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The Oil Curse: How Petroleum Wealth Shapes the Development o

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The Oil Curse: How Petroleum Wealth Shapes the Development o

Unread postby parkerchuks » Thu 03 May 2012, 02:03:19

Michael Ross talks to Viv Davies about his recent book ‘The Oil Curse: How Petroleum Wealth Shapes the Development of Nations’. They discuss the irony of how those countries with the greatest social and economic deficits are also the most vulnerable to the oil curse and as a result grow less quickly than might be expected given their wealth. The video interview and original transcript originally appeared on the VoxEU.org website here.

Viv Davies: Hello and welcome to Vox Talks. I'm Viv Davies from the Centre for Economic Policy Research. It's the 20th of March, 2012, and I'm at the London School of Economics, talking to Michael Ross, Professor of Political Science at the University of California, Los Angeles, about his recent book on "The Oil Curse: How Petroleum Wealth Shapes the Development of Nations." We discuss the analytical basis for this study and how a country's mineral wealth is not necessarily the blessing it might seem.

Professor Ross describes how the irony of oil wealth is that those countries with the greatest social and economic deficits are often the most vulnerable to the curse.

He also points out the fact that countries that are rich in petroleum have less democracy, less economic stability and more frequent civil wars. The question Ross tries to answer in the book is how oil can be turned from a curse into a blessing.


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Re: The Oil Curse: How Petroleum Wealth Shapes the Developme

Unread postby lpetrich » Fri 04 May 2012, 08:52:48

Reminds me of something I posted elsewhere a year ago:

There's an inverse correlation between oil wealth and amount of democracy.

At least that's the conclusion of several people who have done studies of oil wealth vs. democratization.

Nate Silver: Egypt, Oil and Democracy - NYTimes.com
Jon Thompson: Visions of Tomorrow: The Democratic Threshold
Also interesting are some of the comments, especially Yamanin's comment in Nate Silver's one (#34).

With the exception of Norway and Holland, every country with lots of oil wealth is much less democratic than countries with similar levels of development and little oil wealth.

In the Middle East and nearby, Israel, Cyprus, Lebanon, and Turkey are imperfect democracies, but they are much more democratic than neighboring oil-rich nations. This effect happens not only in the Middle East, but in parts of Africa and the former Soviet Union.

Oil wealth has several side effects, like concentrating wealth in an oligarchy and inflating the currency and thus making manufacturing exports less competitive. Nations that have grown rich in its absence have had to do so by manufacturing and services and the like, which requires a skilled work force. Such a work force sooner or later demands democracy, which is why such countries whose GDP passes $10,000 per capita sooner or later become democratic. That is what has happened to South Korea and Taiwan in recent decades, and that may be happening with Tunisia and Egypt right now.

Oil-rich countries often try to pacify their populations with low taxes and lots of welfare-ish government spending, a police-state apparatus, or both. Interestingly, the Gulf States have large populations of expatriate workers, doing jobs that the locals are either unwilling to do or lack the skills to do. This sometimes reaches extremes like only about 17% of Dubai residents being United Arab Emirates citizens.


Nate Silver predicted that Tunisia and Egypt would most likely be followed by oil-poor nations, like Jordan, Syria, and Sudan, but not oil-rich ones like Libya, Algeria, and Iran.

So it's a bit of a surprise that the revolt in Libya has gotten as far as it has.

Some other nations seem VERY afraid -- China's leaders have hushed up news of the revolts as much as they can.


Oil wealth can corrupt politics on smaller scales, like in Texas and Oklahoma and Alberta, as some of Nate Silver's commenters have suggested.
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