There's a vast difference in the effect on a country depending on whether its competitive advantage comes from resources or people though.
If it comes from resources then the incentive to develop the people is lost and they're either bought off or ignored. Look at what happens in Russia or Venezuela or Saudi Arabia.
In the 17th century Bolivia was considered the richest country in the Americas because of the Potosi silver mine while the eastern seaboard of America was basically a poverty stricken nowhere.
Now Bolivia is the poorest country in the Americas and the US is the richest. This is basically why.
The answer is - it works fine until the resource price drops or you run out of it.
Kuwait may be fat and content now but it has a dark future ahead of it once they stop being able to live off foreign cash.
If it comes from resources then the incentive to develop the people is lost and they're either bought off or ignored. Look at what happens in Russia or Venezuela or Saudi Arabia.