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How Latin America’s Next Oil Power Can Avoid the Resource Curse

By Juan Cruz Vieyra , Mario Huapaya

Guyana – population 1 million – could soon become a major oil player. A sovereign wealth fund will help it make the most of the opportunity.

It’s an oft-stated parallel that is worth repeating: A big oil discovery in a country is like winning the lottery. And what happens to lottery winners? Almost 70 percent of them declare bankruptcy within seven years.

Something similar happens to some countries after they strike it rich with natural resources. Massive inflows of money combined with weak institutions lead to fiscal...

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