Effect of Resource Curse on Child Well-being in Resource-rich Countries, Specifically in Post-Soviet States

Aytakin Huseynli, Washington University in St. Louis


It was November of 2019, and I had just landed in my next country, the second resource-rich country I was visiting to collect data for my dissertation. I took a taxi from the airport to go to my hotel. The radio was playing Russian pop music. As we started to drive, I was shocked to see gleaming buildings, wide roads, lights, and mega-sized construction projects, all radiating out from the airport. I knew this particular country was rich, but I did not expect this much wealth. Everything was telling me that I was in a country with immense wealth; signs of it were everywhere. While looking around I could not hide my surprise and excitement. Noticing my reaction, the taxi driver responded, “Yes, we are a very rich country, we have all the minerals and expensive natural elements from Mendeleyev’s [periodic] table.” As we were driving, the news, in Russian, which I understood, came on the radio. The news anchor announced, “We continue reporting on the news that we woke up to yesterday, which shocked the whole nation. The mother of the five girls who burned to death behind locked doors is still in the hospital and in shock. She is still not fully conscious or able to talk about details.” As I heard this, I asked the driver what happened. Apparently, two able-bodied parents had come to the capital from one of the provinces of the country to seek work to support their five children. They found a place to live, but while out earning money—most probably through informal labor—they had to leave their children without supervision behind a locked door at home. The eldest of five children, all girls, was seven years old. The family did not know anyone who could be with their daughters, nor could they afford to send them to childcare or school. A fire started at the home, and the girls could not escape, so they burned to death. As I heard this story, we continued passing by an increasing number of mega-constructions, fancy buildings, and new bridges on the way to the hotel. I remembered an old saying we had in Azerbaijan, “the beggar sons of millionaires,” which referred to the millions of poor people during the first oil boom in Azerbaijan back in the early 1900s. Azerbaijan and this country I visited had similar histories, with similar outcomes. Oil wealth does not necessarily lead to shared prosperity and development. Moreover, as I was writing this introduction in 2022, the people of this country were mourning another tragedy—the arrests of 5,000 people and the deaths of 165 civilian protesters, who were killed on January 6, 2022, by their government, while protesting harsh living conditions and recent increases in fuel and food prices. In addition to inequality, oil- and gas-rich developing nations also tend to have less democracy and more government oppression. Why are so many people struggling and helpless in countries with oil and gas resources? As countries become richer, citizens should gain in social and economic well-being. Theoretically, countries with new wealth can create opportunities for vulnerable populations, especially for children. But that has not been the case for low-to-middle income (LMI) countries that are rich in natural resources such as oil and gas. These countries are victims of the resource curse, which is regressive development that occurs despite wealth coming from the exploitation of natural resources, especially oil and gas. These countries tend to have unequal economic development, strong autocratic regimes, and severe human rights violations. Social well-being is also affected negatively by the resource curse. The purpose of this dissertation research has been to extend resource curse theory to the study of child well-being in LMI resource-rich countries and to suggest a policy-level intervention to improve children’s well-being. Although the effect of the resource curse on the development of countries has been studied since the late 1980s, little attention has been paid to the situation of children from the perspective of the resource curse. But with resource-rich LMI numbering as many as 72—about one-quarter of all the nations on the planet—the question of truncated or diminished well-being of children in these countries is important to address. And it is also important to plan, design, test, and implement tailored interventions that can contribute to the improvement of the well-being of millions of children. Given this agenda, the following three papers have the purpose of (1) studying the situation of the well-being of children in resource-rich LMI countries worldwide, (2) focusing specifically on six post-Soviet countries, and (3) developing a policy or policies to break the resource curse, in this case focusing on one resource-rich LMI country. The first paper presents a new conceptual model to test the link between the resource curse and child well-being, using mixed-effects linear regression and then tests the mediation effect of social protection policies by using structural equation modeling analyses. Panel data for 18 years were entered into the models and analyzed in STATA 17 and SPSS 21. The sample size for the first paper was 137 countries, nearly all the LMI countries in the world. The results showed that dimensions of the resource curse such as oil, poverty of people, and democracy had a statistically significant relationship with child well-being. As oil rents (or net revenues) per capita increased, child well-being declined; and as income per capita and democracy increased, child well-being improved. The second paper compares three resource-poor post-Soviet countries—Georgia, Moldova, and Kyrgyzstan—to three resource-rich post-Soviet countries—Ukraine, Azerbaijan, and Kazakhstan—to test the relationship between the resource curse and child well-being. Using a mixed-methods research design, the paper examines the link between the two concepts, asking how and why the resource curse is associated with child well-being. For the quantitative part of the study, an analytical model like the first paper was employed to test the relationship in the six countries between the resource curse and child well-being. In the qualitative research, 65 interviews were conducted with key informants. Thematic and content analysis methods were used to analyze data in NVivo 21, and structural, descriptive, process, motif, emotion, evaluation, hypothesis, values, holistic, and provisional types of coding methods were used. The quantitative analyses found that oil and poverty affected child well-being in resource-rich post-Soviet countries, in line with the findings of the first paper. Strong civil society and political activism of citizens were contributing factors to the successful child well-being reforms in resource-poor countries. But measures of democracy and effective governance had the opposite impacts. Based on qualitative insights, the standard quantitative measures of democracy and effective governance may be overridden by the instability of government leaders and administrators. In short, shifting political regimes do not necessarily create institutional stability. This may be a contribution of the research, and a useful specification of resource curse theory. The qualitative results overall were more consistent with the results in the first paper. Overall, as expected, child well-being was not a priority for policymakers in resource-rich post-Soviet countries, compared to resource-poor post-Soviet countries. The findings of the second paper suggest that child well-being reforms may be more successful in resource-rich LMI countries when decision-makers pay attention to and invest in civil society and the political activism of citizens. The third paper proposes an intervention to improve the well-being of children in LMI countries with oil and gas resources, using Azerbaijan as a case study. The recommendations are based on the findings of additional qualitative studies conducted in Azerbaijan from 2017 to 2020. The sample for the studies was 39 key informants, such as ministers, deputy ministers, heads, and deputy heads of the national oil foundation, academics, and civil society representatives. The paper recommends diverting a portion of wealth coming from oil and gas revenues into individual child development accounts (CDAs), which are evidence-based asset-building accounts, which can be used for purposes such as postsecondary education or starting a business. Compared to the national oil reserve fund model, CDAs have a direct impact in building assets for children and households in resource-rich LMI countries, which can in turn lead to social and economic development. The national oil reserve fund model was developed in the 1970s to enable countries with oil and gas resources to save some or all that wealth for the future, but in reality, half of the resource-rich countries using this model failed to save oil and gas wealth, due to mismanagement of the funds and endemic corruption. Saving accounts at the individual and household level, in contrast, avoid government mismanagement of funds and corruption, and CDAs are a proven policy intervention to improve child well-being. Thus, diverting oil and gas revenues into CDAs may be a promising strategy for resource-rich LMI countries. The CDA design work for Azerbaijan could also potentially serve as a model for other resource-rich LMI countries that may choose to develop similar policies.