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https://en.wikipedia.org/wiki/Resource_curse https://en.wikipedia.org/wiki/Resource_curse The resource curse, also known as the paradox of plenty or the pove

https://en.wikipedia.org/wiki/Resource_curse https://en.wikipedia.org/wiki/Resource_curse The resource curse, also known as the paradox of plenty or the poverty paradox, is the phenomenon of countries with an abundance of natural resources (such as fossil fuels and certain minerals) having less economic growth, less democracy, or worse development outcomes than countries with fewer natural resources. There are many theories and much academic debate about the reasons for and exceptions to the adverse outcomes. Most experts believe the resource curse is not universal or inevitable but affects certain types of countries or regions under certain conditions.

throwaway211 2y ago
I take your resource curse and raise you a Prebisch-Singer hypothesis > Prebisch–Singer hypothesis argues that the price of primary commodities declines relative to the price of manufactured goods over the long term, which causes the terms of trade of primary-product-based economies to deteriorate. As of 2013, recent statistical studies have given support for the idea. https://en.wikipedia.org/wiki/Prebisch%E2%80%93Singer_hypothesis https://en.wikipedia.org/wiki/Prebisch%E2%80%93Singer_hypoth... Derived demand (copper) is likely to be more price sensitive than demand for the end good (AI services) over the long run due to substitution that can occur in factor inputs. Meaning Prebisch-Singer's true again.
- kristianp 2y ago
  I imagine that assumes we can find large new deposits to meet increasing demand. That's not happening with copper. The deposit in this article is an exception.
  - throwaway211 2y ago
    It doesn't assume. Hence 'substitute'. long run refers to the amount of time for prices to adapt, not a short run dependence on one thing. Hence change in factor inputs. An example of a change in factor inputs was, for example, whale oil which was a big deal for lighting systems in the 19th century. But as cheap whales were running out, so whale oil, thought to be so important for many and which there were technical improvements in sourcing and usage, was shifted away from. As will be the case for copper, as it's a derived demand. The derived demand will be more price sensitive than the demand for the end service (lighting in the case of whales, or Open AI for copper). Not happening with copper in the short run will only make the long run change happen even (as time passes) faster.
awinter-py 2y ago
acemoglu development econ paper on this worth a read follows postcolonial trajectories of coastal countries used for ports + trade vs inland countries used for resource extraction labor
- lifeisstillgood 2y ago
  Ooohhh - intriguing. And presumably lines up with the Prebish-Singer hypothesis- that ports can switch to substitute goods - also interesting that almost every major city globally is a port city / river city
  - fuzzfactor 2y ago
    The math on that never looked very promising. All wealth arises from natural resources. A truly dense population can not be sustained in a location without local resources unless there is a way to import at least the necessities for survival from somewhere else where they are more abundant. Some of the best places for that, naturally are port cities, and for millennia merchant marine moves more goods more sensibly than most. Inland cities can get big more easily when there are abundant local resources, well developed, and if there is some huge excess of something like timber, coal, gold, or whatever that is widely desirable. A local market will develop first in the land of abundance. Then if it's possible to arbitrage in a world market, the cost will be paid to shuttle commodities to an international port. Where the trading merchants will be able to buy low and sell high in a way that is further out of reach for the local producers. Eventually the traders make more money on the same tonnage of natural resource flow than the extractors do, but the extractors got there first. Depending on what the resource owners do with that early advantage, and whether there is a regime in place which values the local resource more than human life, and stuff like that has a much bigger effect on the imbalance between producer and trader, as well as local versus international prosperity, and that's with raw commodities not yet subject to value-added manufacturing. Seems to me port cities mostly arose due to upstream export needs before they were utilized as major import hubs and mercantile centers.
    - robocat 2y ago

throwaway211 2y ago

I take your resource curse and raise you a Prebisch-Singer hypothesis > Prebisch–Singer hypothesis argues that the price of primary commodities declines relative to the price of manufactured goods over the long term, which causes the terms of trade of primary-product-based economies to deteriorate. As of 2013, recent statistical studies have given support for the idea. https://en.wikipedia.org/wiki/Prebisch%E2%80%93Singer_hypothesis https://en.wikipedia.org/wiki/Prebisch%E2%80%93Singer_hypoth... Derived demand (copper) is likely to be more price sensitive than demand for the end good (AI services) over the long run due to substitution that can occur in factor inputs. Meaning Prebisch-Singer's true again.

kristianp 2y ago
I imagine that assumes we can find large new deposits to meet increasing demand. That's not happening with copper. The deposit in this article is an exception.
- throwaway211 2y ago
  It doesn't assume. Hence 'substitute'. long run refers to the amount of time for prices to adapt, not a short run dependence on one thing. Hence change in factor inputs. An example of a change in factor inputs was, for example, whale oil which was a big deal for lighting systems in the 19th century. But as cheap whales were running out, so whale oil, thought to be so important for many and which there were technical improvements in sourcing and usage, was shifted away from. As will be the case for copper, as it's a derived demand. The derived demand will be more price sensitive than the demand for the end service (lighting in the case of whales, or Open AI for copper). Not happening with copper in the short run will only make the long run change happen even (as time passes) faster.

awinter-py 2y ago

acemoglu development econ paper on this worth a read follows postcolonial trajectories of coastal countries used for ports + trade vs inland countries used for resource extraction labor

lifeisstillgood 2y ago
Ooohhh - intriguing. And presumably lines up with the Prebish-Singer hypothesis- that ports can switch to substitute goods - also interesting that almost every major city globally is a port city / river city
- fuzzfactor 2y ago
  The math on that never looked very promising. All wealth arises from natural resources. A truly dense population can not be sustained in a location without local resources unless there is a way to import at least the necessities for survival from somewhere else where they are more abundant. Some of the best places for that, naturally are port cities, and for millennia merchant marine moves more goods more sensibly than most. Inland cities can get big more easily when there are abundant local resources, well developed, and if there is some huge excess of something like timber, coal, gold, or whatever that is widely desirable. A local market will develop first in the land of abundance. Then if it's possible to arbitrage in a world market, the cost will be paid to shuttle commodities to an international port. Where the trading merchants will be able to buy low and sell high in a way that is further out of reach for the local producers. Eventually the traders make more money on the same tonnage of natural resource flow than the extractors do, but the extractors got there first. Depending on what the resource owners do with that early advantage, and whether there is a regime in place which values the local resource more than human life, and stuff like that has a much bigger effect on the imbalance between producer and trader, as well as local versus international prosperity, and that's with raw commodities not yet subject to value-added manufacturing. Seems to me port cities mostly arose due to upstream export needs before they were utilized as major import hubs and mercantile centers.
  - robocat 2y ago