The presource curse describes the pattern of fiscal overexpansion, premature borrowing, governance distortion, and political instability that resource-discovering countries exhibit during the gap between discovery and first production.
Unlike the classic resource curse — which requires actual resource revenues to operate — the presource curse is triggered by the *anticipation* of wealth. Expectations change behaviour before a single barrel is lifted or tonne of ore extracted.
The Lab's canonical definition: the presource curse is triggered by anticipated wealth, not by discovery per se. This means it applies equally to major petroleum discoveries and to portfolios of mining investment in low-resource-maturity states — a critical insight for the critical minerals transition.
How It Operates
Premature Borrowing
Governments borrow against anticipated revenues — often on unfavourable terms — before production begins. Debt accumulates when repayment capacity is theoretical.
Fiscal Overexpansion
Public spending surges in anticipation of windfalls. Wages rise, headcounts grow, and commitments are made that are hard to reverse if production underperforms.
Governance Distortion
Political competition shifts toward capturing anticipated rents. Regulatory capacity erodes before revenues arrive to test it.
Expectation Shocks
Citizens and political actors form expectations of rapid improvement. When reality lags, the result can be instability, populist policy pivots, or erosion of institutional trust.
Policy Implications
- → Anticipate and manage expectations explicitly — not just fiscal accounts
- → Design fiscal rules that bind during the presource window, not just post-production
- → Require parliamentary approval and independent auditing of all sovereign borrowing within 3 years of a major discovery
- → Use conservative revenue scenarios for any fiscal commitments made pre-production
- → Build governance institutions *before* revenues arrive — not in response to them