Resources and Development in an economy

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Resources and Development

a)        

Resources influence the structure and progress of an economy. If something is considered a resource it is potentially of economic benefit. However there are three differing types of resources, and it is the relative abundance of all these that dictates the economic structure. It is debatable whether the presence of one resource, e.g. Coal (a natural resource), leads in itself to economic sustainability and strength. There are human, capital and natural resources. Human resources represent the quality and quantity of the workforce and is influenced by factors such as education and demographics. Capital resources come in the form of accumulated wealth in assets such as industry or infrastructure. Natural resources, such as oil, coal or timber, are primary materials which are of utility to man, which man has the willingness (i.e. it will either be of use in other industrial processes or will gain a profit), and ability to exploit. These three factors combine to provide the backbone to an economy, although they often rely on one another, especially the industries on the workforce, to function properly. Natural resources are arguably the ‘kick off’ necessity of the other two, and is more complex as there are many types of natural resource, both infinite such as timber, and finite such as crude oil. There is therefore the issue of decision-making regarding sustainability, and the appropriateness of using a particular resource for a particular purpose, when a suitable replacement is available, and this often alters which natural materials are regarded as resources.

b)

Logic would suggest that the presence of natural resources in a country has a positive relationship with its economic development. There are many examples that support this theory, such as with the most developed countries of Western Europe, and renowned anthropologists such as Rostow assume it to be true. However there is well supported evidence that natural resources are not at all essential for economic development, and with the global political structure having evolved the way it has, anthropologists such a Gunder-Frank suggest that natural resources can be more of a hindrance than an advantage regarding the improvement of an economy.

In his model for economic development Rostow assumes that natural resources are necessary for economic progression through the ‘preconditions for takeoff’ and ‘takeoff’ stages of development. This was originally true in the case of the first industrialised countries in the 18th century. The development of the UK’s wool, and later coal industries, directly triggered the processes that have led to the UK’s developed economy today.

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However Gunder-Frank would argue that as soon as the first industrialised nations became rich and began looking to exploit wealth from overseas natural resources became an economic liability, as their extraction through the colonial system prevented the growth of secondary industries, and therefore formed a multitude of over-dependent economies whose long-term growth was seriously threatened due to their dependence on the extremely changeable markets for primary materials. India had vast natural resources, but benefited little economically during their rule under British colonial power, preventing the Indians generating wealth by selling primary products such as tea internally through tariffs, but massively ...

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