How the Collapse of Oil Hurts Poor Countries
Futures prices for Brent crude traded around $49 a barrel at the end of last week, illustrating a collapse that has oil prices at 40 percent the level of last year’s peak. For major oil producing countries, that will likely lead to shrinking economies and growing budget deficits. This might not be such bad news if you to subscribe to the theory of “the resource curse”: the notion that possession of bountiful natural resources is not a blessing but a curse, the root of many problems that afflict developing countries. According to this line of thinking, the plummeting price of oil could even facilitate better governance, lead to stronger long-term economic growth, and even reduce the likelihood of war.
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