A Forths Oil Crisis?

With the price of crude oil up from $29 a barrel in 2000 to over $40 now, the world economy is experiencing its fourth oil price shock in the last 30 years. In nominal terms, this is the highest price ever, but in real terms the price of oil remains well below the 1981 peak, when it was equivalent to $72 in 2004 dollars. In the previous shocks, prices came down again, in each case in the wake of a global recession. What will happen this time?

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Fruits of Good Governance

The resumption of capital flight from Russia is a predictable response to the Russian government’s onslaught on the Yukos and Michael Khodorkovsky. It’s a sad time both for investors in Russia, and for all those who still hope that Russia will develop along more or less Western lines. Both the symbols and habits of autocracy are re-establishing themselves. This is not a return to communism. But it may mark a drift back to what the historian Richard Pipes called the ‘patrimonial state’, in which state power is uncontrolled by secure rights of private property.

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Good Government? Not in Russia…

The resumption of capital flight from Russia is a predictable response to the Russian government’s onslaught on the Yukos oil company and its creator, Michael Khodorkovsky. It’s a sad time both for investors in Russia, and for all those who still hope that Russia will develop along more or less Western lines. Both the symbols and habits of autocracy are re-establishing themselves. This is not a return to communism. But it may mark a drift back to what the historian Richard Pipes called the ‘patrimonial state’, in which state power is uncontrolled by secure rights of private property.

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Engine of Growth

In Defence of Globalisation
Jagdish Bhagwati Oxford University Press, 324pp, £17.99
ISBN 0195170253

Why Globalisation Works
Martin Wolf Yale University Press, 398pp, £19.99

These two books offer a defence of globalisation against its critics. Both cover much the same ground, though with differing emphases. Martin Wolf, a noted economics columnist at the Financial Times, has written the more comprehensive, better organised and (despite its greater length) more concise book. It is a necessary and compelling read for all who want to understand the logic of unfolding events. Jagdish Bhagwati is one of the world’s leading trade theorists. His book has its moments, but he is not at his best. It is intellectually self-indulgent, and his style – with its mixed metaphors (“white elephants making gargantuan losses”), ponderous jokes, linguistic tics and exclamation marks – often seems like a parody of good writing. For this kind of book it is surely better to keep one’s language as unadorned as possible.

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Economic development + equality = democracy?

In my last column, I discussed the impact of rich natural resources on economic growth. I pointed out that they can keep a country poor, by slowing down the development of human capital. Today I want to carry the argument further by considering the impact of rich natural resources on the political system, and particularly on the possibility of democracy.

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Can Russia escape the resources curse?

Most people believe that rich natural resources make a country rich. Fertile lands and abundant mineral wealth are seen as a natural endowment, available to support an abundant life. They also give a ready-made advantage in trade, since food, timber, metals, and energy are universal means to life. Even today many countries prohibit private ownership (as opposed to private exploitation) of their natural resources: in Russia oil and minerals are still owned by the state, though private companies are given leases of various lengths to turn them into usable commodities.

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