I really enjoyed Dr. John Lynham’s presentation in class on Thursday. I realized that ecoonomics is more than supply/demand and recessions. It’s the study of predicting the way people act and react, which I find extremely interesting.
One thing that caught my attention during Professor Lynham’s talk was the Resource Curse. I found it fascinating that the rich countries in the Middle East that have an abundance of oil don’t experience very little economic growth. The experiment Professor Lynham explained that was the apparent reason for the resource curse made sense. I think that rich people are more likely to hold onto their massive amounts of wealth rather than investing if they can’t trust the government/ political situation, which is similar to what happens after a recession because people are still scared for the future and so are less likely to invest,
Thinking back on my economics class senior year, I think that another possible reason for the resource curse is that people are so used to having a means for living available to them without having to do any serious innovation to reach their wealth, therefore they have no need to come up with alternative ideas/innovations/inventions that would help to stimulate the economy and bring in money from outside industries besides the natural resources already available. Without the new innovations, there is no good competition that will stimulate new innovations and so people solely rely on the natural resources for growth. Of course although the country is fabulously wealthy, there is no real need to invest in new ideas and products because they have everything they need. This is just a theory and I could be totally wrong but it’s just a thought that came to mind based on what I learned in high school.