The resource curse, also known as the paradox of plenty or the poverty paradox, is the phenomenon of countries with an abundance of natural resources (such as fossil fuels and certain minerals) having less economic growth, less democracy, or worse development outcomes than countries with fewer natural resources. There are many theories and much academic debate about the reasons for and exceptions to the adverse outcomes. Most experts believe the resource curse is not universal or inevitable but affects certain types of countries or regions under certain conditions.
I take your resource curse and raise you a Prebisch-Singer hypothesis
> Prebisch–Singer hypothesis argues that the price of primary commodities declines relative to the price of manufactured goods over the long term, which causes the terms of trade of primary-product-based economies to deteriorate. As of 2013, recent statistical studies have given support for the idea.
Derived demand (copper) is likely to be more price sensitive than demand for the end good (AI services) over the long run due to substitution that can occur in factor inputs. Meaning Prebisch-Singer's true again.
I imagine that assumes we can find large new deposits to meet increasing demand. That's not happening with copper. The deposit in this article is an exception.
It doesn't assume. Hence 'substitute'. long run refers to the amount of time for prices to adapt, not a short run dependence on one thing.
Hence change in factor inputs.
An example of a change in factor inputs was, for example, whale oil which was a big deal for lighting systems in the 19th century. But as cheap whales were running out, so whale oil, thought to be so important for many and which there were technical improvements in sourcing and usage, was shifted away from.
As will be the case for copper, as it's a derived demand. The derived demand will be more price sensitive than the demand for the end service (lighting in the case of whales, or Open AI for copper). Not happening with copper in the short run will only make the long run change happen even (as time passes) faster.
Ooohhh - intriguing.
And presumably lines up with the Prebish-Singer hypothesis- that ports can switch to substitute goods - also interesting that almost every major city globally is a port city / river city
A truly dense population can not be sustained in a location without local resources unless there is a way to import at least the necessities for survival from somewhere else where they are more abundant.
Some of the best places for that, naturally are port cities, and for millennia merchant marine moves more goods more sensibly than most.
Inland cities can get big more easily when there are abundant local resources, well developed, and if there is some huge excess of something like timber, coal, gold, or whatever that is widely desirable. A local market will develop first in the land of abundance. Then if it's possible to arbitrage in a world market, the cost will be paid to shuttle commodities to an international port. Where the trading merchants will be able to buy low and sell high in a way that is further out of reach for the local producers.
Eventually the traders make more money on the same tonnage of natural resource flow than the extractors do, but the extractors got there first.
Depending on what the resource owners do with that early advantage, and whether there is a regime in place which values the local resource more than human life, and stuff like that has a much bigger effect on the imbalance between producer and trader, as well as local versus international prosperity, and that's with raw commodities not yet subject to value-added manufacturing.
Seems to me port cities mostly arose due to upstream export needs before they were utilized as major import hubs and mercantile centers.
I say it's the cheapness and abundance of commodities that makes it easier to add value for quite a long chain, and when you get into manufacturing it can be a big jump.
Services, technology and education are all worth money on their own but it does seem to take quite a bit of resource abundance at some point for somebody to be able to pay the bills.
Especially when resources were developed generations ago, there can be so many layers between the commodity and the consumer that things like service, tech, and education can be valued in their affect on each other without any direct correlation to a particular commodity or manufactured product.
I would argue Australia suffers from a lite version of the resource curse. There's undue control over politicians and resulting political resistance to invest in things that would diversify economic complexity or go against mining interests. Norway however is a strong counter example.
The key is whether or not a country, it's people and their representatives, are in control of the deal making wrt the resources within their boundaries.
Australia and Canada are, their indigenous people less so, and we can argue about the quality of the many resource deals within Australian and Canadian borders - overall they do less well than Norway.
This is in strong contrast to many African countries, Papua, and elswhere about the globe where often the key parts of government are wholly in the pocket of outside transnational corps who frequently have small divisions of PMC's (private militay contractors) for 'security' and land deals are forced through with near zero compensation to former land holders and NSR (Net Smelter Returns) | leasing returns to the country and people are near non existant.
The reality of what another peer commenter in this thread decsribed as
> But this is a boon to a democratic light in ... Africa
is anything but. eg: US PMC's in Africa .. acting for multiple clients, including China .. but not for Africans.
> Australia and Canada are [in control of the dealmaking wrt resources]
It's not a binary. It's a spectrum. The capability of Australians to control the deal making is diminished by the control that the mining industry has over elected representatives.
Please don't incorrectly paraphrase | strawman my comments.
Your point is implicit within:
> and we can argue about the quality of the many resource deals within Australian and Canadian borders - overall they do less well than Norway.
"The mining industry" should include energy extractors who, IMHO, do more harm to Austrlia than mining - many of the mining operations (not all by any means) are majority Australian owned|controlled with that money staying within Australia (even if with individuals rather than spread out across the entire community).
Even significant energy extractors such as Santos are Australian companies .. it's literally an acronym of South Australia Northern Territory Oil Search, but they're no angels although perhaps arguably better than the non-Australian gas operators.
