Collier Flashcards
What role does regulation play with regards to economic prosperity?
The presence of regulation is the difference between a nation prospering from the utilization of its natural resources or plunder for the benefit of the few.
Nature+governenment+regulation=prosperity
Nature+governement-regulation=plunder
What are the differing takes on nature as
Environmentalists want to preserve nature,
Economists tend to want to exploit nature and use it as an asset.
Collier argues the two need each other.
What is the resource curse?
The idea that a country endowed with natural resources will experience negative outcomes for it.
Countries can become dependant on a singular resource which weakens their global economies
When a resource boom happens, countries with resource based economies will decrease exports of that resource due to decreased demand due to higher prices.
Examples: Diamonds in Sierra leone, oil in nigeria
What causes the resource curse?
Poor governance. Collier found that the governments of nations blessed with resources determined whether they were plundered or used to increase prosparity.
How much known resources do the bottom billion countries have compared to the top quarter and why?
The bottom billion countries have as much as one quarter as much known subsurface assets. Collier believes this is because they simply havent been discovered yet.
What problems are posed with the prospecting and discovery of natural resources in these bottom billion countries?
Countries must decide whether they should grant access to third parties vying for newly discovered resources. This brings issues of corruption into the mix.
Another issue with third parties is that they can take advantage of a country that is not well informed of their resource abundance. If a company knows there is an abundance of resources, they could misrepresent the amount to a country’s government, reducing fees and taxes they might have to pay. (Asymmetric information)
Solutions to this problem include making subsurface information public and selling off rights plot-by-plot to control the rate of exploitation using auctions.
What can a country do to counter corruption of public officials?
- Have an effective legal system
2. Promote transparency
What is the “Bird in the Hand” rule?
The notion that future incomes from natural assets should not be anticipated.
Why was norway successful in its development of oil resources where other similar countries failed to do the same thing?
Norway took 100% of its revenues and reinvested them in the global market, earning them considerable interest and generating an asset.
