A Brief Explanation: The Curse of Natural Resources

Despite the presence of natural resources seeming implicitly advantageous, resource rich economies have shown very little economic growth and have often seen negative affects from their discovery. For this essay a natural resource is limited to resources that can be mined, such as oil, gold, diamonds and many more, rather than the smaller natural commodities such as soil type or a temperate climate - which have a little effect on the economy. Natural resource wealth ‘can be bad for growth and bad for democracy’, in what has become to be known as the ‘resource curse’. The curse has effects such as loss of foreign investment and crowding out caused by the Dutch disease, and can also have a direct link to civil war and corruption through its change of incentives that strain democracy, stall political change and change institutions- all of which contribute to the slow growth of an economy.

Why did international trade rise rapidly between 1870 and 1914?

Here is a short article (that misses many points that could have been made, such as mass migration and transmission of knowledge) that I wrote before christmas on the series of events that lead to the rapid increase in international trade between 1870 and 1914.

Between 1870 and 1914 global trade was growing at a rate that was noticeably rapid in comparison to the time period before, and included vast amounts of international trade in capital, goods and ideas. The rapid rise in trade between countries grew for many reasons but is greatly connected to what the World Bank sets out as the first ‘wave’ of globalisation that began in 1870 and finished in 1914. This period of globalisation introduced a reduction in transport costs, which increased the value of involvement with international trade and it also introduced fixed exchange rates and other benefits via the gold standard.

Did geography matter? The basis of economic growth in history - a brief overview.

After my last post concerning the economic growth pattern of Africa I feel an important follow on is the impact of geographical factors on growth - I wrote this article a few months ago and feel it will be interesting to those interested in the Africa post, and others.

Geography has played an important role in the differences between countries economic success and development. Some countries experienced more stable and long term growth that made them the most economically successful to present day and the path that links this growth to geographical factors can be easily followed. Direct links can be found between productivity and institutions, mortality rates and institutions, factor endowments and income equality, and distance and market access that leads to discussion on how much geography mattered.

Why has growth failed to touch Africa?

During the 19th Century Africa dramatically fell behind in income and life expectancy and moving on to the 20th Century, Africa fell further. Africa experienced a fleeting boom from 1950 to 1980 in terms of GDP per head, which was short lived when Africa slowly declined into the 1980s. Many factors must be analysed as to why growth has failed to sustain in Africa, the main points that I will be studying include fractionalisation which can be seen as the levels of difference between the many ethnic, cultural, linguistic and religious groups which are abundant throughout Africa. I will also study the foundation of African economics; Agriculture, and how it was affected by the implication of trade and economic policies such as import substitution industrialisation - a policy advocating replacement of foreign imports with domestic production. My final point will analyse how geography has affected growth and I will tie in the inefficient transport systems in place in Africa. Once analysing these factors it is clear that the reason growth has failed to touch Africa cannot be attributed to one factor but must be based on the accumulation of interlinking factors.