Wednesday, August 6, 2008

Resources, China, and Africa - Again

Fortunately nobody took me up on my bet about oil dropping below $120 a barrel, but I still don't think it'll be below $100 again. Yes, Lehman Brothers is predicting $90 a barrel oil by early 2009, but we'll see - any takers now? The point is, here we are in 2008 and commodities - resources that come out of the ground, not technology - continue to be one of the strongest sectors, fed by global demand. That is to say, China, and to a lesser extent India.

For all the huffing and puffing about the US encircling the world's remaining resources (both pro and con, domestic and international), we're not doing a very good job of it, perhaps because we remain myopically focused on oil, and oil in one part of the world at that. I ran across excellent articles on China's presence in Africa (here and here) and a blog following China's economics that I highly recommend.

So what's the solution? If you read the comment sections of the linked articles, you'll notice African readers rightly pointing out that business interests and governments of sovereign states trading with each other is exactly that, trade, and not colonization (China's disregard for human rights and future designs notwithstanding). Could it be that trade and direct infrastructure development is more beneficial to African citizens than decades of NGO charity efforts?

China's expansion into Africa hasn't gone totally unnoticed in the US, or AFRICOM wouldn't have been established. But the clear conclusion is that U.S. strategy in Africa should shift away from a charity mindset and toward a trade-and-infrastructure approach, because frankly it's working for China - and John McCain is the executive most likely to implement such a policy.


Mike said...

I'll take you up on the $100 oil bet.

Say "oil <= $100 before end of 2009"?

For a while I had some money in PCRIX.

Made a bit of scratch but sold it when the level of speculation got too much for my cheap blood.

Julian Simon once made a bet with the "Population Bomb" guy (Ehrlich?) that some basket of commodities would be less in inflation-adjusted dollars N years in the future.

Simon won.

Thomas Paine Jr. said...

Alright, you're on. Prize is a beer of the winner's choosing. If I predicted from the Sweet Sixteen that KU would take it then oil can't be any harder.