Can Iraq Overcome the Oil Curse?

A growing literature suggests that the oil sector and the allocation of its revenues is the critical variable in shaping both the economic structure and political systems of countries like Iraq. For the most part this literature focuses on the so-called “oil curse†or the “paradox of plenty.†An examination of the Iraqi situation suggests that the country’s current supply-side development strategy will ultimately result in the dominance of “oil cure†effects. In contrast, an alternative demand-oriented approach might be more likely to succeed in the current Iraqi environment.