IGS 10a Lecture Notes - Lecture 17: Latin American Debt Crisis, Resource Curse, Environmental Degradation
29 Nov 2016
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Document Summary
Japan and east asian tigers lacked natural resources but grew and developed rapidly vs. delayed development and slow growth that is typical of resource-rich africa/middle. Able to use other resources like abundance of labor, high literacy rate, etc. to compensate. Problem of being resource rich: others can come in and exploit those resources. Dutch disease : gas reserves were found and the environment was destroyed to build industrial factories. Capital and labor flood to the resource sector in order to tap riches. Resource riches destroy manufacturing base by creating competition with a different booming sector. Volatile, changing prices = boom and bust cycles of wealth and decline. Exports increase -> currency appreciates which leads to imports increasing (because there is now more money to spend on foreign goods) -> exports decrease. All of this causes crowding out to occur in the manufacturing sector. Things that can attribute to the resource curse". These are traits common in resource-rich countries.
