Economy of Scarcity: From Oil and Chips to Labour Force

From time to time, any sphere and any economy may face the problem of scarcity that goes hand in hand with fears that a particular resource, be it oil, chips, or the labour force, will not be sufficient for everyone. On 13 April 2026, participants in the online discussion held at the New Economic School (NES) during the Educational Days in memory of NES co-founder Gur Ofer debated whether the global competition for resources is intensifying, whether the real problem is their shortage or inefficient use, whether the market is capable of regulating these problems, and when the government should intervene.

Econs provides excerpts from the conversation, which featured Natalia Volchkova, Professor at NES and Director of the Centre for Economic and Financial Research (CEFIR) at NES; Rodion Lomivorotov, Executive Director and Senior Economist at Sber CIB; and Maxim Titov, Executive Director of the Research Centre for Energy Policy and International Relations at the European University in St Petersburg.

Access to resources and their sources

Natalia Volchkova:
– The current situation in the global oil market could be regarded as a struggle for resources if there was an oil shortage. However, over several recent decades, the world has had the necessary amount of oil at an appropriate price, and for the past two decades, there has been a process of substituting hydrocarbons with renewable energy sources. An important feature of today’s global economy is not scarcity, but uneven distribution. Access to the Strait of Hormuz is not about control over resources, but about their delivery routes. With significant intensification of geopolitical tensions, stable access to resources becomes the goal, rather than the efficiency of their production. The critical problem is in infrastructure, not in the resource itself.

Rodion Lomivorotov:
– The situation can be viewed from two perspectives. The first is through the lens of geopolitics. In his book Principles for Dealing with the Changing World Order, Ray Dalio (investor and founder of the Bridgewater Associates hedge fund – Econs’ note) explains the cycles of superpower formation. Following this theory, we see that the United States – the undisputed leader – is in a phase of declining power, while China is challenging its dominant position. Competition between them is seen in many areas, including access to resources and their logistics.

The second perspective is through the lens of the financial system. Recent shocks – first the 2008 financial crisis, then the pandemic along with massive increases in fiscal deficits, and finally sanctions and restrictions – are finally leading to a situation where countries have large amounts of currency, but at some point, lose the ability to convert that currency into real goods like oil, gold, and gas. This also intensifies competition for access to physical resources: it is not enough to have money; one also needs to be able to buy something with it. I think that these two trends – deglobalisation and the build-up of debt in the financial system – are interconnected.

Maxim Titov:
– Some raw materials were located in rather hard-to-reach places, and given the situation in the Persian Gulf, it became obvious that all these seemingly well-known bottlenecks with all associated scenarios taken into consideration, could still present surprises. As for the resources there, they are in abundance. The current issue is about control over sources of raw materials and means of delivery.

The hope that the acute phase of the crisis would be over quickly and things would return to normal is not justified. It seems things will not be as they were. However, the system associated with raw material delivery has proven its ability to adapt to and deal with crises over many years. All this means that supply chains are changing and becoming more expensive. In the end, everything will inevitably reach a state of equilibrium, but this will be another crisis from which lessons must be drawn.

Consequences of conflicts over resources

Rodion Lomivorotov:
– Countries have drawn lessons from the previous oil crisis. In fact, the strategic reserves created in the United States, Japan, and China are specifically designed to protect against the consequences of such scenarios. Regarding improvements in energy efficiency and cost optimisation, the global economy has become much less dependent on energy resources in recent years. Here, I would also say that we have become hostages of our own efficiency. Over recent decades, many companies and industries have cut costs and optimised production, by maintaining maximum capacity utilisation rates with minimal reserves. During the pandemic and now any major global shock leads to a lack of excess capacity and reserves, which in turn means there is no buffer to absorb the shock. On the one hand, the modern economy has become much more efficient due – on the other hand – to greater vulnerability to shocks. Moreover, supply chains have become far more complex. The current crisis is primarily focused on the oil and gas sector, but this means, for example, that fertilizer or aluminium plants could shut down due to gas shortages. Without aluminium, certain car or aircraft parts cannot be produced, and so on. Spreading along the chain, this could ultimately lead to unexpected and multiplicative effects.

Natalia Volchkova:
– A direct resource price shock hits the poorest and most vulnerable the hardest. This largely undermines the concept of global sustainable development. One example is the oil and gas conflict in countries of the Persian Gulf and nearby Nepal. Over several decades, Nepal has maintained a fairly decent standard of living thanks to the income of migrants working in the countries of that region. Now, Nepal faces the threat of its income falling below a critical level, which may potentially return it to the category of least developed countries – simply because the income received through migrants working in the Persian Gulf countries has disappeared. Thus, the consequences of the oil crisis can also be seen in social spheres such as human capital and healthcare.

Technology and Earth’s resources

Maxim Titov:
– Experts have long been warning about the possibility of depleting resources of the Earth, as discussed in the famous 1970s work The Limits to Growth. It is evident that the current oil crisis has confirmed the importance of a structural transition to clean energy sources. We have the sun and wind in unlimited quantities, but we are still learning to use them in sufficient quantity. In terms of growing demand for rare-earth elements such as lithium, copper, and other components of the green transition (link in Russian), this is undoubtedly a market where shortages appear, where unmet demand is building, and this, in turn, generates supply.

Natalia Volchkova:
– Climate policy as a whole is a regulatory framework. If old capacities are no longer allowed to operate under the new regulatory system, while new ones have not yet been created, a shortage arises at that point. Therefore, again, the issue is not a shortage, but rather the coordination of processes in the real economy. Climate policy must adapt to these processes to avoid shortages, but it is not itself a factor of scarcity.

Rodion Lomivorotov:
– Research on resource scarcity appears periodically, but every time, people find a way to overcome these limitations in the form of breakthrough technologies. The agricultural revolution (link in Russian) has increased agricultural production; green energy can similarly increase energy production; and artificial intelligence also influences productivity. Overall, humanity is currently coping with the challenges of limited planetary resources through scientific and technological advances.

Labour shortages

Rodion Lomivorotov:
— Population ageing can have serious and delayed consequences for the global economy. A number of countries, such as the United States, want to bring manufacturing back home and de-offshore production. This will mean the need to build more factories and employ more people. Yet, with an ageing population, there is no one to work. US policy in recent decades yielded good results, as it was focused on attracting highly qualified specialists in the IT sector, mathematicians, and physicists. However, current US policy is working in the opposite direction: it repels talent instead of attracting it. This could indeed become a major problem and a challenge.

Natalia Volchkova:
– I think the motivation of migrants has not changed much, but the situation in different countries can vary greatly due to several factors. One very important factor is taxes, and the second is prospects. If we see that, due to high taxes, markets in developed countries today do not promise workers the same successful opportunities as, for example, similar sectors in Asia, then a specialist who wants to succeed will most likely choose Asian markets.

Critically thinking specialists will be a sought-after and scarce commodity. In education, we are facing the problem of the use of artificial intelligence by students. The results depend heavily on how well they can ‘filter’ what AI produces, and whether it will be beneficial. Critical thinking is the key factor here. AI processes large amounts of information, but without critical analysis of that information, the final outcome will be poor.

Market or state

Natalia Volchkova:
– In the case of a local shortage in a flexible market, the problem is solved through a price increase, which signals the need to invest in expanding supply. However, housing is a classic example of a problem that the market cannot resolve. It is not that the market does not want to build in response to rising house prices, but rather that it cannot: there are constraints related to land, zoning, and urban infrastructure. So, prices rise, but supply fails to keep up.

State support will be indispensable in three cases. First, in the case of infrastructure or network shortages, which may be housing, electric power grids, and transport. Second, in the case of large-scale externalities and where the problem cannot be solved by market means, which may be science and education. Third, in the case of a shortage related to high market concentration and uneven access, which may be microchips or medicines, especially for rare diseases. In all these situations, the market price does not create room for private investment, and state intervention is essential.

Broadly speaking, the state should act as an instrument for redistributing gains. Unfortunately, due to various political processes, the redistribution of these gains from economic processes is very often not the focus of the state’s economic policy, even though it should be its central task.

Maxim Titov:
– For countries with transition economies, energy tariffs are a major problem, for example. These countries face a choice. Tariffs need to be raised to secure investment for modernising power grids and capacities because the number of consumers is growing. However, sharp tariff hikes lead to social and political instability. To attract investors to the renewable energy market, special tariffs are unavoidable.

Rodion Lomivorotov:
– Geopolitics is often the primary reason for state intervention in the market. The trade war with China began when the US decided that high-tech chips and the equipment needed to produce them could not be sold to China. What did the Chinese government do? It allocated significant resources to developing these competencies domestically. According to expert estimates, China now covers about 30% of domestic demand for high-tech chips, although these are not efficient enough and the technological process lags one or two generations behind the most advanced models. Given the scale of China’s investment, it is quite possible that this technological gap will be closed by 2030. It would probably be difficult to achieve this result through market mechanisms alone. Government intervention, the directive allocation of resources, money, and people to the industry help resolve the problem. However, the problem would not have arisen in the first place were it not for geopolitical demands.