The main thesis is that aside from the traditional Dutch disease of such intense exporters, there is an organizational component in the downfall of such plenty. For example, she argues that a large self-serving infrastructure and bureaucracy is built around the "pot of gold". She argues this may be one of the main causes that coutnries squander such valuable resources without ever refocusing them on the development of people (health and education) or the country's economy (such as through the extension of value-added activities).
Overall, an interesting proposition, though I am not sure this is a phenomenon unique to countries faced with the plenty of oil or other products. It is a strong case that inefficiencies are added through bureaucracies, but I still believe much of the damage is caused by the traditional Dutch disease.
On the downside, her point is clearly made in the first 50 pages. In the remainder of the book the author goes into too much detail regarding the political evolution of Venezuela. And she fails to end with a reader-friendly synopsis or a glimpse of the future.
With today's troubles in the Mideast, this book could have been a lay-reader best seller. Unfortunately the author's writing is aimed more toward Political Science professors than the general public. Still worth the purchase, however.
Her complex argument boils down to this: oil booms (like all commodity booms) put enormous power in the hands of the state that suddenly has vast sums at its disposal. "How these states collect and distribute taxes, in turn, creates incentives that pervasively influence the organization of political and economic life and shapes government preferences to respect to public policies." In other words, "the origin of a state's revenues influences the full range of its political institutions." What appears to be a chance to do almost anything, it turns out, is in fact a very circumscribed choice.
Though a Latin American specialist, Karl understands the Algerian and Iranian encounters with oil and has insights to offer all those who study Middle Eastern oil states-as well as those who lead them.
Middle East Quarterly, December 1997