My post feeds off of Professor Karreth's links regarding the resource curse and compares the situation in Angola to that of Brazil. This article brought up the geological history of Angola and Brazil stating that the two countries were believed to once be connected on the supercontinent of Pangea and as such the two countries are virtually geological twins today.
Brazil has been fueled by it's oil production economically, and according to the U.S. energy information administration was the largest producer of liquid fuels in South American in 2011. I was curious as to how this rich resource endowment had been affecting its political and economic status. This economist article discusses Petrobas, the large state-run oil company in Brazil, and states that the company is dominated by government appointed directors. This kind of incest also appears in Angola where the first article I listed states that the Angolan President's son and daughter are in charge of the Sovereign Wealth Fund being created in Angola, and the head of the Red Cross in Angola (respectively).
The Sovereign Wealth Fund is another dimension Angola and Brazil share, the following Economist article states that due to the governments disappointment in this quarter's GDP numbers they are being forced to 'raid' the sovereign debt fund they set up in 08'. Interestingly enough Angola's strategy to avoid the perils their sure-to-be short lived oil jackpot will certainty bring, is to diversify into other sectors (such as agriculture and fishery) and the $5 billion dollar sovereign wealth fund is an attempt to aid in the diversification process. As noted earlier one of three members on the board of this fund is the President's son.
The dimenstions on which Angola and Brazil present similarities is uncanny, and it is my thought that Brazil may forshadow the fate of Angola (at least in certain ways). Which wouldnt be all horrible, although Brazil is struggling at the moment, but this downturn is coming of the heels of years of substaintial growth. A Reuters article calls Brazil the "near China" due to its large and relatively recent growth trend. Brazil's prosperity was in large part due to the thriving middle class who are now demanding more high quality goods. This could be good for Angola as the first article states only 10% of their country can be considered middle class. But is it sustainable? Can any other correlations be drawn between Angola and Brazil to help substantiate this comparison?To disprove it?
Brazil has been fueled by it's oil production economically, and according to the U.S. energy information administration was the largest producer of liquid fuels in South American in 2011. I was curious as to how this rich resource endowment had been affecting its political and economic status. This economist article discusses Petrobas, the large state-run oil company in Brazil, and states that the company is dominated by government appointed directors. This kind of incest also appears in Angola where the first article I listed states that the Angolan President's son and daughter are in charge of the Sovereign Wealth Fund being created in Angola, and the head of the Red Cross in Angola (respectively).
The Sovereign Wealth Fund is another dimension Angola and Brazil share, the following Economist article states that due to the governments disappointment in this quarter's GDP numbers they are being forced to 'raid' the sovereign debt fund they set up in 08'. Interestingly enough Angola's strategy to avoid the perils their sure-to-be short lived oil jackpot will certainty bring, is to diversify into other sectors (such as agriculture and fishery) and the $5 billion dollar sovereign wealth fund is an attempt to aid in the diversification process. As noted earlier one of three members on the board of this fund is the President's son.
The dimenstions on which Angola and Brazil present similarities is uncanny, and it is my thought that Brazil may forshadow the fate of Angola (at least in certain ways). Which wouldnt be all horrible, although Brazil is struggling at the moment, but this downturn is coming of the heels of years of substaintial growth. A Reuters article calls Brazil the "near China" due to its large and relatively recent growth trend. Brazil's prosperity was in large part due to the thriving middle class who are now demanding more high quality goods. This could be good for Angola as the first article states only 10% of their country can be considered middle class. But is it sustainable? Can any other correlations be drawn between Angola and Brazil to help substantiate this comparison?To disprove it?
Very cool, this article has the feel of a natural experiment using millions of years of geological tectonic movement. What a cool concept! An Econ professor, Billy Mertens sent me a very interesting paper that uses mathematical models to describe the cost-benefits of "point resources," that is the type of resource whose wealth is concentrated in one area (oil, precious metals, etc..as opposed to farmland which is very spread out) and the utility functions of when conflict or rent-seeking over these have the greatest overall payoff. I don't know how to post an attachment to a blog so if you want to read it I can email it to you or anyone else. I think that for a country to grow using high value resources like Brazil's and Angola's maybe just comes down to responsible leadership and stable government, which I'm no genius for pointing out but there it is...Cool post.
ReplyDeleteya id love the link - email is paige.mitchum@colorado.edu
Deletethanks!