ABSTRACT
This chapter discusses the problems of planning a long-term economic strategy for North Sea oil. The economy was divided into five sectors: primary production, manufacturing, construction, distribution and services and public administration. The most controversial policy recommendation of Forsyth and Kay was their suggestion that the oil revenues should be largely invested overseas. One of the most sustained and powerful criticisms of Forsyth and Kay have come from the Bank of England. Even if the arguments of the Bank of England did not apply to the UK during the 1970s, therefore, this argument would indicate that as long as government economic policies were correctly revised to allow for the advent of the oil there could be no absolute decline in manufacturing. The chapter concludes the exploitation of a natural resource will cause an absolute decline in the domestic production of tradeable goods, if the economy starts from a position of balance of payments equilibrium and if nothing else changes.
