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[The] most vulnerable countries by this measure - in the sense that an oil price increase will eat a larger fraction of their GDP

I am somewhat split as to this being a good measurement. I think the relationsship between oil prices and GDP might be quite different.

Cheap energy drives a lot of other economic activity. Just to get a pretty clear example of wht I am getting at, picture early 19th century Russia. Almost all of the work is provided - dirt cheap - by serfs. It is quite possible that Faberge produced more GDP then all the serfs together. Now, imagine you had more producers of valuable trinkets, making the serfs percentage even less. Would that make the economy better or worse of should the serfs make themselves scarce. What I am getting at is that when some of our energy spikes in price, having lots of people doing fancy things might very well turn out to be a liability.

On the other hand, I think where the GDP ends up today is not a measure of economic efficiency, but of political power. We have a system that ships lots of stuff from some countries and to some countries. This system was until some 50 years ago held in place by direct political control by the governments in the countries receiving the stuff. The rich/ high GDP countries still holds much political power which they can use to get more of the shrinking supply of resources.

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by A swedish kind of death on Tue May 27th, 2008 at 09:12:07 AM EST

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