Smoothing may be achieved by the diversification of an economy to ensure that a nation does not solely rely on one commodity. Countries whose economies rely on one commodity to generate income are vulnerable to positive shocks, when the price of the commodity rises sharply and negative shocks, when the price falls sharply. This has been, particularly, observed in oil generating countries such as Nigeria. In 1970, Nigeria suffered the Dutch disease, where the oil boom caused other exports like peanuts and cocoa to become unprofitable and collapse. Smoothing can also be achieved by stabilizing foreign assets and avoiding overspending and the subsequent over-borrowing to pay off debt.
An assemblage refers to a group of things, individuals or organizations brought together. In this case, an assemblage of oil may refer to the role players in the extraction, transportation, refining, exportation, selling, marketing and pricing of oil. It may also include those people whose lives are affected by the oil, either positively or negatively. The oil assemblage in Nigeria include: the Niger delta where the oil is mined; the Ogoni and Ijaw tribes that reside in the Niger delta; the Royal Dutch Shell Company; militant groups in the region; oil martyrs; oil academics and professionals; oil research centers, trade groups and lobbies, and gas stations.
The public good of scrutiny is important to make sure that the government is effective and accountable. A public body examines and monitors the activity of a public sector to ensure that the qualities of public services are improved. Countries with rich resources do not need taxes, therefore, such bodies are not provoked into demanding an explanation on the expenditure of their taxes.
Armada concrete is a construction company located in Las Vegas. During the oil boom in the Nigeria, in the 1970s, a lot of construction projects were carried out. Housing projects, construction of bridges, roads and other facilities increased. The increasing demand in construction material led to the uncontrolled importation of armada cement. This created congestion in the Nigerian ports, which made the Nigerian government to pay huge demurrage fee amounts. In the end, more than 80% of the construction spending from the boom may have been wasted.
The Big Push (1971-1976) was the third five year plan used by Park Chung Hee in a bid to make South Korea a self-reliant nation. South Korea depended on the United States aid since the end of the Second World War Park. The Big Push aimed at developing heavy and chemical industries by 1980. They would constitute 50% of all exports by then. The big six included: Steel, autos, shipbuilding, electronics, chemicals and machine tools.
The problem of uncertainty may influence the way in which a nation utilizes its natural resources. For instance, political uncertainty may destabilize the investments in the country. A permanent government is able to form policies that create a stable environment for investments unlike a temporary government. In addition, a distrusted government will not attract investors.
The state of a nation is the primary unit of economic planning, organization and measurement. Therefore, national resources are the determinants of economic planning, measurement and organization in a country.
Positive economic shock occurs when the price of a commodity in the international market rises sharply. When this happens, the value of the commodity rises together with the currency of the nation producing this commodity. In turn, this makes the other products of the country non-competitive.
Austerity measures are the policies that a government formulates to reduce its budget deficits in times of harsh economic conditions. The measures include lowering wages of union workers and public employees, and raising taxes.
Works Cited
Weinthal , Erika and Pauline Jones Luong. "Combating the Resource Curse: Alternative Solutions to Managing Mineral Wealth." Cambridge Journals (2007): 34-53.
