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An Inquiry into the Mideast Economy and Petrodollars Flows(in Chinese)

No.:CA0045

Author:Cherng-Shin Ouyang

Price:Out of print

Publication:2008.04

Abstract:

Recent upsurge of the international oil prices has, once again, brought in huge export proceeds of the Mideast oil producers while draining financial resources from import-dependent oil consumers of the world. The two-way flow is accompanied by growing disparities in payment imbalance, income and wealth redistribution, and a chain of radical global restructuring of market relations at both the regional and country levels. Seeking to identify the chains of causation, seven Mideast economies plus Libya in North Africa are selected as the main sources of oil fortune to which this study is dedicated. The text that follows contains two parts. Part one evaluates the economy-wide modernisation campaign of MENA-8 to the extent that the newly-found wealth warrants an overhaul of their industry and financial system. MENA-8’s respective “absorptive capacity” is viewed as the analytical base for demarcating the contributive share of petrodollars to economic growth of relevant countries concerned. Part two traces international financial flow by drawing the lessons of the so-called “petrodollar recycling” scheme that effectively bridged global payment imbalance in the aftermath of the last two energy crisis. It is contended, among others, that similar design at present can only attack the symptoms not a real cure to the problem - the “structural imbalance syndrome” of the US economy. The U.S. administration is strongly motivated to defend universal dollarization at all costs virtually because it is the only way to circumvent (more realistically, to postpone) a home-grown economic crisis. Ironically, flooding of the over-stretched fiat currency around the world is as dangerous as the shortage of gold in late 1960’s that eventually gave way as a standard of value to the floating system. Whereas it would be premature to predict if world financial turmoil is imminent, but for the petroleum-exporting bloc, gradually shifting to Euro as both reserve currency and a more credible means of payment is due to trigger a silent war across the Atlantic.

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