PSCI252 Lecture Notes - Lecture 12: Per Capita Income, Dutch Disease
4 Feb 2015
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Document Summary
The time the resource is discovered is crucial: when sierra leone discovered its resource of diamonds, it was also going through the issue of getting out of colonialism. International demand for the export drives up the prices and therefore cost of the currency. An over-valued currency is a disadvantage to other tradable good sectors. Negative consequences from a nation discovering a profitiable resource. Natural resource exploitation attracts labour and investment away from other manufacturing sector. Resource extraction is often done by foreign firms, so profits do not accrue to the ldc. The repression effect: self-preservation, internal conflict, modernization effect, resource-led growth is not likely to produce social and cultural changes that would product democracy. Communal environmental problems: what is natural capital , prone to depletion, because we use them up, exhaustible, common pool resources, available for everybody. Pollution: industrial (factories, mines) and human waste, pesticides and fertilizers, other forms of pollution: visual, noise.
