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> Inflows of hard currency push up prices, squeezing the competitiveness of non-oil businesses and starving them of capital. This is true for any kind of indus

> Inflows of hard currency push up prices, squeezing the competitiveness of non-oil businesses and starving them of capital. This is true for any kind of industry that a country has a competitive advantage in.

MrBuddyCasino 7y ago
I think this true for London and Banking as well.
pytester 7y ago
There's a vast difference in the effect on a country depending on whether its competitive advantage comes from resources or people though. If it comes from resources then the incentive to develop the people is lost and they're either bought off or ignored. Look at what happens in Russia or Venezuela or Saudi Arabia.
- throwaway284721 7y ago
  So what's wrong with being bought off? People in Kuwait have it very well.
  - pytester 7y ago
    In the 17th century Bolivia was considered the richest country in the Americas because of the Potosi silver mine while the eastern seaboard of America was basically a poverty stricken nowhere. Now Bolivia is the poorest country in the Americas and the US is the richest. This is basically why. The answer is - it works fine until the resource price drops or you run out of it. Kuwait may be fat and content now but it has a dark future ahead of it once they stop being able to live off foreign cash.
  - dredmorbius 7y ago
    Nauru's birdshit apocalypse. https://www.nytimes.com/1995/12/10/world/a-pacific-island-nation-is-stripped-of-everything.html https://www.nytimes.com/1995/12/10/world/a-pacific-island-na...
dredmorbius 7y ago
In the case of natural resource boons, where what is happening, in an economic sense, is the benefit of hundreds of millions to billions of years of natural capital appreciation extracted with no realised economic cost. This is a vast unbooked. cost, but still a real one. Separation taxes reimpose this in part. Most other cases of competitive advantage lack this element, though network-based superiority resembles it in parts (comms, transport, trade, urbanisation, IT, banking, military & political power).

MrBuddyCasino 7y ago

I think this true for London and Banking as well.

pytester 7y ago

There's a vast difference in the effect on a country depending on whether its competitive advantage comes from resources or people though. If it comes from resources then the incentive to develop the people is lost and they're either bought off or ignored. Look at what happens in Russia or Venezuela or Saudi Arabia.

throwaway284721 7y ago
So what's wrong with being bought off? People in Kuwait have it very well.
- pytester 7y ago
  In the 17th century Bolivia was considered the richest country in the Americas because of the Potosi silver mine while the eastern seaboard of America was basically a poverty stricken nowhere. Now Bolivia is the poorest country in the Americas and the US is the richest. This is basically why. The answer is - it works fine until the resource price drops or you run out of it. Kuwait may be fat and content now but it has a dark future ahead of it once they stop being able to live off foreign cash.
- dredmorbius 7y ago
  Nauru's birdshit apocalypse. https://www.nytimes.com/1995/12/10/world/a-pacific-island-nation-is-stripped-of-everything.html https://www.nytimes.com/1995/12/10/world/a-pacific-island-na...

dredmorbius 7y ago

In the case of natural resource boons, where what is happening, in an economic sense, is the benefit of hundreds of millions to billions of years of natural capital appreciation extracted with no realised economic cost. This is a vast unbooked. cost, but still a real one. Separation taxes reimpose this in part. Most other cases of competitive advantage lack this element, though network-based superiority resembles it in parts (comms, transport, trade, urbanisation, IT, banking, military & political power).