Beyond the Resource Curse

Beyond the Resource Curse

Beyond the Resource Curse

Beyond the Resource Curse

Synopsis

When countries discover that they possess large deposits of oil and natural gas, the news is usually welcome. Yet, paradoxically, if they rely on their wealth of natural resources, they often set down a path of poor economic performance and governance challenges. Only a few resource-rich countries have managed to develop their economies fully and provide a better and sustainable standard of living for large segments of their populations. This phenomenon, known as the resource curse, is a core challenge for energy-exporting states. Beyond the Resource Curse focuses on this relationship between natural wealth and economic security, discussing the particular pitfalls and consistent perils facing oil- and gas-exporting states.

The contributors to this volume look beyond the standard fields of research related to the resource curse. They also shed new light on the specific developmental problems of resource-rich exporting states around the globe, including Azerbaijan, Bahrain, Cambodia, East Timor, Iran, Norway, Russia, Trinidad and Tobago, the United Arab Emirates, and Venezuela.

Policy makers and academics think of energy security solely in terms of the interests of energy importers. Beyond the Resource Curse shows that the constant volatility in energy markets creates energy security challenges for exporters as well.

Excerpt

Brenda Shaffer

Energy security is a fundamental challenge for major energy-exporting states. Most policymakers and many academics think of energy security solely in terms of the interests of energy importers. However, the constant volatility in energy prices and the permanent uncertainty of supply and consumption trends create energy security challenges for both importers and exporters. Beyond the Resource Curse examines a number of the challenges to energyexporting states that emanate from this volatility and studies the various influences of oil and gas revenue on exporting states.

Energy production and transport is a highly capital-intensive industry. Creating new energy production also requires a long lead time, which means that energy supply and demand are frequently unsynchronized. This creates inherent energy price volatility and the subsequent boom and bust cycles characteristic of energy-exporting economies. Energy trade is the largest input in the world economy, and energy consumption and production trends directly influence and are influenced by the state of the world economy. Although the ebbs and flows of energy prices have a significant impact on the state of the world economy, those same ebbs and flows can translate into tsunamis and tidal waves for energy-exporting economies. This can be seen in the collapse of prices that took place with the onset of the current global financial crisis that began in 2008, when the price of oil fell to under $40 a barrel in January 2009. Just half a year earlier, oil prices had been at an all-time high of $147 a barrel.

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