1 What impact do natural resources have on economic growth? Will it be possible

Question

1 What impact do natural resources have on economic growth? Will it be possible for a country with few natural resources to grow rapidly? Why or why not. 2 Suppose you have just been appointed to a high level position in the economic analysis unit of the State Department. The secretary of state has asked you to prepare a memo describing the key policies and economic arrangements that a specific less developed country should follow in order to achieve rapid growth and higher income levels. During your research, you discover that multiple Christian aid organizations have been working in the country to assist the local population. Briefly describe your response (2

Explanation / Answer

Natural resources were earlier considered to be the engines of economic growth. It was believed that the economic resources are widely considered to be effective in influencing the growth pattern of the economy. A resource rich country will be assumed to have more growth than the country which does not have resources. But later this thought was proved wrong with many countries such as Singapore, Mauritius emerging out as the countries with absolutely no resources as huge drivers of economic growth leaving behind India which had abundant amount of resources. This is commonly known as Resource curse hypothesis which was largely populated recently. Resource Curse hypothesis shows that how resources lead to decline in growth of the country. Abundant amount of resources leads to mockery, corruption and greediness resulting in decline in growthrate ultimately. A classic exmple can be brought from India the bifurcation of the state of Bihar into two states of Bihar and Jharkhand(Resource rich) was done to improve the living conditions of Jharkhand as it was assumed that resource rich state will have more growth but this turned out to be exactly reverse. While on one hand, Bihar is growing now by 8% Jharkhand has shown no growth in the years. A country with few resources does not necessarily mean that it cant grow. If they develop technologies that are not present anywhere in the world. They can import the raw materials and produce the goods cost effectively resulting in higher profits. I hope this helps. Do rate me please :) Require ratings.

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