Norway used their oil resource well

Australia’s resource boom could have invested in a permanent, constitutionally protected Sovereign Wealth Fund for all time. The world’s best example of a SWF is Norway. They realised their oil resource was a singular gift that only one generation would profit from unless they taxed it, and invested that tax in a constitutionally protected SWF where no politician could touch the capital investment for all time. They can only live off the profits. *All* future generations will have that *bit* more to play with because of Norway’s wise investment strategy. They now have the largest SWF in the world, and all future generations will enjoy the interest on $855 billion. As the wiki says:

SWFs are typically created when governments have budgetary surpluses and have little or no international debt. It is not always possible or desirable to hold this excess liquidity as money or to channel it into immediate consumption. This is especially the case when a nation depends on raw material exports like oil, copper or diamonds. In such countries, the main reason for creating a SWF is because of the properties of resource revenue: high volatility of resource prices, unpredictability of extraction, and exhaustibility of resources.

There are two types of funds: saving funds and stabilization funds. Stabilization SWFs are created to reduce the volatility of government revenues, to counter the boom-bust cycles’ adverse effect on government spending and the national economy. Savings SWFs build up savings for future generations. One such fund is the Government Pension Fund of Norway. It is believed that SWFs in resource-rich countries can help avoid resource curse, but the literature on this question is controversial. Governments may be able to spend the money immediately, but risk causing the economy to overheat, e.g., in Hugo Chávez‘s Venezuela or Shah-era Iran. In such circumstances, saving the money to spend during a period of low inflation is often desirable.

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