Thursday, September 1, 2005

The curse of natural resources

Imagine a country with tin, lots and lots of tin. Imagine it has tons of arable land where it grows cash crops such as oil palm and rubber. Then imagine it pumps out so much crude oil (light and sweet too) from its waters and lands that it pumps more than it uses. Add to that forests chock full of good quality hard wood. Then imagine it also has gold, bauxite, titanium and other strategic resources. Then why does the country have people living below the poverty line?

Now imagine this country randomly took 10% of its population and set them adrift on an island (48 kilometres wide at its longest point). This island has no resources at all.

This is the Malaysian conundrum for me. How come we have so much in the way of natural resources yet we are not ten times or a hundred times richer than Singapore?

Was reading this post which offers a great summary of a book. I read the authors other book (the lexus and the olive tree) which was worth reading.

Friedman’s theory is that government and the oligarchy which owns it will always find some way to take care of themselves. If there are easily exploitable natural resources, there is no need for the rulers to involve their subjects in the project. Not needing help from their subjects, the rulers don’t have to give them anything in return. So they don’t. No share in the loot. No democracy. No effective government. Nothing.

Will probably go to MPH this weekend to look for the book.

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