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Apparently when Norway found oil, they were blessed with a government that was both honest and farsighted, noted the effect of the resource curse in other count

Apparently when Norway found oil, they were blessed with a government that was both honest and farsighted, noted the effect of the resource curse in other countries, called in a consultant from the Middle East who had seen it firsthand, and set up a system that carefully firewalled the oil money to mitigate its corrupting influence. I'm not clear on exactly how the firewall works, but people who understand it better than I do, have credited it with Norway still being a great place to live today.

ars 7y ago
You can't tell if it worked until the resource runs out. It's always a great place to live while the resources are being extracted. Tell me, how large is the oil industry relative to other industries? Or to put it in other words, if all oil extraction stops tomorrow what would happen to the economy?
- rwallace 7y ago
  > It's always a great place to live while the resources are being extracted. Intuitively you would expect that. The thing that's so difficult for us to wrap our heads around about the resource curse is that intuition is completely wrong here; a sufficiently valuable natural resource can ruin a country even while it is being extracted. The short version of the reason why is that it breaks the alignment of interest between the rulers and the people. Manufacturing industry needs a healthy and capable workforce, but as this excellent video puts it, a gold mine can run with dying slaves and still produce great treasure: https://www.youtube.com/watch?v=rStL7niR7gs https://www.youtube.com/watch?v=rStL7niR7gs
magicalhippo 7y ago
> I'm not clear on exactly how the firewall works The government has agreed with itself that all the oil money goes into a big fund, and that they only use a small percentage of the expected return of the fund per year. They've also renamed it the pension fund to make it less attractive for the current ruling politician to use more for their pet issues. https://translate.google.com/translate?sl=no&tl=en&u=https%3A%2F%2Fwww.regjeringen.no%2Fno%2Ftema%2Fokonomi-og-budsjett%2Fnorsk_okonomi%2Fbruk-av-oljepenger-%2Fretningslinjer-for-bruk-av-oljepenger-ha%2Fid450468%2F https://translate.google.com/translate?sl=no&tl=en&u=https%3...

ars 7y ago

You can't tell if it worked until the resource runs out. It's always a great place to live while the resources are being extracted. Tell me, how large is the oil industry relative to other industries? Or to put it in other words, if all oil extraction stops tomorrow what would happen to the economy?

rwallace 7y ago
> It's always a great place to live while the resources are being extracted. Intuitively you would expect that. The thing that's so difficult for us to wrap our heads around about the resource curse is that intuition is completely wrong here; a sufficiently valuable natural resource can ruin a country even while it is being extracted. The short version of the reason why is that it breaks the alignment of interest between the rulers and the people. Manufacturing industry needs a healthy and capable workforce, but as this excellent video puts it, a gold mine can run with dying slaves and still produce great treasure: https://www.youtube.com/watch?v=rStL7niR7gs https://www.youtube.com/watch?v=rStL7niR7gs

magicalhippo 7y ago

> I'm not clear on exactly how the firewall works The government has agreed with itself that all the oil money goes into a big fund, and that they only use a small percentage of the expected return of the fund per year. They've also renamed it the pension fund to make it less attractive for the current ruling politician to use more for their pet issues. https://translate.google.com/translate?sl=no&tl=en&u=https%3A%2F%2Fwww.regjeringen.no%2Fno%2Ftema%2Fokonomi-og-budsjett%2Fnorsk_okonomi%2Fbruk-av-oljepenger-%2Fretningslinjer-for-bruk-av-oljepenger-ha%2Fid450468%2F https://translate.google.com/translate?sl=no&tl=en&u=https%3...