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tive economic management. Instead, oil-
based wealth tends to create an implicit social
contract in which state-provided welfare is
substituted for political rights. By the same
token, all that easy money is an invitation to
corruption (public and private), further un-
dermining incentives to deliver good govern-
ment at minimum cost.
direct ways, through a mechanism that econ-
omists call "Dutch disease" after the experi-
ence of the Netherlands during its natural gas
boom in the early 1960s. Bountiful earnings
from energy (at least during periods of high
commodity prices) tend to increase the ex-
change value of a nation's currency, making it
and services to compete both at home and
abroad. And Russia certainly fits the descrip-
tion: The world's largest exporter of natural
gas and second largest exporter of oil has
failed miserably to build world-class manu-
facturing and service sectors.
tempting to build an advanced free-market
economy without giving up his monopoly on
political authority. But while the Russian
leader no doubt envies China's success, he is
hardly managing the economy on the Chinese
model. Indeed, Putinomics seems based on an
unusual strategy (in recent decades, anyway)