Comparative History of State and Society in Latin America

Term Paper-Gerardo Lucas

Comparative Studies contribution to explaining the Oil Curse in Petro-States

Motivation
My first job as an economist was in the Venezuelan planning office, in 1967, during the
government of Raul Leoni. We had an economic development adviser called Clark W. Reynolds
from Stanford University. We became friends and he said some words that y would never forget:

“I am not interested in studying Venezuela, as a case of development, because it reminds me

of a mining town in the old west: when they find gold, the town grows and prospers, but
when the mine is depleted, the place turns into a ghost town.”

Part One: Introduction

This is a historiographical paper discussing a dozen comparative studies of petro-states, including
several of Latin American nations, between 1970 and 2016. The study helps explain the reasons
for the “oil curse”, whereby an underdeveloped, resource-rich country fails to benefit from its
natural wealth and the workable solutions to the problem.

We must remember that it was in October 1973, when Israel and its Arab neighbors fought the
Yom Kippur War, and OPEC countries sized control of the price of oil, and declared the oil
embargo. This is when, for the first time, the oil prices soared creating a sudden bonanza in petro-
states.

The paper’s main argument, or thesis, is that the deficit capital oil-rich countries, in the
developing world, experience a macro-economic curse, after an initial period of soaring prices
and economic expansion, consisting, typically, of the overheating of the economy, high inflation,
growing trade deficits, a less diversified economy, high public debt, and, finally, loss of income
per capita, recession, and loss of political, economic and human rights. Behind this series of
problems, we find countries with weak democratic institutions, lack of checks and balances, and
absence of long-term planning capabilities.

Our central topic, the negative outcomes due to sudden richness in petro-states, is especially
conducive for comparative method research because the same phenomenon happens to
different countries simultaneously, regardless of their geographic, historical and cultural
backgrounds.

Our principal thesis is in synchrony with the original argument brought by Perez Alfonso in his
book The Devils Excrement (1976), where for the first time someone equates sudden richness
and dismal outcomes related to the oil states.

The later success of Norway in managing a similar circumstance provides further credibility to the
hypothesis that democratic institutions and checks and balances are the fundamental
containment of the negative outcomes of the oil curse.
In the political sphere, the reiteration of authoritarian regimes prevailing in these countries, also
tends to confirm the validity of our central thesis.

Part Two: Methodological Issues and the Sources

Classification of Petro States as Units of Analysis: Terry Linn Karl in The Paradox of Plenty (1997),
uses a synchronic comparative method among five Deficit Capital Countries (Algeria, Indonesia,
Iran, Nigeria and Venezuela) between 1973 and 1994, and proposes an operational classification
of oil states, as units of analysis, that we assume for the purpose of our own paper. First, she
identifies Capital Surplus Exporters, which are countries with small populations and greater per
capita reserves, such as Saudi Arabia, Kuwait, Libya, Qatar and United Arab Emirates. Second,
Deficit Capital Countries have relatively larger populations, and lower GDP per capita. This sub
set includes México, Algeria, Indonesia, Nigeria, Venezuela, Iran, Trinidad-Tobago, Ecuador,
Gabon, Oman, Egypt, Syria and Cameron. We study a sub-share of these countries, Iraq, Nigeria,
Angola, Venezuela, Kazakhstan and Iran because they have a high share of World Oil Production
and discard the rest because of their small contribution, and therefore represent a lesser relative
impact of the oil curse in their internal economy and politics.
Today, countries have changed since 1994 when The Paradox of Plenty was published, so we
propose a new list: Iraq, Nigeria, Angola, Venezuela, Kazakhstan, Algeria and Iran.

2013 Exports %
Country Population Barrels Exports
1 Saudi Arabia 32 7.4 87.4
2 Russia 143 4.9 71.2
3 Iraq 38 3.3 99.8
4 Canada 36 3.2 27.3
5 United Arab E. 9 2.6 64.8
6 Nigeria 191 2.2 87.6
7 Angola 29 1.7 90.0
 8 Kuwait 4 1.7 94.2
9 Venezuela 30 1.5 97.7
10 Kazakhstan 18 1.4 60.0
11 Qatar 3 1.3 88.7
12 Norway 5 1.2 67.4
13 Mexico 129 1.1 7.3
14 United States 324 1.1 *
15 Algeria 41 1.1 96.7
16 Iran 81 1.1 70.5

Processes of the Oil Curse: The oil curse is a complex phenomenon. Typically, government
revenues increase dramatically due to a sudden increase in oil prices, or the discovery of oil and
gas sources previously unknown. This increase is followed by a sharp rise in government spending
in investment in projects and consumption. This sudden expansion overheats the economy,
creating substantial inflation; long term savings fall, as do investments, while consumption
increases. At the same time, there is a currency appreciation due to increased export revenues.
The increase in oil export revenues has a negative effect on the competitive position of
agricultural and manufacturing industries, an issue known as the “Dutch Disease”. At the new
level of spending, oil income is insufficient and new internal and external debt is incurred, to
cover the budget deficit. Later, fluctuations in commodity prices bring posterior disruptive
effects. Income falls, affecting the political sphere, undermining democracy and promoting
authoritarian regimes which appeal to the general dissatisfaction with the economic outcome.
The core of the problem lies in the political decision to initially spend much more money than the
economy can absorb, for the benefit of internal or external special political, economic, or
financial interests. Terry Linn Karl explains: “Governments believed that the removal of the
foreign constraints finally permitted them to take a “great leap forward” into the select category
of the industrialized countries.”1

Our sources are twelve comparative studies and related articles published between 1976 and
2016. We are going to review them in chronological order, starting with Perez Alfonso, The Devils
Excrement and Karl’s Paradox of Plenty, and see how new explanations of the problem and
plausible solutions appeared based on previous comparative analysis. The limitation of the
sources is that they cover an extended period with variable conditions that make some
comparisons difficult. We will handle the limitation by understanding that the study occurs in the
two great price surges, one in 1974-80 and the other in 2008.

1
Karl, Terry Linn The Paradox of Plenty-Oil Booms and Petro-States. University of California Press. 1997.
Pag.25
 Part Three: Evidence and Arguments

Theories that explained the Oil Curse. The writers that do comparative studies of the oil curse are
fundamentally theory driven. Neo-liberal theorists emphasize Ownership Structures and the
importance of capitalism in avoiding the negative outcomes of the crisis. Neo-Marxists see the
role of the state and its leaders as a manifestation of class interest and class struggle.
Organizational theorists may emphasize the importance of the structure of the state as
determinant in the outcome of events. Economic behaviorists may emphasize the Agency
Asymmetry explanation. Institutionalists base their analysis on the lack of institutional
development on the political (parliament), state, and private sector, to explain the negative
outcomes in most cases. Combining economic and institutional theory produces proposals such
as the asymmetric information and bargaining explanations. Political scientists may give
emphasis to the issue that the oil curse reinforces the existence of the autocratic state. In the
following pages, we will see how these arguments develop.

The Original Argument

An important factor behind the oil curse and its negative outcomes, as we shall see, is the political
pressure exerted by local interests (members of the ruling party, public labor unions, business
and banking interests related to management of public corporations, and others; and
transnationals corporations and international banks related to the oil industry and future public
investments) who are ready to benefit directly by an expansive public spending policy of the new-
found resources.

This appreciation of the primary reasons for the oil curse was first brought to public attention by
Juan Pablo Perez Alfonso, oil minister of Venezuela (1959-1964), “founding father” of the
Organization of Petroleum Exporting Countries (OPEC), and ranking member of the ruling party
(Acción Democrática), in a series of articles, written between 1974 and 1975, and later compiled
in a book, called Sinking in the Devil’s Excrement (1976).2 As the title implies, his pessimistic
expectation of the result of the newly-found riches, coming from the abrupt increase of the
petroleum prices, and administrated by an unprepared nation, would have negative
consequences for its inhabitants.

His reasoning was as follows: “The difficulty consisted in recognizing that this type of unearned
richness, because it is not generated by economic activity proper, but in the greater part consists
in the liquidation of a preexisting asset, had to be injected in the economy like a dangerous

2
Pérez Alfonso, Juan Pablo. Hundiéndonos en el Excremento del Diablo. Caracas. Editorial Lisbona. 1976
medicine. This was not understood at that time and also very powerful foreign and native
interests displayed all kind of actions to impede that we comprehend what was happening.” 3
Then he directs the blame to “The pressure of privileged interests, accomplices of the
transnationals, over governments little prepared to administer the deceptive collective
richness.”4

He explains that “Because the economic indigestion was slow, this was an intoxication very little
appreciated by those who did not deepen their understanding about the issue. Today the
situation has become evident and the accumulation of evils is understood as the Venezuelan
Effect. The malady has extended to other petroleum exporters, in analogous situations.”5

Perez Alfonso specifically blames the V Plan de la Nación (1976-1980) as the National Destruction
Plan, because it increased the state intervention in the economy, expanded greatly public
spending and gave a green light to greater ineptness. Perez Alfonso told Terry Linn Karl: “Ten
years from now, twenty years from now, you will see. Oil will bring ruin.” 6

Norway; A Monographic Argument

It is important in our study to understand what happened in Norway, where sudden oil richness
occurred but had a happy ending.

Norway’s oil boom started when Philips Petroleum struck oil in the continental shelf, but it was
the Yom Kippur War in 1973, that renewed interest in the new oil provider. John C. Ausland in
his book Norway, Oil and Foreign Policy7 (1979), studied how Norway struggled with the
problems related to oil, one of which is of our interest: how did it deal with the manner in which
the profits should be spent and at with pace? This issue is at the center of the oil curse matter.

At this early stage of the petroleum experience, reading this book, we can clearly identify several
considerations that weighed in favor of the control of public spending: First of all, it was the
Parliament and not the executive branch of government that led the initiative in the discussions
and decisions on the subject; second, environmental issues were paramount in Norway,
especially because extraction of the oil was done at sea, and that made them be cautious in the
rate of oil extraction; third, emphasis was put on spending “gradually” in consonance with “the
missionary spirit that is very strong in Norwegian psychology”8, which played into a conservative

3
IDEM. Pag. 24.
4
Ibidem. Pag. 26
5
Ibidem. Pag. 28
6
Ibidem. Pag. xv.
7
Ausland, John C. Norway, Oil and Foreign Policy. Westview Press. Boulder Colorado. 1979.
8
Idem. Pag 13
approach to the use of resources; fourth, when planning for growth of the gross domestic
product, they set a target of 6% annually, which effectively restricted public spending; and finally,
the general approach was that it should be invested at home and abroad opening the way for the
creation in 1990 of the Government Global Pension Fund, also known as the Oil Fund, to invest
the surplus revenues of the Norwegian petroleum sector, and that has today 1 trillion dollars in
assets.

The Eclectic Argument.

Terry Linn Karl, in The Paradox of Plenty - Oil Booms and Petro-States (1997) wrote the first
comparative historical study of the oil boom, in which she claims the use of an eclectic method,
avoiding the theory-driven constraints. She explains why, in the midst of two massive oil booms
in the 1970s, oil exporting governments as different as Venezuela, Iran, Nigeria, Argelia and
Indonesia, chose common development paths and suffered similarly disappointing outcomes.
She found that these countries had strikingly similar institutional arrangements and patterns of
public policies. In consequence, she concludes that dependence on petroleum leads to extreme
centralization of political power and incoherent public bureaucracies. The result is uncontrolled
public spending at the expense of statecraft.

Oil booms are likely to have pernicious effects in this context by dramatically exacerbating
patronizations, reinforcing private and public oil based interests, and further weakening state
capacity. They lead to economic decline and regime destabilization while creating the illusion
that they are doing exactly the opposite.9

The main finding of this study of petro-states is that countries dependent on the same export
activity are likely to display significant similarities in the capacity (or incapacity) of their respective
states to guide development, even if the actual institutions are quite different in virtually all other
respects. 10

The Venezuelan Case in Latin America constitutes perhaps the first and most notorious example
of the Oil Curse. It is at the center of the seminal work about the application of comparative
historical study by Terry Linn Karl. Many comparative studies followed, and their findings are the
the object of her paper. The overarching lesson of the various experiences is that similar
institutional arrangements and patterns of public policies, explain similar outcomes.

The Asymmetry Argument.

9
Karl, Terry Linn. Pag.17.
10
Karl, Terry Linn. Pag.237.
Another critical factor behind the oil curse is agency, information, and bargaining power
asymmetries, as stated by George Soros, in the Preface of the book Escaping the Resource
Curse11.

Soros states that there are three kinds of asymmetries: asymmetric information, asymmetric
agency, and asymmetric bargaining power. Of the three, asymmetric agency problems are by far
the most important.

Agency Theory explains how to best organize the work, where one party determines the work,
and another does it. The principal hires an agent to do the work, but the agent’s interests are not
necessarily aligned with that of the principal: hence, the conflict of interest. In the case of the oil
curse, the rulers of the country get the rewards from the companies, not the people whose
interest they are supposed to represent.

Soros explains that national oil companies can offer an effective antidote vis a vis international
oil companies with regard to all three asymmetries. However, they run into agency problems of
their own because they serve as a power base for non-democratic governments, as well as a
source for internal corruption.

Asymmetric information (when one party does not have the same information than the other)
persists about extractive industry-related activities for citizens of these countries. The obvious
remedy is greater transparency and accountability. He concludes that “The resource curse is a
mayor scourge, but it can be cured. It has now been recognized that transparency and
accountability are the remedies”.

The Institutional Argument

Joseph E. Stiglitz, in What is the Role of the State in Escaping the Resource Curse 12, sustains that,
in dealings with global extractive industries, national governments fail to get full value for their
resources. The key problem is that private sector parties have interests to maximize their
revenues and minimize those accruing to the country. Full privatization of rights to oil and gas
wealth have led to the worst abuses. Governments should abide by certain guidelines: first,
institutions should always be strengthened before engaging in privatization; patience should be
practiced - it is sometimes better to keep oil in the earth than to sell it badly; provisions should
be identified for renegotiation ex ante; contracts should be minimally complex and evaluated on

11
Humphreys, Sachs & Stiglitz, Editors. Escaping the Resource Curse. Columbia University Press. 2007.
Preface by George Soros, Pag. XI
12
Stiglitz, Joseph E. in What is the Role of the State. In Escaping the Resource Curse. Columbia
University Press. 2007.
the basis of incentives; finally, the timing of payments should be a function of the ability of the
state to bear risk. The aim of government is to ensure transparency, ownership and fairness.

Seeing the problem from the expenditure side of the resources, Jeffry Sachs in How to Handle
the Macroeconomics of the Oil Wealth13 considers that the oil curse problem arises when public
institutions decide that oil earnings should be used for consumption rather than for public
investments. He concludes that the Dutch Disease is a worry mainly if the oil boom is used to
finance consumption rather than investment. Therefore “the solution lies in a long run growth
focus investment strategy”14.

A Neo Marxist Argument

Thad Dunning in Crude Democracy, Natural Resource Wealth and Political Regimes 15 (2008)
reevaluates the popular and academic consensus linking oil wealth to authoritarianism, and
concludes that resource wealth can promote both democracy and authoritarianism, albeit
through separate mechanisms. He contends that resource dependence will have sharply
different effects in governance, depending on a country’s prior level of inequality: where
inequality is low, oil dependence may hinder democracy, but where it is high, oil dependence
may foster democracy.”

The basic argument of the book is that “in the kinds of high-inequality settings, the limited role
for checks and balances and for protections of minority (elite) rights might ordinarily make
democracy of this kind highly threatening for elites.” “Resource rents mitigate the threat of
redistribution; because the redistributive costs to elites of democracy are lowered, incentives to
undertake a risky coup may be reduced” 16

The Voracity Effect Argument

Gel’man and Marganiya in their book Resource Curse and Post-Soviet Eurasia-Oil, Gas and
Modernization (2010), state that oil rich countries of post-Soviet era Eurasia are far from being a
success stories of post-communist modernization, but rather stories, if not of their complete
collapse, then at least a kind of sideways trend of economic and political development.

13
Sachs, Jeffrey. How to Handle the Macroeconomics of the Oil Wealth. In Escaping the Resource Curse.
Columbia University Press. 2007.
14
Idem. Pag. 173
15
Dunning, Thad. Crude Democracy, Natural Resource Wealth and Political Regimes. Cambridge
University Press. 2008.
16
Dunning, Thad. Pag.15.
Gel’man and Marganiya analyze economies that lack a strong legal-political institutional
infrastructure and populated by multiple powerful groups. Powerful groups dynamically interact
via a fiscal process that effectively allows open access to the aggregate capital stock. In
equilibrium, this leads to slow economic growth and a “voracity effect”,' by which a shock, such
as a term of trade windfall, perversely generates a more than proportionate increase in fiscal
redistribution and reduces growth.

Governments of oil nations not only have additional capacities for corruption, controlling easily-
lootable resources, but also have incentives to conduct inefficient economic policy. Owing to
pressure from special interest groups, the “voracity effect” arises: the state expenditures begin
to grow swiftly, faster than the amount of the income, while the revenues from the export of oil
and gas are often used by governments to implement ambitious investment projects that do not
give positive returns. They also show that, on the contrary, a dilution in the concentration of power
leads to faster growth and a less procyclical response to shocks.

The Repression Effect Argument

Andrey Scherbak in The Impact of oil shock in the Post-Soviet Regime Changes (2010).17 is devoted to
explaining the cause of the rise of authoritarianism in post-Soviet countries. A regression analysis
demonstrates very convincingly that the most significant mechanism by which the resource curse
makes governments of the post-Soviet oil states hinder the democratic development of these
countries is the repression effect. The governments of Russia and its neighbors are capable of
investing some revenues from export of oil and gas into increasing the size of a coercive
apparatus, and to a much smaller degree, in increasing the costs of maintaining it, and this way
to preserve in power the ruling elite.

The Ownership Structure Argument

Pauline Jones Luong and Erika Weinthal in their book Oil is not the Curse. Ownership Structure
and Institutions in Soviet Successor States (2010)18 argue that a key reason for the negative
outcome of the petro-states was ownership structure. This book seeks to advance the literature

17
Andrey Scherbak. The impact of oil shock in the Post-Soviet Regime Changes. In Gel’man, Vladimir and
Otar, Marganiya. Resource Curse and Post-Soviet Eurasia. 2010.
18
Jones Luong, Pauline and Weinthal, Erika. Oil is not the Curse. Ownership Structure and Institutions in
Soviet Successor States. Cambridge University Press. New York. 2010
on the resource curse by utilizing the experience of the Soviet successor states to address the
seminal questions.

It provides evidence that one of the core assumptions of the conventional literature on the
resource curse – namely that ownership structure does not vary and thus cannot hold any
explanatory power- is not only unfounded but also has impeded our understanding of the
relationship between mineral wealth and institutions. During this period, there was a clear
convergence toward state ownership due to the nationalization wave that swept across mineral
rich states in the developing world beginning in the early 1960s. Less than a decade later more
that three quarters of petroleum sectors in the developing world were state owned.

Jones and Weinthal utilize the experience of the Soviet successor states to demonstrate that
ownership structure can vary even across countries that share the same institutional legacy; and
that this variation helps explain the divergence in their fiscal regimens, and hence their
developmental trajectories, from the early 1990s through the mid-2000s.

Conversely, they conclude that private forms of ownership structure create the potential for
mineral rich states to willingly adopt restrictions on government spending - albeit in different
degrees. In short, they are more likely first to constrain the state’s ability to extract revenue from
the mineral sector and second to lower societal expectations vis a vis the state. Both Russia and
Kazakhstan, for example, could enact significant cuts in expenditures in comparison with the
other three petroleum rich Soviet successor states because their respective governments
believed that this action were consistent with popular sentiments regarding how widely the
benefits of mineral wealth should be distributed.

They state that “Russia went even further - the bargain with the private oil companies that led to
the adoption to the stable Tax Code, combined with the belief that expenditures could be limited
without public backlash, even during the boom, paved the way for the Russian government to
establish the only effective New Russian Federation in the Former Soviet Union.” What they do
not address is that Russia’s disastrous privatization process led to the oligarch class and its dire
influences.

A Liberal Argument.

In Jesse Salah Ovadia’s The Petro-Development State in Africa (2016), the main concern arises
from moving from a rent-seeking pattern of society to one that passes from renters to
successfully mature capitalist development. This must pass, he says, through indigenous
accumulation, described as an increased number of indigenous companies and the amount of
indigenous economic activity, coinciding with increased capitalistic accumulation and decision
making based on the logic of capitalist growth.
Bearing in mind the devastation that oil has caused to Angola, and especially Nigeria, to sit back
and wait for an anti-capitalist solution to the problems of extractive industry and
underdevelopment is not a viable option. However, a large-scale movement to encourage a
successful, democratic petro-developmental state has not yet taken hold.

Ovadia stresses that, though both Angola and Nigeria suffer very weak civil society institutions,
Angola must be singled out for the high levels of repression and lack of freedom. Where Nigerian
civil society may be disorganized or lack capacity, Angolan civil society is engaging in a struggle
to assert basic demands. Freedom of press is virtually nonexistent in Angola. The unfortunate
similarity between Angola and Nigeria is their respective coercive apparatus.

Part Four: Conclusions

The comparative studies reviewed, and recent statistical data, validate this paper’s main
argument or thesis, which is that the deficit capital oil-rich countries in the developing world,
experience a macro-economic curse, after an initial period of economic expansion, finally falling
into economic regression, and loss of political, economic and human rights. Behind these
problems, we find states with weak democratic institutions, lack of checks and balances, and
absence of long-term planning capabilities.

From the economic outcome, if we review recent data of The Human Development Index of the
eight states, we find that all countries fall in trailing positions; four countries between the 56 and
83 in the ranking and the other three after the 120 positions of a total of 167 countries analyzed.
The Human Development Index was created to emphasize that people and their capabilities
should be the ultimate criteria for assessing the development of a country, not economic growth
alone. It is a summary measure of average achievement in key dimensions of human
development: a long and healthy life, being knowledgeable and have a decent standard of living.
The health dimension is assessed by life expectancy at birth; the education dimension is
measured by mean of years of schooling for adults aged 25 years and more and expected years
of schooling for children of school entering age. The standard of living dimension is measured by
gross national income per capita. Also, to highlight the negative economic aspects of the oil curse,
countries like Iraq, Nigeria, and now Venezuela, have been classified as Failed States - those that
cannot supply the basic needs of their populations.
 2013 Exports % Human
Country Population Barrels Exports Development Index
6 Nigeria 191 2.2 87.6 152
7 Angola 29 1.7 90.0 150
3 Iraq 38 3.3 99.8 121
15 Algeria 41 1.1 96.7 83
9 Venezuela 30 1.5 97.7 71
16 Iran 81 1.1 70.5 61
10 Kazakhstan 18 1.4 60.0 56

From the point of view of the Oil Curse influence in the political outcome of the country, the
results are worse. All the countries analyzed have autocratic regimens. We can see from the
Democratic Index that all fall after the last 107 places of 167 countries surveyed.

Exports % Democracy Index

Country Population Barrels Exports of 167
16 Iran 81 1.1 70.5 154
10 Kazakhstan 18 1.4 60.0 139
7 Angola 29 1.7 90.0 130
15 Algeria 41 1.1 96.7 126
3 Iraq 38 3.3 99.8 114
6 Nigeria 191 2.2 87.6 109
9 Venezuela 30 1.5 97.7 107

The main reason for the Oil Curse given by the comparative studies surveyed is what Soros calls
the Agency Asymmetry in which the rulers of the country get the rewards from the companies,
not the people whose interest they are supposed to represent. Therefore local and international
political and economic interests pressure the country to spend the new riches in the short run,
where they compete to participate in a greater proportion of the spoils. This point of view, first
brought up by Perez Alfonso, was also subscribed by Terry Linn Karl, George Soros, Joseph E.
Stiglitz, Vladimir Gel’man, and Marganiya Otar.

Other main explanations for the curse are of a liberal nature, such as the Ownership Structures
thesis, sustained by Pauline Jones Luong and Erika Weinthal, in which private forms of ownership
structure would create the potential for mineral rich states to willingly adopt restrictions on
government spending; and a lack of a more developed capitalistic society, by Ovadia. Neo
Marxists insists that the root cause of decline is class struggle where elites take control of the
decision process. Institutionalists stress the need to strengthen institutions before privatization
or definition of investment decisions as Stiglitz and Sachs maintain. Also, as secondary
explanations the Information and Bargaining Asymmetries, are highlighted by Soros.

Also, a group of comparative studies stretched the relation between the Oil Curse and
authoritarian regimes, as Thad Dunning and Andrey Scherbak, do.

Tackling an oil boom, as we have seen, requires the government to: first, control government
expenditures, so as not to heat the economy, as the rate of inflation might indicate, while
sustaining growth; maintain a currency parity, neutral or slightly overpriced, so it does not
stimulate local consumption of foreign goods, undermining local agriculture and manufacturing
(the Dutch Disease) and, finally, place surplus resources out of the country in a special Investment
Fund.

So, is it fatalistic that non-earned incomes by developing states lead to wrong endings?
Apparently, the conclusion is yes, if they are underdeveloped countries, with weak institutions,
sudden richness, and high dependence on petroleum exports.
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