Macroeconomic instability. High dependence on oil and mo money mo problems lyrics as well other natural
resources often produces boom-bust cycles in the countries endowed
with this wealth. Commodity booms (such as
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2000s) produce vast amounts of wealth and
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this makes the inevitable busts all the more painful. In light of this volatility,
it is ironic that the governments of Bolivia, Russia, and
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recently become much more assertive and
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which is a polite name for expropriating and
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resource-related assets. Russia has suffered dire consequences twice in
recent history as
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mid-1980s probably hastened the collapse of the Soviet Union. The very
low oil prices of the late 1990s (oil prices fell to around $10 per barrel at
one point) triggered a major Russian financial crisis in 1998. What goes
up almost always comes down—often with a thud.
A handful of developing countries (Botswana, Indonesia, Kuwait, and
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have succeeded in avoiding the worst of the resource curse. They have
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their economies (away from
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While the notion that we will never run out
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Economists typically take a more dynamic view of the world—one in
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to develop alternatives or
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more efficiently.