Any price shock would come in an environment already

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Unformatted text preview: e prices is being perceived as a major threat as soaring energy prices and consumption cause irreversible environmental damage for societies. If the energy prices stay high, the big losers will be in particular the poor countries because they will be hit economically, socially and politically much harder in comparison with the OECD countries. It may curtail their economic development prospects and lead to social–political unrest, state failure, new terrorist havens or largescale migration (Burrows and Treverton, 2007). 210 Oil DDW 2012 1 Oil stunts basic services and collapses economies – Causes cascading state failure Elhefnawy, previously published on international and security issues in journals including Astropolitics, International Security and Parameters, Visiting Assistant Professor of Literature at the University of Miami, 08 Nader Elhefnawy, previously published on international and security issues in journals including Astropolitics, International Security and Parameters, Visiting Assistant Professor of Literature at the University of Miami, 3-25-08, [“The Impending Oil Shock,” Survival: Global Politics and Strategy, 50:2, 37-66, www.tandfonline.com/doi/abs/10.1080/00396330802034242] E. Liu Some states, particularly in the underdeveloped world, may not even be able to obtain sufficient energy resources to keep their economies functioning. Less-developed nations differ widely in the energy-intensiveness of their economies as well, but given the relatively low resource productivity of many; their obsolete, poorly maintained or otherwise inadequate infrastructure; and their obligation to pay for high-priced oil in hard currency; low-income oil importers will be in an especially poor position . In contrast to developed states enjoying more developed institutions and better access to capital and technology, less-developed nations have fewer of the resources needed to adapt to new circumstances, and any price shock would weaken such resources as they do have .71 Indeed, with adequate supplies of energy priced out of the reach of consumers, businesses and government, basic services might fail and states cease to be viable, even as developed nations continue to get by. Any price shock would come in an environment already favouring state failure: recent years have seen stagnating growth in Latin America and Africa; the removal of a great deal of foreign support for weak governments (a process that started with the Cold War’s end); and continued population growth in the poorest regions, putting pressure on infrastructure and resource bases. Many of these problems will get worse rather than better, particularly the relationship between population size and natural resources such as water and arable land. The salinated and damaged farmland on which a third of the world’s crops are presently grown is a case in point.72 Aside from the expensive repairs such lands require, drip-irrigation and other methods needed to keep them productive are much more energy intensive than current practices. Not having access to the required energy may mean disaster. Moreover, there will be spillover effect...
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This note was uploaded on 01/30/2013 for the course ECON 101 taught by Professor Burke during the Spring '13 term at Southern Arkansas University.

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