Abstract
The two oil shocks, followed by the interest rate and dollar exchange rate ‘shocks’, had, as explained earlier, severe economic effects on oil- consuming developing countries in the early 1980s. Only when oil prices declined and when the dollar exchange rate and interest rates started to fall in the second half of the 1980s did the debt crisis subside somewhat and real economic growth return to these countries. In the oil-exporting countries, who were the apparent beneficiaries of the oil boom economic developments followed a contrary path. In the 1970s, the terms of trade for these countries improved dramatically, although some of the benefits of higher oil prices were inflated away. Unlike the oil-importing developing countries, the oil producers were deemed to be in a unique position to improve their economic performance. It was widely believed that the oil windfall provided them with the means to make a ‘big leap forward’, and would lead to investments in growth and sustainable development. The results, however, have been disappointing.
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Reference
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van der Linde, C. (2000). Turning Black Gold into Development. In: The State and the International Oil Market. Studies in Industrial Organization, vol 23. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-4575-0_6
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