Economic Abundance and The Dutch Disease model

I have been slow with the postings lately because my workload is starting to pile up :(
Anyway, I am supposed to do a group presentation on "growth" for my economic class. I never like to do group projects in university because students tend to not do proper research and stick to very easy topics. So I'm quite happy with this group because they seem a more hardworking bunch. Later, I went around the web search for ideas and look what I found.

Did you know that countries with abundant resources actually grow slower than countries that are resource scarce ? I got this idea from an Economic paper "Natural Resource Abundance and Economic Growth" by Jeffrey Sashs and Andrew Warner for the NBER.

I'll quote them here :

"In the past 30 years, the world's star performers have been resource poor Newly-Industrialized Economies (Singapore, Taiwan, South Korea and Hong Kong). While oil-rich countries like Mexico, Nigeria and Venezuela went bankrupt"

There are a whole bunch of reasons and analysis to why this happens. One of them is the Dutch disease economic concept. Something on the line of resource abundance will cause countries to reduced their manufacturing sector and hence slow growth. I'm still reading up on that so I'll only post more information on the Dutch disease when I have them.

Growth rate

I am taking a course on economic growth. Surprisingly, I see many students questioning why developed countries are so concerned with economic growth since their standard of living is already high. Like the US, they probably have the highest purchasing power in the world, so why worry so much about economic growth, slows down and not meeting growth rate targets.

The rebuttal I thought was rather simple. Humans have 'unlimited' wants. So of course, humans are never satisfied with where they are. So you could expect people to want to be able to purchase more stuff than they already could. This simple concept which happens to be the basic foundation of economic theory is the reason why economic growth is so important to every countries.

Of course there are other reasons too like political, employment or even poverty. The assumption of developed countries having no poverty is totally wrong. Just look at the poverty rate of the US. (Photo courtesy of The Economist. Should check them out. I'm a loyal subscriber)