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To what extent are natural resources the pre-requisite to economic development?

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Introduction

To what extent are natural resources the pre-requisite to economic development? This question focuses on whether natural resources are the essential ingredient for economic development within a country. To do these I need to define what natural resources are, and define the levels of economic development. Natural resources are features that are needed and used by people. These can include raw materials, climate and soils, whereas human resources may be divided into people and capital. Economics development is associated with a growth in wealth based on GDP or GNP. This implies that the standard of loving and quality of life has improved. The relationship between natural resources and development is complex. Many developing countries are very well endowed with natural resources, yet have not achieved prosperity. Sierra Leone in West Africa has substantial mineral, agricultural and fishery resources. Bauxite, titanium oxide and diamonds are the principal exports. The economic and social infrastructure is not well developed however, and serious social disorders continue to hamper resource exploitation. In 2000 Sierra Leone was ranked the poorest country by the UN. To understand why some countries are able to develop much more quickly than others, and why others cannot seem to develop at all, we have to look at case studies from around the world. ...read more.

Middle

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. ...read more.

Conclusion

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. ...read more.

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