Dutch Disease in São E Tomé Príncipe: Policy Options for the Coming Oil Boom
نویسنده
چکیده
This paper discusses the policy issues facing the country of Sno TomJ e PrRncipe, a small island country in the Gulf of Guinea, given the discovery and imminent exploitation of large reserves of oil in its territorial waters. While presenting huge opportunities, the history of other African oil-exporting countries demonstrates that there are dangers as well. An appropriate policy for macro balance and for disposal of oil revenues will be essential if Sno TomJ e PrRncipe is to avoid the economic pitfalls which have plagued countries such as Nigeria or Angola. The two main lessons of macroeconomics in such a situation is first not to generate revenue faster than it can be productively used and second to invest in such a manner that the country's underlying comparative advantages are preserved. This is based on the premise that since the oil reserves are finite, the oil boom is not permanent and the country will in the the foreseeable future be forced to fall back upon non-oil export sectors. In the case of Sno TomJ e PrRncipe, history and recent analyses confirm that there is a strong comparative advantage in agriculture, implying that investments which enhance productivity and efficiency in this sector would be appropriate for expenditure of oil revenues. In addition, such a strategy would have beneficial effects in terms of poverty alleviation and equitable distribution of benefits from the coming windfall.
منابع مشابه
Oil Overdependence and Dutch Disease, KSA Evidence
In the context of recent oil prices fall and resulting budgetary problems faced by KSA, it is very interesting to examine the country’s overdependence on oil revenues. In this paper, we examine whether extreme oil dependence for Saudi Arabia is the symptom of Dutch Disease. We first provide a brief review of the literature on Dutch Disease and the natural resource curse. We then discuss the sym...
متن کاملHas Canada Caught Dutch Disease?
Issue The ter m ”Dutch Disease” originally referred to the adverse effects of the large North Sea natural gas discoveries on the Dutch manufacturing sector and economic growth. Dutch Disease is now an economic term that refers to the general ef fects of a commodity export boom on an economy. The booming sector drives up the cost of labour and other non-tradable inputs, which makes other tradabl...
متن کاملInvestigating the Use of Oil Revenues with the Assumption of Dutch Disease in Different Economic Sectors of Iran: a Dynamic Computable General Equilibrium (DCGE) Approach
The use of revenue from natural resources, including oil, has always attracted the attention of politicians, economists and political scientists as well as various social groups. Here, we study the optimal consumption of oil revenues under different interest rate and social discount rate scenarios, and presence of Dutch disease, using a dynamic computable general equilibrium approach.The result...
متن کاملThe Curse of Wealth – Middle Eastern Countries Need to Address the Rapidly Rising Burden of Diabetes
The energy boom of the last decade has led to rapidly increasing wealth in the Middle East, particularly in the oil and gas-rich Gulf Cooperation Council (GCC) countries. This exceptional growth in prosperity has brought with it rapid changes in lifestyles that have resulted in a significant rise in chronic disease. In particular the number of people diagnosed with diabetes has increased dramat...
متن کامل