Natural Resources, Love of Money, and Democratic Republic of the Congo’s Competitive Disadvantage

Abstract

The Democratic Republic of the Congo is a ‘geological scandal’. It has mineral reserves worth an estimated US$24 trillion. Also, it has in abundance several other natural resources. Based on Forbes Global 2000, a ranking of the world’s most competitive 2,000 companies, the paper attempts to understand why, despites its potentials, Congo has no globally competitive companies. The paper uses two models, Michael Porter’s ‘national competitive advantage’, and behavioral economics’ model of ‘love of money’, to argue that extractive institutions devised by the Congolese elite in power, along with rampant corruption, prevent the emergence of modern industrial enterprises in the country. The paper ends with the hope that Congo’s newly-elected government improve good governance by restructuring political and economic institutions so Congolese companies will have a chance to create global competitive advantage in the mining sector where Congo has a comparative advantage.