Time
An example of a country that has started to use its resources well is Botswana. Botswana has been successful, economically and politically, since its independence in 1966. The success has been based on the exploitation of diamond deposits. Botswana is also very oil-rich and ore-rich, however this does not necessarily mean it’s a guarantee for economic success. The mining of such goods is often more beneficial to the company rather than to the country. Botswana’s success is partly due to the government being joint owner of the diamond mining company Debswana. The mining company (DeBeers) was prepared to agree to this arrangement because it helped the company to maintain a virtual monopoly in the world market, keeping prices high. In turn this boosted Botswana’s revenue. Botswana’s revenue has been used effectively over a succession of 5-year plans. The use of these plans has marked Botswana as a developmental state.
Other countries that have developed using their natural resources are the Asian tigers. These include Hong Kong, Japan, Korea, Thailand and Malaysia. These are countries that have started off as poor as African countries, but have used their resources well, and have developed so far that, they are now a dominant force in the worlds economy. For example, Thailand used land reform to reduce agriculture and increase industry and employment. To begin with bigger economies such as the US used the low wages and high labour forces to their advantage, by creating sweatshops. However, these sweatshops were essential for Thailand’s development. Nike would pay them high wages, give them free food, employment assets/subsidies, and give loans to local businesses. Poverty thrives in countries that don’t adapt to/for multi-national countries. However even the Asian Tigers suffer set backs, for example, over the years the residents of Thailand or Indonesia had found it advantageous to borrow US dollars rather than their own currency. This was because the dollar interest rates were lower than those of the baht were or the rupiah were. Financial institutions found they could make money out of borrowing cheap dollars and then converting them into local currency. So banks in Japan, Europe and North America became major creditors of institutions in Thailand, South Korea and Indonesia.
These are the three that are now subject to rescue programmes led by the International Monetary Fund. But even those countries that were not in quite the same position as those three have faced enormous difficulties. So it goes to show that the road to development and success is not an easy one. Countries like Japan have been able to develop even without having any natural resources to begin with. Instead Japan concentrated on manufacturing goods, and specialised in them, this way they were able to make more profits, and export more and more quantities. With foreign investment, and other foreign companies ‘setting up shop’ in Japan, local businesses were able to learn from them. As it happens Japan was the first country to mass-produce the first computer. And in this day of age, Japan and the Asian Tigers are considered the technological giants, along with USA. Trade helps Japan earn the foreign exchange needed to purchase raw materials for its economy.
However there are countries that are just unable to develop, because they make the wrong decisions. For example, Mauritania, debts were reduced, oil prospecting was in progress and reforms were continuing, but the extreme poverty suffered by almost half the population can not be hidden. The economy is based around mining, agriculture and livestock rearing and fishing. Although the struggle for water and agriculture livestock caused by the droughts worsen conditions. The fisheries and mining are the main source of income, bringing in 54% of all export revenue. However there are major limitations, the fishing equipment, and fisherman’s ages are both very old. There are poor port infrastructures, under-utilisation of refrigeration plants, and over-fishing endangers the stocks of certain species. A declining economy, impoverishment and social inequality are the most visible effects of the social change of recent years. The government has devised a plan to combat this poverty, but it is yet to be seen if it will manage to reconcile growth with a fair distribution of the spoils.
As mentioned before Sierra Leone is another country that is unable to develop. The economy centres around mineral, agricultural and fishery resources. However the economic and social infrastructure is not well developed and serious social disorders continue to hamper the exploitation of these resources. The mines are closed due to civil strife, and civil war has prevented growth over the last decade.
Lastly, Kenya another country that has also not developed. Kenya refused multinational companies to employ their workers. Instead stuck to the traditions of agriculture, which was hard to expand, as there were export restrictions, therefore they were unable to prosper. There is extreme poverty in Kenya; this leads to a lack of growth, which then leads to a lack of reformation. Due to the government’s unwillingness to let multinationals into their country, like Thailand did, they were unable to prosper, so the country was therefore left in poverty, and economical crisis.
The original question was whether natural resources were the pre-requisite to economic development. To answer this I would say that they are. However it is not just the amount of natural resources that determines whether the country develops or not. It is the way that the country uses those resource, is a determining factor in whether a country prospers or not. The country has to be able to use their resources effectively in order to develop. This can be seen from the examples of the Asian Tigers, and large industrial powers like USA and Great Britain, the more economically developed countries, and countries that do not use their resources effectively, Sierra Leone and Mauritania are the countries that are less economically developed countries.
