Australia Should Learn from Brazil in Fighting the Resource Curse

Australia continues to suffer from the "Dutch disease" with export revenues from the resource extraction industries pushing up the value of the local currency and thereby making manufacturing and the services (such as tourism) uncompetitive. This is a theme we have discussed before - see for example Australia's Two Speed Economy. The situation continues worsening, with an anticipated return to trade surplus failing to materialise in the Feb trade data released today (deficit of AUD -480mm, relative to consensus for a surplus of  AUD 1.1bn).

It should be quite clear that the strong currency is hurting many non-resource sectors of the economy. Yet other than including in their Monetary Policy press release a boilerplate statement to the effect

Incredible Failures of Russian Technology - The Resource Curse Taking Its Toll

The recent technical failures of Russian technology are quite staggering. The Bulava ICBM failed numerous tests before finally successfully hitting target earlier this month, the Soyuz rocket used to launch spaceships and satellites crashed on takeoff and now a fire breaks out at the Yekaterinburg nuclear submarine. Russia has never been known as a leader in quality, but the sciences and their applications had been actively promoted during the Soviet era push for large scale industrialization.

Now the entire economy is heavily dependent on oil and gas exports which are very tightly controlled by the Kremlin. This creates corruption on massive scale and causes a deficiency of investment in education and technology. Thus the human and physical capital slowly and surely deteriorates - it is much easier to pump oil than build a spaceship after all.