> Inflows of hard currency push up prices, squeezing the competitiveness of non-oil businesses and starving them of capital.
This is true for any kind of industry that a country has a competitive advantage in.
This is true for any kind of industry that a country has a competitive advantage in.
If it comes from resources then the incentive to develop the people is lost and they're either bought off or ignored. Look at what happens in Russia or Venezuela or Saudi Arabia.
Now Bolivia is the poorest country in the Americas and the US is the richest. This is basically why.
The answer is - it works fine until the resource price drops or you run out of it.
Kuwait may be fat and content now but it has a dark future ahead of it once they stop being able to live off foreign cash.
https://www.nytimes.com/1995/12/10/world/a-pacific-island-na...
Most other cases of competitive advantage lack this element, though network-based superiority resembles it in parts (comms, transport, trade, urbanisation, IT, banking, military & political power).