claimed that this
lack of introducing knowledge, technology, practices
and techniques is one of the contributors to the relative
low level of human development in resource-rich
countries. Figure 2 supports this theorem
Dependency on commodity markets
Furthermore, developing countries had to
compete with each other for commodities on the world
market, instead of being able to compete with niche,
specialized and/or end-consumers products, for which
markets are less competition intensive. Thus, this
manner of exploitation of natural resources was not
only disadvantageous for resource-rich countries as
they made relatively little profit, it also made them
completely dependent on industries in the West where
their raw materials were further processed to end-
products. If demand in the West declined, the demand
for the materials in a Third World country dropped
dramatically, resulting in a sledgehammer blow to an
already fragile economy.
25000
Switzerland
Germany
Purchase Power Parity (US $)
20000
Japan
France
U.K.
15000
10000
Korea
5000
Pakistan
0
0 10
Figure 1. Correlation between purchasing power and natural resource export.
Acad J Sur 2010 (1) 1
Lachman
Dutch Disease
Another important observation that explains the
Resource Curse has to do with the scale of raw material
exports. Since large-scale export of raw materials from
developing countries creates a relative high demand for
their currency, other exports, such as agricultural
products and manufactured goods, become too
expensive to be competitive against foreign suppliers.
As a result of this, those industries that might have
generated greater spin-off effects for the economy, in
particular manufacturing industries, are severely
restrained, and the developing countries become
dependent on only one or a couple of raw material
exports. This is better known as “Dutch Disease” 2).
Transfer pricing
A fourth cause for the Resource Curse that is
discussed here is the use of so-called transfer pricing.
Transfer pricing refers to the phenomenon where a
subsidiary of a multinational literally sells its products
to the parent company or another subsidiary, at a price
much lower than the market price. A multinational is
therefore able to keep its revenues artificially low in
the country where it exploits the natural resources
(Chang, 2008). Since the revenues are taxed, the
developing country’s Government earns an income
which pales in comparison with the earnings obtained
by the multinational through sale of the resources at
international market prices 3).
Asymmetry in negotiating power
Some might argue that resource-rich developing
countries themselves are to be held responsible if they
cannot conclude contracts with multinational
companies that benefit both parties. However, there
appears to be a significant difference in negotiating
U.S.
Canada
Sweden
Singapore
Ireland Venezuela
Malaysia
Mexico Chile
Costa Rica Argentina
Turkey Brazil Equador
Russia Colombia
Lithuania
India Suriname Bolivia
20 30 40 50 60 70 80 90 100
Percentage of natural resources of a country's export
The Resource Curse 61

160

140
Human Development Index

Pakistan
120
India
Bolivia
100
Turkey Suriname Equador
80 Brazil Colombia
Malaysia
60 Russia Venezuela
Mexico
40 Lithuania Costa Rica
Korea Singapore R = 0.53 Argentina Chile
20 Germany U.K. U.S. France
Ireland Canada
Japan
0 Sweden
0 10 20 30 40 50 60 70 80 90 100

Percentage of natural resources in a country's exports

Figure 2. Correlation between material resources and human development.

power and capacity between the developing country become more protective of their natural resources
and the multinational, explaining the unbalanced nature when prices for these raw materials increase (Collier,
of these contracts (Narlikar, 2001; Kwa, 2002). 2009). This has resulted in number of countries, such
as Venezuela, Bolivia and Russia, making attempts to
Lifting the curse turn the tide and to earn more from the exploitation of
Fortunately, there are some signs that some natural resources 4). This is achieved by either
countries now try to dispel the infamous Resource nationalizing assets of multinationals or by pressuring
Curse. As indicated in the beginning of this section, it multinational companies to offer (more) stake in their
can be expected that market prices for natural resources operations (Collier, 2009).
will increase in the long run. Apparently, nations

Correlation between Natural Resources and Democracy

120
Pakistan Russia
100 Venezuela
Turkey Equador
Singapore
Democracy Index

80 Bolivia
Malaysia
R = 0.54
Mexico Colombia
60
Suriname
Argentina
40 Lithuania Brazil
Korea Chile
India Costa Rica
France
20 Japan U.K. U.S.
Germany Canada
Ireland
Switzerland Sweden
0
0 10 20 30 40 50 60 70 80 90 100

Percentage of natural resources in a country's export

Figure 3. Correlation between natural resources and democracy.

Acad J Sur 2010 1 (1)

62
The impact on democracy
This section explores a barely touched topic in
literature, namely the extent to which the possession by
developing countries of abundant (high-value) natural
resources negatively influences one of the cornerstones
of development, viz. democracy. This actually sounds
paradoxically as it is generally believed that sufficient
financial resources are required to manage and sustain
a proper democracy. Natural resources might then be a
good means to obtain these financial resources.
However, reality suggests otherwise; Figure 3
depicts the level of material democracy for several
countries against the share of natural resources in their
exports. In this graph, a low value for the democracy
index indicates a sound material democracy
(Economist Intelligence Unit 2009), and as the graph
shows, there appears to be a strong relation
(regression-coefficient = 0.54) between a country’s
democracy index and the share of natural resources in
its exports. In other words, the more natural resources a
country possesses, the more likely it will be that that
particular country experiences a relative low level of
democracy 5).
Corruption
Natural resource exploiting firms are not only
valued based on their management practices and
production output, but in large part also on their
possession of concession rights. These firms often have
many shareholders. The golden rule for these
companies: maximizing shareholder profit on the short
term which in reality does not always coincide with
best management practices, which generally tend to
have a longer term view. Resource exploiting firms
therefore put a lot of effort into gaining possession of
concession rights. History has shown that this often
leads to a situation where the multi-billion dollar firm
buys off a number of governmental people, or utilize
elites 6), in order to obtain exploitation rights (Chang,
2008).
As a matter of fact, less than a decade ago
expenses made to bribe foreign governments were tax-
deductible for French companies. When these practices
often occur, this ultimately results in a situation where
a government official expects to receive some sort of
payment when granting a step forward in the process of
obtaining concession rights (Collier, 2009) 7).
Another danger of an abundance of resources is
the fact that public sector employees often “reserve”
exploitation / concession rights for family members or
friends, knowing they can get a portion of the profits
(Sankatsing, 2008). This can even escalate to the level
of political parties, where the ruling party grants
permissions only to their main (financial) contributors
(more on this when the issue of elites is discussed) or
members (Garcia-Guadilla, 2005). This distorts
democracy in a significant way, since people vote for a
party knowing that they can get a share of the profit,
and therefore do not judge the political party on their
actual performance. Another result of the two above-
mentioned corruption practices is that government
Acad J Sur 2010 (1) 1
Lachman
officials are not willing to improve policies bend on
transparency and accountability, since this will refrain
them from further profiting from bribery. This is an
important issue as corruption is a significant
determinant of policy quality (Pellegrini and Gerlagh,
2005).
Abovementioned effects are harmful for
developing countries in particular, since the average
income is relative low and people are therefore more
easily susceptible to corruption practice as a way to
increase the living standards, sustain their way of
living or simply to meet their basic needs.
To summarize, developing countries rich in natural
resources invite (unintended or not) corruption which
in turn negatively impacts democratic principles such
as equality, transparency and accountability, since the
level of democracy is partly dependent on the level of
corruption (Tavits, 2007).
Government efficiency and effectiveness
Most raw materials follow cyclical price trends
on world markets. This implies for developing
countries dependent on natural resources that their
income fluctuates with commodity prices. This makes
it hard for these countries to support their institutions
that form the stronghold of their democracy (Salman,
2007). Furthermore, fluctuations of commodity prices
make it difficult for the electorate to determine whether
the Government makes sound decisions. When
commodity prices are high, the Government receives
more income and is often tempted to execute so-called
“white elephant” projects. Even if the Government
spills a lot of the financial resources (in particular with
regard to corruption, as explained previously), it can
still meet the needs of the people (since it has sufficient
income), who in turn create a positive image of their
Government. This image-building accelerates when
Government has the financial means to use the media
to influence the electorate, as is the case in Venezuela
8)
(Garcia-Guadilla, 2005). On the other hand, during
times of low commodity prices the Government might
take sound decisions and use their limited resources in
an efficient and effective manner, but can not get the
electorate on its side, since it can not meet the needs of
the people (Salman, 2007).
Earlier in this article, the problem of government
officials, deliberately stagnating policy improvements
to safeguard illegal payments, was discussed.
However, this phenomenon can also occur at a higher
level of the reigning political party or parties. Since the
Government is the recipent of lucrative bribes from
actors in resource exploitation, it is bent to do anything
to stay in power after the next election; losing elections
simply means losing profit. On their way to the
elections, Government expenditures are even spent on
campaigns of the ruling political party, and vice versa,
the political party is willing to finance to Government’s
expenditures, such as white-elephant projects, to win
over the electorate (Collier 2009). Once in power, the
political party now turns to corruption to gain their
return on the “investments” done towards the elections.
The more profound result of this situation is that
The Resource Curse
Governments are merely interested in the cliché
“winning the next election” and have therefore a short-
term vision, rather than formulating long-term
strategies in order to tackle deeply rooted issues.
The electorate’s view on Government efficiency
and effectiveness with regards to expenditures is also
clouded when state-owned resource exploiting firms
(which can make enormous profits when commodity
prices are high) finance these expenditures 9). In
developing countries, these firms are often one of the
few employers left that can afford to offer sound labor
conditions (such as decent salaries, free health care,
pension plans etc.). Because of these conditions, but
also due to the fact that top positions in these state-
owned firms are often politically taken, top
management is left with little choice to meet the
demands of the Government for financial aid (Garcia-
Guadilla, 2005). These transfers are usually kept secret
from the public, who therefore can not make a sound
judgment regarding the Government’s expenditure
efficiency and effectiveness.
Decentralization of governing power is seen as
one of the most important processes to improve
involvement of the public. It decreases the time
required for reaching a decision (and the time required
to have plans implemented) and thus increases
efficiency. Unfortunately, resource-rich developing
countries are more likely to refrain from
decentralization processes, as it means that relatively
high-placed Government officials give power (for
instance, to grant concessions and exploitation rights)
to local levels, and can not receive bribes 10) (Berg-
Schlosser and Kersting, 2003).
Selective development of regions
Obviously, natural resources are not evenly
distributed across a country, but tend to be more
concentrated in certain regions. This usually leads to
one of the following two situations. The first situation
is where the Government focuses on the resource-rich
part of the country; political parties are influenced in
choosing and developing their strategies by the
resource gap between regions in the country. At first,
this might seem plausible, but not all inhabitants live in
or near such areas. Since the resources at hand for the
Government are finite, areas poor in natural resources
receive little attention for development compared to
areas that have abundant resources. The Government
simply deems it uneconomical to meet the
requirements of the inhabitants of resource-scarce
regions. Over time, this policy widens the gap between
resource-rich and resource-scarce areas. This
simultaneously induces migration to the richer parts of
the country, not only further widening the gap, but also
creating tensions in crowded becoming regions with
regards to housing, jobs, health care etc. This
phenomenon of attention focused solely on resource-
rich regions neglects portions of a country’s
population, and is called in this paper “selective
development”. It occurs primarily in countries where
the overall level of development is relatively low and
where the resource exploitation industry is in relative
infant stages of development (Carbone, 2003).
63
The second form of selective development is
actually the mirror image of the first one discussed, and
deals with the situation where resource-rich regions
supply resource-scarce regions in a country, while
marginal income of the exploitation flows back to the
inhabitants of resource-rich regions. Usually, the only
benefits for local communities near resource
exploitation are low-wage job opportunities 11), and
community projects financed by the exploiting firms.
This form of selective development also results in
neglect of the needs and demands of the inhabitants of
resource-rich regions (Larson, Anne M., Pacheco,
Pablo, Toni Fabiano, e.a. 2007).
Influence of elites
Since elites have been able to secure far-reaching
possibilities of influence on political processes, they
have the power to deafen the Government to the voices
of society (Garcia-Guadilla, 2005). One of the ways
they are able to do this is through their financial
contributions to political parties; it is therefore more a
rule than an exception that political parties are
undemocratic (Sankatsing, 2008).
A striking example is the group of large estate
owners in the North-Eastern part of Brazil, who in
reality rule over all other people through their influence
on local government. They are able to expose
employees to harsh and severe labor conditions with
minimal payment, without any complaints from local
governmental offices or Non-Governmental
Organizations, such as labor unions.
Maybe even more important, apart from
influencing political processes, elites are also able to
put their mark on the judiciary; their influence has
penetrated to such an extent that elites can influence
the judicial system to ensure that any verdict will not
be disadvantageous to them, which is a breach of the
Trias Politica and democracy (Berg-Schlosser and
Kersting, 2003).
Because of their international network, elites
often also play an important role in settling disputes
between resource exploiting firms (usually
multinationals) and local populations. However, it
appears that elites do this more in the favor of the firms
themselves (Salman, 2007). This can often also be seen
in their role as negotiators with multinationals
regarding exploitation contracts. Though the elites, as
negotiators, are on the payroll of the Government, it
often happens that they are bribed in various ways,
from offering large sums of money to securing a job
position for themselves or their offspring in the
exploiting firm. This frequently leads to deals which
are very favorable for the firm, but not as much for the
Government, or more importantly, the local population
(Salman, 2007; Writers, 2009a).
Effects of globalization
The phenomenon that is known as
“globalization” globally intertwines societies at all
levels, through improvement of information handling
and affordable and improving transportation
(Friedman, 2007). Multinationals can therefore
penetrate deeper and easier into societies of developing
Acad J Sur 2010 1 (1)
64
countries. Globalization therefore undermines
democracy since it is a process of “de-nationalization”
which in reality transfers democratic authority to non-
democratic institutions, for instance to the earlier
discussed elites (Bohman, 2007). This is currently
happening in Iraq where the country is pressured by the
United States, via powerful Iraqi public officials, to
relinquish the control over oil resources (Writers,
2009), though the majority of the Iraqis are against
foreign influence in their petrochemical industry. This
also happens in Africa where China pressurizes
countries in their search for minerals.
Derailing of NGOs
When multinational corporations (MNCs) operate
in countries (other than the country of their home
office) they often finance Non-Governmental
Organizations (NGOs) in various fields, ranging from
environmental protection groups to human rights
activists. However, the original intent of NGOs is to
offer a grass root alternative to corrupt and inefficient
government agencies and to play an important role in
developing policies (Sankatsing, 2008). Through the
financial back-up and influence of MNCs, the NGOs
are shifting away from their original focus and become
depoliticized. As democracy is outlined by the overlap
between state, civil society and economy (Schalkwijk,
2004), this focus shift of NGOs (due to influence of
MNCs) implies an erosion of democracy (Rahman,
2006).
Conflict
History has shown that having natural resources
often leads to conflicts (Stevens, 2009). These conflicts
hamper development, and, more specifically, render
democratic institutions powerless, especially when the
conflict escalates to a (civil) war. Since the resources
will not be depleted overnight, the potential cause for
conflict maintains to exist even when conflicts are
settled. Resource-rich countries are therefore likely to
fall into the trap of (civil) wars again after conflicts
have been settled. Notorious examples are Angola,
Nigeria, Democratic Republic of Congo, Sierra Leone,
among many other countries (Gralau, 2008). The
earlier mentioned intrusions on democracy due to an
abundance of natural resources often result in growing
conflict(s) between:
- portions of the population and the state, as a result of
autocratic behavior, corruption and political parties
representing particular interests (Collier 2009);
- political parties, due to corruption of ruling parties,
inefficiencies and lack of effectiveness of
Government actions, lack of effort to improve
policies, etc. However, it should also be noted that
tensions between political parties often rise due to
the simple fact that gaining power will automatically
grant the ruling political party the possession of the
country’s natural resources in order to fill the
pockets of its supporters 12);
- different regions, as a result of selective development
and migration of people. This situation is extra
volatile in ethnically diverse countries, where one
ethnic group populating a resource-scarce region
Acad J Sur 2010 (1) 1
Lachman
feels neglected by Government, whereas another
ethnic group in a resource-rich region thrives with
Government investments. What originally starts as
selective development, ultimately leads to racial
tensions, where in particular minority rights are
mitigated 13) (Welzer, 2009);
- large portions of the population and resource
exploiting firms, often leading to an increase of
weapon use by these firms, or an increasing
militarization of mineral resources (Writers, 2009b).
Local inhabitants (who may have wandered the
lands, given into concession to the exploitation
firms, for centuries) are restricted from what used to
be their land for ages, on which they often depend
(as is the case with Amerindians in the Brazilian
Amazon forest). In the prospect of Government
revenue, the state often sides with the exploiting
firms thereby mitigating rights of local inhabitants
(Maxted, 2006);
- large portions of the population and the country’s
elite, since the rights and needs of the latter
supersede those of the former due to Government
action;
- different countries, when natural resource reserves
cross borders (Collier, 2009). Illegal exploiters from
one country often cross borders to gain more
resources. Furthermore, in the case of underground
liquid or gaseous reserves (e.g. oil and gas reserves),
which can not be exactly quantified, the dispute
often arises if one country does not extract more
minerals than the quantity their borders actually
cover.
Conclusion
As stated in the first section, one would suggest
that exploitation of natural resources benefits a nation.
As a result, development (and democracy as its
component) would thrive. However, this paper suggest
otherwise.
A developing nation rich in natural resources can
therefore be compared with a little boy, without any
significant education, developed talent, skill or
experience, but with a lot of money. As can be
expected from such a small boy, he will spend on a lot
of things he might not need, pay too much for goods
and services, give it away, lose it, etc. The boy needs to
know how to spend the money, how he can invest it to
earn more money, assess whether it is necessary to
purchase a particular product, etc. In other words, he
needs to build checks to ensure he will not make
mistakes and invest the money badly.
Exactly the same applies for resource-rich
countries; they are more in the need of checks and
balances than resource-scarce countries, but
paradoxically have fewer of them (Collier, 2009);
rather than putting all efforts in place to extract natural
resources and export them as soon as possible, efforts
should be put into place first to have all processes,
procedures, roles, responsibilities, structures and
instruments clearly defined and implemented. These
are:
The Resource Curse
- anti-corruption laws, with proper definition of
responsibilities and accountabilities;
- transparency standards;
- prevention of conflict of interests;
- securing land owning rights of indigenous people;
- defining long-term strategies for the entire country,
complete with planning, scheduling, roles and
responsibilities;
- demanding a minimum rate of return when the
Government invests in projects;
- putting all efforts in place to have (foreign and
domestic) subject experts on the Government side at
the negotiation table etc.
These efforts will also diminish the negative
influence of the elite on democracy in the presence of
abundant resources (Menke, 2003).
A country that takes this approach to exploit its
natural resources is Botswana (Lehrer, 2009). The
country used to be a clear example of the Resource
Curse, because of disadvantageous mining contracts.
Fortunately, it broke open the contracts, and
renegotiated after hiring international experts.
Furthermore, it adopted a law which obliges the
Government to have a minimum rate of return on the
investments it does (Collier, 2009). These checks
marked the escape from the Curse.
Another example of checks that are deemed
crucial for proper functioning of democratic
institutions can be found in the oil industry, namely the
fact that the so-called hydrocarbons-law is seen by
many as an indicator of political stability (Writers,
2009).
With regard to the Surinamese context, as figures
1, 2 and 3 have shown, Suriname is also subjected to
the Resource Curse. Checks and balances therefore
need to be put into place to lift the Curse in order to
guarantee a sustainable path to the future.
Notes
1)
Of course, there is a handful number of countries, apart
from the mentioned examples as Australia and Canada,
which have fared well through the use of natural resources,
such as the countries in the Middle East. Some of these
countries have even been able to earn billions of dollars for a
relative small number of inhabitants. However, these
countries experience a very low level of democracy; literally,
authoritarian rule is the norm rather than the exception here.
Therefore development in these countries is not a society
induced and endorsed process, but rather the project of a
small elite group imposed upon the people.
2)
In the early seventies of the previous century, during the
Oil Crisis, the Netherlands capitalized greatly on their huge
gas resource exploitation. Due to the crisis, gas prices sky-
rocketed, increasing the demand for the Dutch currency
which as a result increased in value. This however made
other Dutch exports too expensive for foreign consumers
(Collier, 2009).
3)
One of the most striking examples in this regard is the case
of Peru: the country is Latin-America’s top producer of tin,
lead, zinc, silver, gold among other metals, and there are
several large multinationals active in the mining industry
there. However, the income from these activities amounts to
only 60 % of the export (and Peru doesn’t really have any
other significant industry) and the GDP is still very low,
which can be seen from the striking poverty in Peru. The low
65
income from the metals export is the result of the fact that 25
of the largest mining companies operating there do not have
to pay any royalties to the government of Peru. This is the
result of contracts signed in the nineties which were actually
unfavorable for Peru.
4)
President Hugo Chavez obligated foreign oil companies to
sign new contracts and to form a joint venture with the
Venezuelan oil company PDVSA. This resulted in an
enormous increase of income for Venezuela. In 2006, Bolivia
exhibited a similar effort in nationalizing all oil and gas
fields. These attempts to regain control of natural resources
are not unique to Latin-America. Russia voided a contract
with the powerful Shell Company regarding the Sachalin II -
project, even though Shell had already invested several
billions of dollars in the project.
5)
The concept of democracy can be divided into formal and
material democracy (Breeveld, 2009). Formal democracy
refers to the extent to which institutes, structures, and
instruments exist to support and exercise democracy.
Material democracy goes one step further and represents the
extent to which these institutes, structures and instruments
function correctly. Democracy is used in this paper in the
sense of material democracy.
6)
Elites are here defined as groups of people who are able to
deliberately exert significant influence on society
(Schalkwijk, 2003). They often have gathered their
influential power from an international network they are part
of (Schuster, 2003)
7)
In Nigeria, government officials are often asked the
question “How much?”, since it is well-known that it has
become custom that a large portion of the Government
request (illegal) payment for a performed service.
8)
In the case of Venezuela, the leftist regime led by Hugo
Chavez used the media on a large scale not only to influence
the electorate, but also to spread a positive image of his
regime outside the Venezuelan borders through the
foundation of TeleSur, a region-wide broadcasting television
channel.
9)
In this regard, the president of Venezuela, Hugo Chavez,
changed the complete top management of the state-owned
Venezuelan oil company PDVSA. This led to a number of
strikes which the Government hoped to halt by firing
protesting employees. This effort failed hopelessly,
paralyzing the firm and leading Venezuela into a serious –
albeit short – crisis in 2002 – 2003.
10)
Of course, bribery can still exist, but now at a lower
Government level, viz. the local level.
11)
Because of the low level of development in the resource-
rich areas, the inhabitants of these areas often do not have the
education or experience to get well-paid jobs in the resource
exploiting firms.
12)
Regime change does therefore not automatically mean that
efforts will be taken to put a halt to corruption practices.
13)
Some claim that this was the root cause of the slaughter in
Darfur between Africans and Arabs (Welzer, 2009)
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