Saving Iraq from its oil

The article focuses on the need for Iraq to implement a nevel arrangement for managing its oil wealth with the help of the international community. Countries often end up poor precisely because they are oil rich. Oil and mineral wealth can have a negative impact on economic growth and democracy, sin...

Full description

Bibliographic Details
Main Author: Birdsall, Nancy
Other Authors: Subramaniam, Arvind
Format: Book
Subjects:
Description
Summary:The article focuses on the need for Iraq to implement a nevel arrangement for managing its oil wealth with the help of the international community. Countries often end up poor precisely because they are oil rich. Oil and mineral wealth can have a negative impact on economic growth and democracy, since they tend to impede the development of institutions and and values critical to open, market-based economics and political freedom. To understand the way thinking about development has changed. Given the negative impact of oil and other natural resources on the development of markets and political freedom, three options should be considered in managing the resources. The first approach, which is privatizing the oil sector, has proved disappointing. In countries with weak instiutions, assets of immense value have too often been sold at throwaway prices to a licky few who happen to have good financial or political connections. The second alternative for dealing with a country's oil wealth is the creation of special oil funds with constitutional or other restrictions on the use of revenues. The third approach for managing oil wealth is distributing it directly to the people.