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The Cost of Natural Resources
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The Cost of Natural Resources
Oil is one of the most important components of the economic structure of the world. The economies and populations of the developing world are affected significantly when oil prices rise. Most of the countries face the issue of inflation with an increase in oil prices. The developing counties in the global south region of the world get severely affected by the rise of oil prices. On the other hand, the developed countries of the world like the United States of America do not get severely affected by the change in oil prices. The stable economy of the developed countries and the unstable economy of the developing or underdeveloped countries is one of the most important reasons for the different reaction of the countries towards the rise of oil prices.
The United States of America is one of the biggest importers of oil, apart from the fact that it exports it as well. The energy needs of the population are fulfilled through oil and gas resources, which balances out the financial pressure of the economy. On the other hand, the developing countries of the world face a lot more pressure on their economy, when they have to face the situation of oil rise. The energy needs of developing countries are mostly satisfied with the oil which they export from other countries of the world. With the increase in oil prices, the prices of most of the other goods and services also increase, causing a toll on the economy as well as the pockets of consumers, which is the main reason of their severe reaction (Mussa, 2000).
The oil prices affect the global economy; however, the impact on the economy of the developing countries is a lot more severe than that of the developed countries. The stability of the economy of any country plays an important role in defining its reaction to the rise of oil prices, which is also the reason of less severe reaction of the United States of America, as compared to the countries of the global south region.
Reference
Mussa, M. (2000). The impact of higher oil prices on the global economy. International Monetary Fund, 8.
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