Oil resources: the key to prosperity or to poverty? : Influence of oil price shocks on spending of oil revenues

Abundant natural resources, in particular oil, play an important role in the economics of many countries. The oil price shocks that have been happening continuously since 1970s influenced a lot performance of oil-rich countries on the world stage: some of them could sustain economic growth, reach low level of inflation, diversify and develop their economics, some, unfortunately, could not. So what is the link between wealth prosperity and oil resources abundance? Which spending strategy should countries follow to make themselves “blessed” with oil richness during the oil price booms and falls? Here the four leading oil exporters have been chosen to study the spending patterns of oil revenues and their change during the oil price shocks – namely, they are Saudi Arabia, Nigeria, Mexico and Norway. Firstly it goes a theoretical chapter that contains a model where optimal consumption path of oil revenues is deduced at the perspective of the social planner (government). Further in this chapter it is considered the influence of temporary and permanent oil price shocks on optimal consumption of oil revenues, and optimal spending (consumption) rates are calculated for the four countries mentioned above. The next chapter describes the influence of oil resources on the economics of Saudi Arabia, Nigeria, Mexico and Norway in historical perspective. Comparison of these four countries is carried out in the last chapter. Examination of public finances shows changes in actual spending patterns around four main oil price shocks in 1973-74, 1979-80, 1986 and 2003-04. Besides, comparison of other macroeconomic indicators such as the inflation level, appreciation or depreciation of national currencies and current account balance, are given