Countries with abundant natural resources, including fossil fuels, typically experience economic prosperity. For decades, many economists have claimed that resource richness significantly impacts economic development; yet, there is considerable evidence that those without typically outperform those with a lot of natural resources. In certain countries in Africa, South America, and Asia with abundant resources, people are nonetheless labelled as poor. They can be categorized as poor since they continue to live on less than $2.15 each day. South Sudan, Venezuela, and Indonesia, for example, produce resources such as mining, oil, and gas, but they are often impoverished.
South Sudan: Between Oil and Economics’ Struggle
South Sudan, one of the world’s poorest countries, has an abundance of oil. According to recent data in 2023, South Sudan produced an average of about 149,000 barrels per day of total liquid fuels. However, the population is constantly trapped in difficult situations such as conflict, political and social tensions, and, most commonly, corruption. Until recently, more than 60% of South Sudan’s population, or approximately 9 million people, was classified as very poor. Not only that, South Sudan also has a dramatic economic situation. This country has the lowest annual budget among its neighboring countries, such as Kenya, Uganda, and Tanzania. While these three countries have national budgets ranging from 18 billion dollars to 31 billion dollars, South Sudan only has 1.3 billion dollars. All of these conditions have discouraged foreign investors from putting their financial trust in South Sudan.
Oil and Corruption in Venezuela
Venezuela, a beautiful South American country, has long been associated with political and economic problems. On the other hand, this country has the biggest oil and gas reserves per capita, with more than a million dollars per person, and as a result, it has been referred to as a ‘petrostate’ for many years. Oil resources were discovered in the early 1900s, and major production began in 1914 when the first commercial oil well was discovered in Lake Maracaibo, Venezuela. Until today, this country has more than 303,000 million barrels of crude oil.
Despite the oil resources owned by its country, the vast majority of Venezuelans do not see that wealth transferred in the form of economic growth and job possibilities. Venezuela is extremely poor, with high poverty and unemployment rates. The highest poverty rate does not occur by chance; there are numerous reasons for this; the Venezuelan government is heavily reliant on natural and oil resources, and at the same time, the government is undermining the democratic system, which may lead to corruption.
Indonesia’s Never-ending Corruption of Oil Resources
Since its independence in 1945, Indonesia’s development trajectory has been remarkably episodic, with significant transformation in economic and political growth. After its independence, Indonesia battled with the necessity to bind the nation together under a framework of democratic administration while also stimulating economic development. However, during its transformation, Indonesia faced several challenges regarding good governance and law enforcement, particularly in protecting its resources from certain parties or individuals engaged in corrupt activities. Furthermore, global supply and demand for commodities such as palm oil, lumber, mining, oil, and gas all impact corruption in Indonesia. The complex networks of powerful people in economics and politics make resource appraisal and accountability more challenging.
When comparing Indonesia’s development history to that of other African and South American countries (for example, South Sudan and Venezuela), it is critical to consider how extraordinary oil resources can be corrupted and lead to extreme poverty, as well as identify some key takeaways for overcoming this problem.
Indonesia has been well-known for its petroleum since colonial times. The discovery of the first oil well in Langkat, East Sumatra, in 1880 signalled the beginning of an industry that would shape the region for decades to come. Indonesia, as a petroleum-exporting country, gained greatly from global oil booms, which occurred from the 1970s to the present. According to recent figures, Indonesia’s oil revenues amounted to 7.6 billion USD in 2023/2024. This large profit is in stark contrast to the plight of the majority of Indonesians, who are still trapped in poverty.
Corruption in the oil and gas industry is a global barrier to good governance and sustainable development. Systemic poverty in those three nations (South Sudan, Venezuela, and Indonesia) is worsened by rampant corruption. The “resource curse” that has plagued the world for decades can be addressed if such in-depth study is performed and practice is refocused on people’s engagement, a transparent system, and government accountability.
People’s Engagement, Transparent System, and Government Accountability as Major Takeaways
As an individual who put such concern on this issue, we may consider three major solutions for combating illegal conduct and corruption over oil resources and industries. Firstly, we should consider ‘people’s engagement’. People’s engagement in combating corruption in the oil business and industries sought to train and educate them about their resources, economic, and political conditions. At this phase, people should speak up and express their opinions and views on the government’s decision on oil resources, which may have an impact on public interests. These acts could be presented on different platforms, both formal (via class actions or formal petitions) and informal (social media persuasive approach, etc). Secondly, we have to implement a transparent system in the oil business. Transparency means any data and information should be easily accessed by the public. The government and its apparatus have to ensure that the data and information are accurate, comprehensive, and reliable. Finally, the government’s role in the oil industry should be set to high standards. Accountability, as an essential component of a democratic system, requires that the state’s system be well-functioning and free of interference from other parties, and the three major bodies; legislative, executive, and judicial institutions, have to collaborate closely with independent organizations, civil society, and the media to monitor all actions and movements in the oil industry.
