Editing Resource curse (section)

=== Revenue volatility ===
{{more citations needed section|date=January 2016}}
Prices for some natural resources are subject to wide fluctuation; for example, [[price of petroleum|crude oil prices]] rose from around $3 per [[barrel (unit)|barrel]] to $12/bbl in 1974 following the [[1973 oil crisis]] and fell from $27/bbl to below $10/bbl during the [[1980s oil glut|1986 glut]]. In the decade from 1998 to 2008, it rose from $10/bbl to $145/bbl, before [[World oil market chronology from 2003|falling by more than half]] to $60/bbl over a few months. When government revenues are dominated by inflows from natural resources (for example, 99.3% of [[Angola]]'s exports came from just oil and diamonds in 2005),<ref>{{cite web |url=http://www.imf.org/external/pubs/ft/scr/2007/cr07355.pdf |title=Angola: Selected Issues and Statistical Appendix |publisher=International Monetary Fund |date=October 2007 |access-date=2012-07-26}}</ref> the [[volatility (finance)|volatility]] can disrupt government planning and [[government debt|debt service]]. Abrupt changes in economic realities that result from this often provoke widespread breaking of contracts or curtailment of social programs, eroding the rule of law and popular support. Responsible use of financial hedges can mitigate that risk to some extent.{{citation needed|date=January 2019}}

Susceptibility to that volatility can be increased when governments choose to borrow heavily in foreign currency. Real exchange rate increases, through capital inflows or the "Dutch disease" can make it appear an attractive option by lowering the cost of interest payments on the foreign debt, and they may be considered more creditworthy because of the existence of natural resources. If the resource prices fall, however, the governments' capacity to meet debt repayments will be reduced. For example, many oil-rich countries like [[Nigeria]] and [[Venezuela]] saw rapid expansions of their debt burdens during the 1970s oil boom; however, when oil prices fell in the 1980s, bankers stopped lending to them and many of them fell into arrears, triggering penalty interest charges that made their debts grow even more.{{citation needed|date=January 2019}} As Venezuelan oil minister and OPEC co-founder [[Juan Pablo Pérez Alfonzo]] presciently warned in 1976: "Ten years from now, twenty years from now, you will see, oil will bring us ruin... It is the devil's excrement."<ref>{{cite magazine |title='The Devil's Excrement' |last=Useem |first=Jerry |magazine=Fortune |date=3 February 2003 |url=https://money.cnn.com/magazines/fortune/fortune_archive/2003/02/03/336434/index.htm }}</ref>

A 2011 study in ''[[The Review of Economics and Statistics]]'' found that commodities have historically always shown greater price volatility than manufactured goods and that globalization has reduced this volatility.<ref name=":9">{{Cite journal|last1=Jacks|first1=David S.|last2=O'Rourke|first2=Kevin H.|last3=Williamson|first3=Jeffrey G.|date=2011-07-21|title=Commodity Price Volatility and World Market Integration since 1700|journal=Review of Economics and Statistics|volume=93|issue=3|pages=800–813|doi=10.1162/rest_a_00091|s2cid=57559662|url=http://www.nber.org/papers/w14748.pdf}}</ref> Commodities are a key reason why poor countries are more volatile than rich countries.<ref name=":9" />