Resource-rich countries do worse

[eridani]

http://www.readersupportednews.org/opinion2/279-82/12841-from-resource-curse-to-blessing

On average, resource-rich countries have done even more poorly than countries without resources. They have grown more slowly, and with greater inequality - just the opposite of what one would expect. After all, taxing natural resources at high rates will not cause them to disappear, which means that countries whose major source of revenue is natural resources can use them to finance education, health care, development, and redistribution.

A large literature in economics and political science has developed to explain this "resource curse,"and civil-society groups (such as Revenue Watch and the Extractive Industries Transparency Initiative) have been established to try to counter it. Three of the curse's economic ingredients are well known:

--Resource-rich countries tend to have strong currencies, which impede other exports;

--Because resource extraction often entails little job creation, unemployment rises;

--Volatile resource prices cause growth to be unstable, aided by international banks that rush in when commodity prices are high and rush out in the downturns (reflecting the time-honored principle that bankers lend only to those who do not need their money).

--Moreover, resource-rich countries often do not pursue sustainable growth strategies. They fail to recognize that if they do not reinvest their resource wealth into productive investments above ground, they are actually becoming poorer. Political dysfunction exacerbates the problem, as conflict over access to resource rents gives rise to corrupt and undemocratic governments.

[elleng]

1. They get robbed by LESS resource-rich countries,

who are rich in other 'commodities' like bankers and financiers.

[mbperrin]

2. Yes, precisely so.

Apparently, none of these goofballs have read The Wealth of Nations by Adam Smith, 1776, where he addresses exactly this.

[eridani]

3. Very true, but the factors listed in the OP are also relevant n/t

[Red Aegis]

4. You are overlooking something

The reason that the resource-rich countries are developing poorly is due to the economic and military imperialism of neo-liberal policies.

For debate or information: http://socialistphalanx.com

[eridani]

5. If they weren't resource-rich, imperialists wouldn't give a shit about them

So the hobbits can just keep creeping toward Mount Doom while the Eye of Mordor is focussed elsewhere.

[annasmith]

6. valid analysis... but application shows the opposite

I do agree with the analysis, but in practice, the numbers show a different figure. Some resource rich countries are having High growth, some a slow growth and some a negative growth

http://lebanese-economy-forum.com/2012/gdp-per-capita-ppp-growth-in-the-last-ten-years-list-of-countries/
GDP per Capita Growth in the last 10 years]

High Growth
Azerbaijan 227.4 %
Mongolia 85.5 %
Argentina 59.3 %


Slow Growth:
Kuwait 28.5 %
Algeria 24.3 %
Qatar 19.8 %
Saudi Arabia 8.2 %

Negative Growth:
United Arab Emirates -37.3 %

So how do you explain that?

[eridani]

7. Oil isn't the only resource

Oil prices have been trending higher over the past 10 years, particularly compared to the 90s.

[honestgrifter]

8. Hong Kong

Look at a country with very limited resources, but a free market. The free market is the best system from lifting people from poverty to prosperity.