Thomas L. Friedman notes that “Taiwan is a barren rock in a typhoon-laden sea with no natural resources to live off of — it even has to import sand and gravel from China for construction” yet it has one of the most successful economies in the world. Why is this? The answer includes:

• Countries which are not rich in natural resources invest a lot of money in human capital – the education of the children because “when you don’t have resources, you become resourceful”
• This is why resource-barren countries such as Singapore, Finland, Korea and Japan score high in aptitude tests.
• On the flip side those from countries that are laden with precious commodities such as Saudi Arabia, Kuwait and Algeria among others score low.
• Canada, Australia and Norway are exceptions, scoring high despite an abundance of natural resources.

To read about how this relates to the Dutch Disease (and indeed, what the Dutch Disease is), how Moses fits into this, the way to explain the exceptions, and what NASDAQ can tell us about this phenomenon click here.

Source: The New York Times