For decades, oil wealth has been a serious challenge, paradoxically, to those who possessed it. Resource rich Middle East countries, and their labor exporting neighbors, have failed for decades to invest adequately in their people or to diversify their economies. The massive inflow of petrodollars and related worker remittances discouraged investment in sectors conducive to steady long term growth, fostered corruption and patronage, inflated regional real estate and stock markets, and provided irresistible incentives for governments to spend with wasteful, shortsighted abandon. As the latest Dubai World debt fiasco so amply illustrates, the Middle East resource curse has become globalized. In the new electronic world of rapid market contagion, petrodollar flows of 2003-2008 fueled financial bubbles of massive proportions, damaging the global economy through speculative oil-dollar price feedback loops and boom-bust markets, and threatening to fuel yet another wave of destructive Middle East arms races.
In their new book, "Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold," authors Mahmoud El-Gamal, chairman of the Rice Economics Department and Baker Institute Rice scholar, and Amy Myers Jaffe, Wallace S. Wilson Fellow for Energy Studies at the Baker Institute, offer a fresh perspective on the links between past and present oil crises, financial crises and geopolitical conflicts that keep bringing the world to the brink of economic catastrophe. Books will be available for purchase courtesy of Brazos Bookstore.