Passage: 'The economic concept of the 'resource curse' posits that nations endowed with abundant non-renewable natural resources, such as hydrocarbons or minerals, frequently experience slower economic growth and worse governance outcomes than resource-poor nations. This phenomenon is driven by currency overvaluation (Dutch Disease), which renders domestic manufacturing uncompetitive, coupled with state dependence on resource rents, which weakens institutional accountability by relieving governments of the need to levy broad-based taxes on citizens.'

How does the 'resource curse' undermine democratic institutional accountability according to the passage?

Answer and explanation

Correct answer: D. Governments financed by resource rents do not rely on domestic tax revenues

  1. Step 1: Locate the passage discussion of institutional accountability: the text links weakened governance to state dependence on resource rents.
  2. Step 2: Identify the specific mechanism: resource revenues relieve governments of the necessity to levy broad-based taxes on citizens.
  3. Step 3: Without reliance on citizen tax contributions, the traditional civic scrutiny and demands for governmental accountability are severed.
Answer
Governments financed by resource rents do not rely on domestic tax revenues.

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