a.. Think of an original example of a real-world nation (other than Japan) with

Question

a.. Think of an original example of a real-world nation (other than Japan) with a relatively small amount of natural resources that either

is an IAC, or

has experienced rapid growth

Explain how your example nation underwent its growth, citing any outside sources you refer to.

b. Think of an original example of a real-world nation with a relatively large amount of natural resources that is a DVC. Explain why you think this nation has not experienced sustained growth, citing outside sources.

c. Which of your chosen nations do you find more impressive/shocking and why?

Explanation / Answer

There is a phenomenon named as “paradox of plenty”. It says that abundance of natural resources does not achieve faster economic growth in comparison to those countries having lesser amount of natural resources. This fact is further strengthened by following reasons.

Over dependence upon natural resource industry and reduced competitive edge of other industries

Volatility in revenue flow in natural resource industry due to global economic scenario

Inefficient utilization and / or management of natural resources

Besides, economic growth depends upon many other factors other than natural resources. Monetary and fiscal policies, infrastructure development, education level, saving and investment, trade stimulation packages and government spending fuel the economic growth in an economy. Countries like Japan, South Korea and Taiwan own lesser amount of natural resources but their management of resource utilization is very good. Government in these countries make policies that not only helps industries to grow but also, it makes them very competitive. Further, trade agreement with overseas nations also facilitate international trade. All these initiatives lead to economic growth. In contrast to it, countries like Saudi Arabia and Nigeria lack suitable policies despite having abundance of resources. They rely mostly on imports other than natural resources. Nigeria also lacks good infrastructure. Thus, economic growth is not faster in these countries.

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