Course:ECON372/OK2019WT2/Topic20
Natural Resources and Economic Growth
Group #1
https://www.theglobeandmail.com/canada/article-quality-of-life-will-go-down-for-the-average-canadian-how-readers/
Summary:
This article from the globe and mail talks about how Canadian politicians intend to increase Canada’s productivity by increasing immigration and its effects. It says that the quality of life will go down for the average Canadian since resources per person would become less. It discusses how the rural parts of Canada go undeveloped because of constant brain drain occurring where Canadians growing up in the countryside and then moving to the nearest main city to work and not return. The article predicts that it would be hard to sustain an overpopulated city with reduced standards of living and proposes to “keep Canada live-able by decentralizing.” It argues, cramming people in the cities does not equate to progress and that increasing the number of residents would be detrimental to Canada’s sustainability goals since it would increase the country’s carbon footprint. A few solutions to this issue provided by the article were-
- Having a stable population level and divert the money from immigration to girls education and family planning
- curtailing mass immigration to let cities plan future needs instead of just allowing people in
- Keep the population level the same as replacement rate
- Distribute the population to second tier cities with tax incentives to attract businesses.
Analysis:
This article discussed if increasing the inflow of people in the country was the best idea for progress in Canada. The arguments are understandable and an educated population can definitely be the secret behind a successful and prosperous economy but not at the cost of the current standard of living. Another possible solution to this issue could be to develop the second tier cities and encourage immigration to those cities while keeping the population in the cities the same as the replacement rate. By doing this, the problem of a decline in the city’s standard of living would be taken care of and resources in the other parts of Canada could be sustainably used towards economic growth.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 3 | I don't see much in here about natural resources and economic growth. |
| Summary (20) | 10 | I am not sure if you are focusing on the articles or the letters. The article does not see population growth in cities as bad, just that there is an underinvestment in things like public transit that make cities livable. The opinion letters are just that, and don't have that consistent a theme. |
| Course Related Analysis (30-50) | 10 | The chapter focuses on the role of natural resources in economic growth. This article does not, nor does your analysis take it there. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 7 | |
| Total | 40 |
Group #2
https://www.oceanographicmagazine.com/news/seychelles-hits-marine-protection-target/
Summary:
Seychelles is a cluster of islands that heavily relies on its natural resources as the main driver of its economy. The article discusses how the island is highly susceptible to climate change and therefore there is a huge importance on preserving the marine resources. The Government of Seychelles announced the implementation of 13 new Marine Protection Areas to cover up to 30% of its water. This is vital to the economic growth of the country, with the COVID-19 crisis reminding the region of how reliant they are on their natural resources with communities already facing the consequences from the lack of tourism.
Analysis:
This article introduces the linkage between natural resources and economic growth as referred to in chapter 20. As stated above, the marine resources in Seychelles is vital to the livelihood of those who live on the islands. In particular, this will be due to the tourism that is attracted specifically to the marine environment. This alone will bring economic growth through the creation of jobs and the money spent from tourists visiting. However, growth will likely be a slow process with this being reliant on peak seasons, etc. Therefore, although the natural resources are a big player in the economic growth of Seychelles and clearly worth protecting, it is important that the country look to diversify their economic activity in order to broaden their institutional landscape. Seychelles is Africa’s most developed country, yet such a reliance on only natural resources is extremely risky in an ever changing natural environment. It indicates that as well as investing in protection programmes, it is also important to focus on physical growth in order to boost the total value of their goods and services. The issue here is that in order to do so, it may go against their protective efforts and end up damaging the marine resources. This type of growth could even cause further damage as it is spoiling the natural and picturesque environment that the tourists pay to see, in turn hindering economic growth. Overall, the article highlights the complexity between sufficient economic growth and how natural resources is a key part to the process. However, what is not complex is the simple notion that natural resources should continue to be protected and sustained and these protection programmes in Seychelles may very well allow them to continue to grow economically using their natural resources.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 10 | A central feature of the article is how this conservation is being paid for. |
| Course Related Analysis (30-50) | 30 | The nation was able to retire a substantial portion of its debt in a special deal. This debt for conservation deal is in effect a payment for ecosystem services at an international level. Should have been discussed as well. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 70 |
Group #3
https://freepolicybriefs.org/2011/11/21/are-natural-resources-good-or-bad-for-development/
Summary
On the face of it, a country rich in natural resources is undoubtedly good for economic growth; however, on the ground, an over-reliance on natural resources can dampen the dynamism of other sectors of the economy and can lead to corruption or become a source of conflict, which in turn damages economic growth. For example, the Democratic Republic of Congo, Sierra Leone, Liberia and other countries/regions, all of which are developing countries with natural resources as their main export products, have been the bottom of the global GDP per capita ranking for several years. In contrast to that, some countries and regions without abundant natural resources are some of the fastest growing economies in the world. Of course, abundant natural resources are not always a burden on a country's economic growth. Countries such as Norway and Australia are not only rich in natural resources, but their economies are growing fast.
The reason lies in the institutional environment. If the government and some relative institutions provide good property rights protection and are conducive to production and entrepreneurial activities, natural resources may become an economic source. On the contrary, it will become a source of corruption and conflict, and have a negative impact on the economic growth. The article points out that many problems related to natural resources can be solved through appropriate policy measures, "...many of the economic problems are solvable with appropriate policy measures and in general that natural resources can be have positive effects on economic development given the right institutional setting."
Analysis
This paper introduces the two sides of the impact of natural resources on economic growth, the reasons for the negative impact and the suggestions to solve the negative impact. In both developed and developing countries, some problems related to natural resources are urgent to be solved in the world. The difference, however, is that some countries use natural resources to stimulate economic growth, while others use natural resources to inhibit economic growth.
Different institutional environments are one reason for this difference. Countries with rapid economic growth have sound financial markets and regulatory mechanisms. They adhere to the concept of sustainable development to develop and export natural resources, regulate prices and resource’ types through the market rather than the government, and provide economic subsidies and financial assistance to relevant workers. Slow-growing countries tend to keep most of their wealth in the hands of a small group of people through high taxes, forcing farmers to plant certain crops, over exploitation, and acquiescing to illegal mining by large corporations. Imperfect national laws also increase the uncertainty of property rights, prompting farmers to take actions that undermine the productivity of the resources on which they depend.
Another obstacle to economic growth is the perceived dependence on natural resources. In some low-income countries, which are dominated by natural resources, population is the most intuitive productivity. High fertility and low population quality not only deprive people of the "demographic dividend", but also lead to low per capita GDP due to limited resources and excessive labor market. It is worth noting, however, that it is also part of the government's job to invest enough money in education to raise standards and change people's outdated traditional ideas.
On the whole, a country with abundant natural resources but low economic growth reflects the prevailing bureaucracy and the lack of government and related organizations in any way. To change this situation, they should start from the institutional environment.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 44 | How do you get institutional change to happen? |
| Extended Analysis (0-20) | ||
| Presentation (10) | 9 | |
| Total | 93 |
Group #4
https://www.theatlantic.com/international/archive/2012/04/why-natural-resources-are-a-curse-on-developing-countries-and-how-to-fix-it/256508/?fbclid=IwAR1Dgw9dY2cEF1F2yiXCnGN1hn759pyJKlxfLJPqIk4fxnXc3dpyV_eAxZ0
Summary:
One of the biggest curses to developing nations is the "resource curse" where developing countries that are resource abundant often face large amount of inequality, poverty and deprivation. Rich deposits of oil and minerals often contribute to tyranny, misery, and insecurity instead of freedom, broadly shared growth, and social peace. One of the reasons for this that easy access to natural resources removes a critical link of accountability between government and citizens. It not only generates staggering wealth that facilitates corruption and patronage but also makes the country's economy completely reliant on that one resource.
Dubbed the Dutch disease, countries that suffer this curse have under developed non-resource sectors due to the resource revenues raising the country's exchange rate and hurting the competitiveness in non-resource sectors. Countries that focus on one resource are in danger to the volatility of price fluctuations which may drastically hurt development or give way to more corruption. In addition natural resources such as oil and gas within developing countries exacerbates the risk of violent conflict.
There have been attempts by different organizations to combat these problems, however, none have seen too much success because the initiatives were largely voluntary, and were therefore unenforceable. One of the proposed solutions were for capital-exporting countries, international financial institutions, and private sector companies to improve cooperation. First there should be increased transparency for all extractive industries in developing nations. Second, the international community should create more accountability in resource-rich countries by providing grants to local industries and governments, this way, the international community can better monitor revenue flows. Lastly, international finance institutions should set up independent monitoring mechanisms to ensure that its members are properly following protocols. Proper enforcement and punishment should be set in place instead of just a lip service.
Analysis:
One of the major topics talked about in this chapter is the volatility in resource rent. The example brought up in the power point was Alberta and their oil and gas industry. Many countries such as Saudi Arabia or other OPEC countries have their entire economy based around these natural resources. When prices are high, the money is either used to pay out consumption or used to further develop the resource sectors. In countries that have less stable institutions, higher prices also give way to more corruption. During low prices, the country cannot afford to invest, and often, the overspending during the high prices cause certain institutions to collapse. Since the money was not used to diversify their economy during the high prices, the developing countries are sometimes trapped in a poverty cycle with no way to diversify their economy or to have sustainable development plans. Alberta is a low scale example of this, during times of high prices, the province prospered and during low prices like it has been during the past few years, many industries in the oil sand gas field have been struggling to stay a float. A more drastic example would be Venezuela where the entire country collapsed due to poor management of its resources. Although there are many more factors than just the fall of oil prices that led to the country's collapse, it is the volatile price of oil that forced Chavez to print money and inflate its currency in order to continuously fund its expensive social programs.
Some of the solutions to the issue talked about in class include investing in education to diversify the skills of the workers, investing in human capital also reduces the reliance on natural resources and allows for more sustainable development
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 46 | |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 96 |
Group #5
Summary:
The standard of living has increased globally due to the continuous economic growth but with worldwide changes, there are shortcomings; these drawbacks are climate change and environmental destruction. “Is Infinite Economic Growth on a Finite Planet Possible?” written by Matthew Johnston explains that economic growth should not be correlated with damaging the environment and all practices need to turn away from unsustainable consumption and increasing pollution levels as it is possible to “have limitless economic growth on a finite planet”. All life on earth relies on natural resources and without them, the earth would be inhabitable. Repeated economic growth stems from wanting to improve the standard of living, even in developing countries such as better health care to increase life expectancy and lower mortality rates.
There is an extremely narrow view stating that economic growth is only possible with physical growth such as building larger buildings, manufacturing more, and expanding geographically. As economic growth is defined as increases in real GDP, being the total value of all goods/services manufactured domestically, instead of increasing quantity, countries should be focusing on the quality of goods/services produced. Within the article, this is described as intensive economic growth as it is a way of producing more efficiently to create higher quality. Although, not all economic growth is diminishing our natural surroundings such as growing public transportation allowing more to carpool and developing electric vehicles to lower emissions. In summary, globally we need to continue the sustainable development movement to reduce unsustainable consumption and to prevent releasing more greenhouse gasses into the atmosphere as temperatures are rising. Economic and physical growth should be separated terms.
Analysis:
The article discusses the links between sustainable use of natural resources and the continuous growth of the economy, relating to standard of living. This connection of sustainability when it comes to natural resources has been covered extensively within this course, but chapter 20 introduces these themes into developing countries. Many developing countries economies rely on natural resources heavily for stimulation, with things such as ecotourism, or oil and mineral exportation. The article talks about the topic of quality when it comes to production, and labels this as key way that we can continue to grow economically with finite resources. Increasing this quality would be a large boost for some of the developing countries that are lagging behind with economic growth. The section of chapter 20 subtitled “Sustainable Growth” highlights this exact point, clarifying that the quality and quantity needs to increase in order grow sustainably. The main premise of the article is to understand that by increasing productivity in developing countries, we can continue to grow the global economy. Which in turn, will allow us to make larger investments into sustainable options for the same production processes. While it seems we cannot find the perfect balance between economic stimulation and sustainability in the present, the investments we make into the economic process today will cause the future processes to be more sustainable.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 17 | |
| Course Related Analysis (30-50) | 39 | |
| Extended Analysis (0-20) | ||
| Presentation (10) | 8 | |
| Total | 84 |
Group #6
https://www.sustainability-ninja.com/single-post/2014/11/25/The-importance-of-natural-resources-for-the-global-economy
Summary:
As long as countries are rich because the rich natural resources. According to the research 83 countries with 3.3 billion people can be considered resource rich, that because more than 50% exports and revenue are coming from the resources, such as oil and mining. In the beginning of 2008, before the world economy was agitated by the global financial crisis, the natural resource rent is worth over 7% on global GDP. After 2 years, the global economy slowly started to recover, the sum of rents from natural resources raise again. Over 1/5 natural resources are located in the Middle East and North Africa, at the same time, they depend on their resource to get rich. Republic of Congo, Kuwait and Saudi Arabia those countries heavily rely on earnings from their resource riches and all of their economic output through extractions. Looking at global merchandise trade, natural resource, especially mining product and fuel, in total merchandise trade is significantly high representing around 1/5 of total trade and 56% of primary products trade worldwide in 2011. For global oil production, it grew by 1.1 million barrel per because of the increasing requirement. Although there are some countries have very rich resources, they don't use wisely and supporting current consumption rather than investing in new product. They would be used up anything that they have at beginning.
Analysis:
Natural resource plays a very important role in economic growth, and oil is one of the most important part. In developing countries, such as many countries in Africa and West Asia, the economy relies on the rent of natural resource. Natural resources can be thought of as natural capital, the quantities and qualities of which are provided by nature. Human beings may make use of this capital, combining it with other inputs to produce goods and services. In many cases, natural resources are not necessary for economic growth, such as Japan, Singapore, and Korea. However, sometimes the “resource curse” exists. If a country makes a lot of profit relying on natural resource, there would be lack of incentive for the country to develop a sustainable growth for economy, which might lead to failure in the economic growth in long run when the natural resource is running out.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 14 | |
| Course Related Analysis (30-50) | 36 | Article talks about sustainability requiring investment of rents, which has been a repeating theme in the course. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 8 | |
| Total | 78 |
Group #7
Summary: This Forbes article titled "Property Rights Of The Poor Need To Be Recognized In Developing Countries" asserts that over a billion people in developing nations are forced to live without secure, documented and traded able rights to the homes that they own. Previously, in an attempt to aid this situation, western economies have donated billions of dollars to developing countries governments. Unfortunately, this generosity fell short as political and professional elites in these nations stand apposed to the notion of solidifying individual property rights. Due to the fact that there is an enormous financial and political benefit to control the allocation of land rights, the elites are extremely reluctant to surrender this power. As long as informal landowners remain isolated from official property ownership recognition, there is hope for a political reform. The article then addresses the question "how do the billions of informal's in poor countries create a political reality that is more powerful than the interest of the elites?" The answer is to create an open access global registry of informal rights that reflects an actual representation of property lines. With the introduction of more sophisticated technology in developing countries, it is now easier to determine individual lots and for the informal population to stake a claim to the land. The next question that the article answers is "how do these poor informal's translate maps into political power sufficient to formalize their property?" Not only will the maps help to establish individual property lines, it will also help to establish communities. Despite the informal registration, development, mining and other corporations will now not have the ability to simply turn a blind eye to the civilization and deal with the centralized government. Instead, the registries will have names, addresses and contract information available and businesses will need to conduct negotiations with the informal property owners themselves. Conclusively, the informal registries will provide a form of stability and may allow the poor to leverage their assets and improve their standard of living. This strategy may unlock frozen assets and could help create a more balanced economy under the protection of the law.
Analysis: Analysis of this article directly relates to chapter 20 of the textbook. The book depicts a common trade off that farmers in poor developing areas are faced with - whether or not to operate on a short or long term basis. Due to the fact that property rights are relatively insecure in some developing nations, farmers have a lingering fear that they may be dispossessed of their land by a higher power. In some cases, it is in the best interest of the farmers to manage larger herds than what would be considered sustainable for the future. Due to the increased number of animals, the soil quality may be jeopardized and in the long run, farmers may have to face more significant hardships. If the solution explained within the article proves to be effective, farmers would be able to balance the short term benefits with the longer terms costs more effectively. The textbook also defines two categories of property rights: individual and collective. Throughout the developing world, rural communities often share, govern and rely upon the collective natural resources of the entire community. When resources are essentially open access to the members of these communities, the incentives for individual households to act conservatively are weakened. In terms of economic growth, more solidified property rights for individuals would address not only the concern of losing their land to a higher power, but it may also provide a remedy for a resource rent dissipation. In order for developing economies to grow, resources rents must be invested into the future. Without properly governed regulations, long term prosperity becomes more and more unattainable.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 50 | |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 100 |
Group #8
https://www.worldfinance.com/wealth-management/chimimport-is-driving-economic-development-in-bulgaria-heres-how
Summary
This news article from the World Finance highlights how ‘Chimimport is driving economic development in Bulgaria’. It starts with how Bulgaria joined the EU in late 2000’s and has shown promise in ‘economic growth’ however, ‘productivity’ still remains an issue. Adding to it is ‘political uncertainty’ in with the Parliament ‘torn’ between improving relations with either Belgium or Russia. It’s economic growth forecast was up 0.5 points compared to previous year. It also houses Chimimport, ‘a holding company that operates across multiple sectors’. The executive director answered questions regarding how Chimimport will play a part in ‘Bulgarias economic development’.
1. Centered around state of stock markets in South-East Europe and Bulgaria. Due to political tensions and financial crisis in 2008, the Bulgarian stock market has just started recovering, many companies are willing to invest and operate, however further steps have to be taken. If international investors are brought to Bulgaria it will be a game changer. The trend in SE Europe is similar to ones around the world, but on a smaller scale. More investors have put money towards ‘capital markets’ for higher returns. The best performing industries in the region are ‘manufacturing, financial services, green energy investment and IT’. Also public companies face several challenges such as war in Syria, Brexit and several other world events.
2. Based on how ‘state of Bulgaria’s economy affecting the development of its private businesses’?
The reply was the the economy of Bulgaria is stable and indicators for development are positive. However, much of this depends on relations with neighbouring countries and EU.
3. ‘Which sectors of the Bulgarian economy does Chimimport support’?
Since its inception 70 years ago, today the company brings almost ’70 subsidiaries and associates’. The ‘financial services, transport, construction, manufacturing, trade and real estate sectors by investing in and developing companies in these areas’. It is ranked as one of the best performing companies in Central and SE Europe.
4. ‘What is your prognosis for Bulgaria’s economy in the coming years and what role do you see Chimimport playing’?
If there are no future shocks in world economy or EU, Bulgaria will ‘steadily grow’ same as its stock market. Chimimport and its subsidiaries will ‘contribute to development of the capital market in Bulgaria’. Becoming part of eurozone will also play a positive role in bringing about growth and development.
5. How Chimimport gives back?
The main mission of the company is to establish ‘successful companies’ in major sectors of Bulgaria also adding their CSR projects. They believe that supporting ‘human resources yields greatest returns’ and that is why they work on a lot of CSR projects and hope to open a school for aviation in future. Outside education, they supported sports by heading some prestigious organisations. They hope to bring back the ‘oldest martial arts’ back to life.
6. What are current projects?
There is innovation carried out in almost every sector where they operate and there is high public trust due to major companies coming under their portfolio. They ‘aim to offer a full range of services in every segment of our business, providing high-quality products that give Chimimport a competitive edge’.
7. Development strategy going forward?
Invest in human capital and how to create a sustainable business. Sustainability is important and is included in their long term plans with international brands ‘managing and maintaining stable and sustainable cash flows and improve quality of life in Bulgaria’.
Analysis
This article published in World Finance is based on Bulgaria’s premium company Chimimport and its executive director answering some questions how it is helping with economic development. This article touches upon many ideas discussed in this chapter and in our course. According to our textbook, Bulgaria is categorised as a developed country, meaning it has successful transition to industrial and post-industrial economies, with slow demographic growth and high level of social welfare, where focus is on economic growth to match population growth. The company Chimimport has a diverse portfolio, which includes production, process and trade in petroleum, natural gas and biofuels and also green energy investment. Since it is a developed country, it does not deal with extensive issues such as managing and exploitation of non-renewable resources such as oil as done in developing countries.
Although, the company is very diverse they need to focus to improve productivity, because if productivity is high within there are higher chances of higher economic growth. The stock market of Bulgaria has just started recovering from the financial crisis, however there is a lot of promise and investments available, if utilised Bulgaria will be on an upward trajectory of growth. However, the markets in SE Europe are based on world markets, so currently due to the outbreak of corona virus many world stock markets have been hurt and this will also have an impact on markets in SE Europe and also to some extent effect on Bulgaria’s stock market. Chimimport supports the country immensely, as it supports the financial, transport, construction, manufacturing, trade and real estate sectors and therefore is a real factor behind their economic development and growth. Since, it is one of the most liquid companies, it is essential towards development of the capital market. By investing in human capital more people will be made knowledgeable and more will have the ability to work complex tasks and be a factor in development.
Sustainability should be the primary focus of any company as it helps to improve its brand image and gives them an edge over other countries. It attracts more employees and investors as people generally tend to choose businesses which are sustainable. It helps to reduce the general waste of a company and reduces effect on environment and has an effect of making shareholders happy due to increasing profits. In the end, if you are sustainable, in the long term you will be able to achieve economies of scale and achieve higher profits due to high productivity. This will have a positive impact on Bulgaria’s economy as company is invested in almost every sector and the aim is to develop and grow economically and sustainably.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 8 | |
| Article Relevance (10) | 2 | A company profile with little direct relation to anything in the course. |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 10 | Our course focuses on the efficient use of natural resources and the incentive systems that support or hinder achieving this efficiency. You have not spoken to this issue. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 9 | |
| Total | 49 |