THE PARADOX OF PLENTY: Oil Booms and Petro-States.

#### THE PARADOX OF PLENTY: Oil Booms and Petro-States.

By Terry Lynn Karl. Univ. of California Press. 360 pp. $55 ($22, paper)

In Frank Herbert’s science-fiction classic Dune (1965), whoever controls the spice—the desert planet’s most valuable commodity— controls everything. Karl, a political scientist at Stanford University, would disagree. The message of her book is that he who controls the spice will live to regret it.

The author finds proof in the way the oil boom of the 1970s affected five previously poor nations: Venezuela, Iran, Nigeria, Algeria, and Indonesia. Each nation spawned ungainly centralized bureaucracies, all geared solely toward generating more oil profits. Entrenched interests, such as foreign investors and state officials, acquired additional influence and fought to retain it, creating enormous barriers to change. Policymakers put aside any plans for nurturing long-term, sustainable growth. When the prosperity ended, the results were economic crisis and political decay. In this important addition to the literature on political economy, Karl explains why sudden riches pushed the policymakers of these strikingly different nations toward the same unwise choices.

A wealth of natural resources, the author suggests, can enfeeble a nation’s institutions and ultimately bring about economic decline. Conversely, some of today’s newly industrialized nations, especially those in Asia, may have had success in part because they lacked natural resources: "The need to overcome this poverty may have been one of the chief catalysts for building effective states." To Karl, this is "the paradox of plenty."

She is not the first to recognize the paradox. Juan Pablo Perez Alfonso, the founder of the Organization of Petroleum Exporting Countries, said at the peak of the oil boom: "Ten years from now, 20 years from now, you will see. Oil will bring us ruin." He was right, and this valuable book helps us see why.

—Elizabeth Qually