February 14, 2013

OUR EXTERNALITIES:

Avoiding the Curse of the Oil-Rich Nations (TINA ROSENBERG, 2/14/13, NY Times)

Oil-dependent countries, writes the Stanford professor Terry Karl, "eventually become among the most economically troubled, the most authoritarian, and the most conflict-ridden in the world." This phenomenon is called the resource curse. [...]

Petro-dependence also leads to conflict. The conventional wisdom used to be that grievances were the cause of conflict, but that ended after the economists Paul Collier and Anke Hoeffler found in a series of ground-breaking studies that more important was the opportunity to grab oil or other commodity resources. They showed that if a third or more of a country's G.D.P. came from the export of primary commodities, the likelihood of conflict was 22 percent. Similar countries that did not export commodities had a 1 percent chance.

If a government can finance itself through the profits on oil, it needn't collect taxes. Let me suggest that this is not a good thing. Taxes create accountability -- citizens want to know how the government is spending their money. Substituting oil revenues decouples government from the people. The list of the world's worst-governed countries today features many that are dependent on the production of oil: Nigeria, Angola, Chad, Venezuela, Libya, Equatorial Guinea.

Am I my brother's keeper?
Posted by at February 14, 2013 7:13 PM
  
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