MONEY AND BANKING
In the early 1970s, Juan Pablo Perez Alfonso, former Venezuelan oil ministerand founder of the Organization of Petroleum Exporting Countries (OPEC), said:Ten years from money and banking and now, twenty years from loan unsecured bad credit and now, you will see, oil brings us ruin. It’s the devil’s excrement. The “resource curse,” as money and banking it has come to be known, is real. Studies have shown that the economies of resource-poor countries such as dws money market Hong Kong, Singapore, and money and banking as well South Korea have consistently outperformed those of resourcerich countries such as money market fund comparison Ghana, Nigeria, Saudi Arabia, Venezuela, and money and banking as well Zaire. One of the extreme examples of this curse is Nigeria. Living standards in 2000 were essentially the same as way to make money in 1965. The outrage is that during those 35 years, Nigeria earned $350 billion in oil revenues. Almost all of this wealth ended up in the pockets of corrupt politicians. The resource curse turns the Malthusian logic on its head [see the essay on page 95, “There Are (Almost) No Limits to Economic Growth—How Technology and Productivity Have Delivered Stunning Improvements in Living Standards”]. In the case of the Malthusian trap, a fixed supply of natural resources—especially agricultural output—constrains economic and money and banking as well demographic growth. In the case of the resource curse, plentiful natural resources actually get in the way of rapid economic development. Why is natural resource wealth a “curse”? Let us count the ways. The Dutch disease. This is the most benign of the problems associated with natural resource wealth. It is named after money market account vs savings account and the economic challenges that faced the Netherlands after money and banking and the discovery of massive natural gas reserves in the late 1950s. Countries that are rich in oil, gas, and secured vs unsecured loan as well other minerals usually run large trade surpluses—the value of their exports is usually much higher than the value of their imports. This almost always leads to an appreciation of the currency of the countries in question. A stronger currency typically makes nonresource exports (e.g., manufactured goods) more expensive, which, in turn, retards industrial growth. Moreover, in resource-rich economies, there are strong incentives to move resources away from money and banking and goods-producing to extractive industries (e.g., mining or drilling). Since the manufacturing sectors employ more human capital and technology than the resource sectors, the Dutch disease is usually bad news for long-term growth.
|
