
Norway Has Advice For Libya - patrickk
http://www.npr.org/blogs/money/2011/08/26/139972557/the-friday-podcast-norways-got-advice-for-libya
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icegreentea
I think its pretty obvious that one of Libya's biggest challenges with their
oil money is going to be corruption. The Sovereign Wealth Fund works well at
limiting corruption by drastically reducing the amount of money available, but
ONLY if the level of corruption was low to begin with, and a high level of
transparency maintained.

On a hunch, I have a feeling that Libya does not have suitable conditions.
However which way they decide to spend the money, I predict that large amounts
will not be used as 'intended'. The difficulty of keeping corruption at a low
level, even for such a 'benevolent' task of rebuilding a country should be
clear from how badly Iraqi reconstruction went. Why worry about rebuilding the
rest of your country when you can get a cut of money from a source NOT LINKED
to the well being of your country.

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slurgfest
I have a feeling that the Iraqi situation (the US flying in pallets of cash to
pay off Iraqis in support of an occupation aimed at outsider political
objectives) is different from the Libyan one (not occupied at all).

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simonh
It's occurred to me the same basic advice might work well for lottery
winners(1). Invest the money and live off the interest.

1\.
[http://en.wikipedia.org/wiki/Michael_Carroll_(lottery_winner...](http://en.wikipedia.org/wiki/Michael_Carroll_\(lottery_winner\))

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eru
And don't tell anybody about your new riches, either.

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jetti
That only works in some locales. I know some states in the US require that the
winners names are disclosed for marketing purposes. Other places may allow
anonymity.

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wildmXranat
Yep. Here in Canada, I believe that a winner's name is published or at least
known publicly.

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norswap
The article of interest is this (which is linked at the end of the submitted
article):

[http://www.ft.com/cms/s/0/99680a04-92a0-11de-b63b-00144feabd...](http://www.ft.com/cms/s/0/99680a04-92a0-11de-b63b-00144feabdc0.html#axzz24qMDRL00)

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S4M
Yes, but as someone else said, this article is behind a paywall. Which is too
bad, I think, as I think the article that was posted was only scratching the
surface. There are several things I was wondering after reading this article:

\- what are the structural differences between Libya and Norway that would
make Libya succumb more easily to the temptation of oil? I suppose Libya is in
a direr situation than Norway, but is that all?

\- exactly, what are the cons of investing _some_ money from the oil in
infrastructure of education?

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Retric
Education is only useful up to a point. A PHD in Aerospace Engineering sounds
great, but even in the US there is little demand for such people so they often
waste most of that education. The worse the economy / infrastructure / social
infrastructure the lower the benefit from high levels of education.

PS: It's been suggested that a balance of subsidizing government services and
giving everyone an equal rebate like Alaska may be the best overall approach.
However, doing so in a corrupt society often simply breeds government waste so
a pure refund is probably the best long term option.

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S4M
Well, that is true if you are talking about higher education, but people still
need to learn some basic skills (writing, reading, counting, etc.). Learning
English is often useful as well (note that before replying to your comment, I
expected Libya to have a low rate of alphabetization, but it turns out their
alphabetization rate is rather high (source:
<http://en.wikipedia.org/wiki/Libya#Education)>).

On top of that, they probably need some skills in the fields of medicine, or
petrol engineering.

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vidarh
They have the trade off between paying for that with oil money directly now,
or being able to continue to pay for less of it, but being able to continue
"forever" by investing the oil money, while the principal grows rapidly as
long as their oil revenue keeps coming.

It's the age-old tradeoff between saving vs. immediate gratification.

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danmaz74
It is one thing to save or reinvest all the money coming from your oil when
you're already a developed nation, and your population has other means to
sustain itself. That's not true for Lybia.

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vidarh
That's true. But while Libya isn't in a great spot, it is nowhere near being
one of the poorest countries, and its inflation adjusted GDP per capita in
2009 was about 50% of where Norway was when oil was discovered. That's about 4
times as high as Egypt in 2009, and higher than some European countries like
Estonia.

Presumably the civil war might have set them back somewhat, but they're still
in a position where it at least ought to be possible to start building a long
term revenue stream from this.

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danmaz74
Yes, but I presume that for the reconstruction they'll have to use all the
money they can get from oil and gas, for some years...

