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Title
We're Rich!! Or Are We? Oil and Development in Sao Tomé e Príncipe
Keywords
This paper discusses the policy issues facing Sno TomJ e PrRncipe; given the discovery and imminent
exploitation of large reserves of oil in its territorial waters. A common reaction to news of a large oil discovery is to
think that all economic problems can be solved by the flow of oil revenues. However; the experience of numerous
oil countries shows that it is necessary to temper this attitude somewhat since there are numerous pitfalls which can
offset the positive aspects of oil riches. An appropriate policy for macro balance and for disposal of oil revenues
will be essential if Sno TomJ e PrRncipe is to avoid the problems which have plagued countries such as Nigeria or
Angola. The two main lessons of macroeconomics in such a situation is first not to generate revenue faster than it
can be productively used and second to invest in such a manner that the country’s underlying comparative
advantages are preserved. In the case of Sno TomJ e PrRncipe; history and recent analyses confirm that there is a
strong comparative advantage in agriculture; implying that investments which enhance productivity and efficiency in
this sector would be appropriate for expenditure of oil revenues. In addition; such a strategy would have beneficial
effects in terms of poverty alleviation and equitable distribution of benefits from the coming windfall.
Author(s)
Subject(s)
Issue Date
2003-05
Publication Type
Working or Discussion Paper
DOI and Other Identifiers
Record Identifier
https://ageconsearch.umn.edu/record/121116
PURL Identifier
http://purl.umn.edu/121116
Total Pages
35
Series Statement
SP 2003-02
Record Appears in