The Myth of Natural Resources

the AZEL PERSPECTIVE Commentary on Cuba's Future, U.S. Foreign Policy & Individual Freedoms - Issue 341 B

José Azel's latest books "On Freedom" and "Sobre La Libertad" are now available on Amazon.  The Myth of Natural Resources Share Tweet Forward

When I studied international economics in the 1960s, one of the explanations offered for the wealth of a nation was its endowment of natural resources. Then, countries were perceived to be rich, or poor based on their natural resources. Nations with abundant natural resources were deemed to be rich, or potentially rich; nations poor in resources were destined to be poor. Today, we understand that other factors are at play. For example, in their book, “Why Nations Fail,” Daron Acemoglu, and James A. Robinson argue that a nation’s economic problems are caused by a lack of inclusive political rights. Poor nations are poor because they are ruled by narrow elites that organize society for their own benefit. Nations are rich because they have succeeded in creating inclusive political and economic institutions that allow participation by all.  Similarly, economist Gregory Clark in his book “A Farewell to Alms” offers a cultural explanation as to why some countries enjoy unprecedented wealth while others languish behind. After all, the key technological, organizational, and political innovations are well known, and all societies can employ them. So, why isn’t the whole world economically developed? Dr. Clark reasons that some societies “cannot instantly adopt the institutions and technologies of the more advance economies, because they have not yet culturally adapted to the demands of productive capitalism.”  These theses offer new economic insights, and yet, a nation’s endowment of natural resources is still viewed by many as deterministic of its wealth. The evidence shows differently. Below is a list of eight countries with practically no natural resources that are among the world largest exporters, and most successful economies. (Data sourced from the World Fact Book of the Central Intelligence Agency; GDP rankings are per capita.)  Japan, a volcanic island country with a large population, ranks # 4 in the world as an exporter, and # 42 in GDP. South Korea went from abject poverty to being a leading industrial powerhouse. It ranks # 5 in exports, and # 46 in GDP. Italy must import most raw materials needed for manufacturing. Yet, it ranks # 9 in exports, and # 50 in GDP. Hong Kong has little arable land and imports most of its food and raw materials. It ranks # 8 in exports, and # 18 in GDP. Singapore shows how a small island can become one of the world’s most prosperous economies. It ranks # 13 in exports, and # 7 in GDP. Belgium is heavily reliant on foreign raw materials. It ranks # 20 in exports, and # 35 in GDP. Switzerland proves that being landlocked is not an impediment to becoming a leading exporter. It ranks # 17 in exports, and # 16 in GDP. Taiwan was left devoid of natural resources after Japanese colonial rule. Today, it ranks # 15 in exports, and # 28 in GDP.  The myth of natural resources was first exposed by Julian Simon (1932-1998) by demonstrating that the human mind is the ultimate resource. It is the human mind that creates what we call resources. Or, as Donald Boudreaux, of the American Institute for Economic Research, puts it “There are no natural resources.” Yes, nature created materials such as oil, but it was the creativity of the human mind that transformed oil into a resource. Nature creates raw materials, not resources. It is human ingenuity and effort that transforms raw materials into resources.  Raw materials become resources only when human creativity discovers how to employ those raw materials to satisfy our needs. Oil has existed for millennia, but it was useless, say to the American Indian. Oil did not become a resource until we figured out how to extract it, and how to use it. Land was not a resource until we learned to cultivate it for agricultural purposes.  Environmentalists ignore one implication of Professor’s Simon’s work; economic growth does not promote resource depletion. Ultimately, economic growth prevents resource depletion by allowing more creative minds to survive, to interact, and to innovate. Prosperity allows for a greater quantity of the ultimate resource: human minds.  Please let us know if you  this article. We welcome your feedback. Abrazos,  Lily & José  (click on the name to email Lily or Jose) José Azel, Ph.D. José Azel left Cuba in 1961 as a 13 year-old political exile in what has been dubbed Operation Pedro Pan - the largest unaccompanied child refugee movement in the history of the Western Hemisphere.   He is currently dedicated to the in-depth analyses of Cuba's economic, social and political state, with a keen interest in post-Castro-Cuba strategies. Dr. Azel was a Senior Scholar at the Institute for Cuban and Cuban-American Studies (ICCAS) at the University of Miami, Jose Azel has published extensively on Cuba related topics. In 2012 and 2015, Dr. Azel testified in the U.S. Congress on U.S.-Cuba Policy, and U.S. National Security.  He is a frequent speaker and commentator on these and related topics on local, national and international media.  He holds undergraduate and masters degrees in business administration and a Ph.D. in International Affairs from the University of Miami. José along with his wife Lily are avid skiers and adventure travelers.  In recent years they have climbed Grand Teton in Wyoming, trekked Mt. Kilimanjaro in Tanzania and Machu Pichu in Peru.  They have also hiked in Tibet and in the Himalayas to Mt. Everest Base Camp. They cycled St. James Way (El Camino de Santiago de Compostela) and cycled alongside the Danube from Germany to Hungary and throughout southern France.  They have scuba dived in the Bay Islands off the Honduran coast and in the Galapagos Islands. Most recently, they rafted for 17 days 220 miles in the Grand Canyon.  Their adventurers are normally dedicated to raise funds for causes that are dear to them.  Watch Joe & Lily summit Kilimanjaro. Books by Dr. José Azel José Azel’s writings are touched with the wisdom of a master, and the charm of an excellent communicator. Anyone who wishes to understand why countries do, or do not, progress will find in this book the best explanations. And, from these readings emerge numerous inferences: How and why do the good intentions of leftist collectivism lead countries to hell? Why is liberty not a sub product of prosperity, but rather one of its causes? If it was in my power, this work would be required reading for all college and university students, and I would also recommend its reading to all politicians, journalists, and policymakers. With his writings Azel accomplishes what was achieved in France by Frédéric Bastiat, and in the United States by Henry Hazlitt: Azel brings together common sense with intelligent observation, and academic substance. Stupendous, Carlos Alberto Montaner                                                                    BUY NOW Los escritos de José Azel están tocados por la sabiduría de un maestro y la amenidad de un excelente comunicador. Cualquiera que desee entender por qué los países progresan, o no, encontrará en este libro las mejores explicaciones. De estas lecturas surgen numerosas inferencias: ¿Cómo y por qué las buenas intenciones del colectivismo de izquierda llevan a los países al infierno? ¿Por qué la libertad no es un subproducto de la prosperidad, sino una de sus causas? Si estuviera en mis manos, esta obra sería de obligada lectura de todos los estudiantes universitarios, pero además, le recomendaría su lectura a todos los políticos, periodistas y policy makers. Con sus escritos Azel logra lo que Frédéric Bastiat consiguiera en Francia y Henry Hazlitt en Estados Unidos: aunar el sentido común, la observación inteligente y la enjundia académica. Estupendo. Carlos Alberto Montaner                                                            Compre Aqui "Liberty for beginners is much more than what the title promises. It is eighty themes touched with the wisdom of a master, and the charm of an excellent communicator. Anyone that wishes to understand why countries do, or do not progress, will find in this book the best explanations. Stupendous" Carlos Alberto Montaner Buy Now "Libertad para novatos es mucho más de lo que promete el título. Son ochenta temas tocados con la sabiduría de un maestro y la amenidad de un excelente comunicador. Cualquier adulto que desee saber por qué progresan o se estancan los pueblos aquí encontrará las mejores explicaciones. Estupendo." Carlos Alberto Montaner Compre Aqui In Reflections on Freedom, José Azel brings together a collection of his columns published in prestigious newspapers.  Each article reveals his heartfelt and personal awareness of the importance of freedom in our lives.  They are his reflections after nearly sixty years of living and learning as a Cuban outside Cuba. In what has become his stylistic trademark, Professor Azel brilliantly introduces complex topics in brief journalistic articles. Buy Now En Reflexiones sobre la libertad José Azel reúne una colección de sus columnas publicadas en prestigiosos periódicos. Cada artículo revela su percepción sincera y personal de la importancia de la libertad en nuestras vidas. Son sus reflexiones después de casi sesenta años viviendo y aprendiendo como cubano fuera de Cuba.  En lo que ha resultado ser característica distintiva de sus artículos, el Profesor Azel introduce con brillantez complejos temas en  breves artículos de carácter periodístico. Compre Aqui Mañana in Cuba is a comprehensive analysis of contemporary Cuba with an incisive perspective of the Cuban frame of mind and its relevancy for Cuba's future. Buy now Pedazos y Vacíos is a collection of poems written in by Dr. Azel in his youth. Poems are in Spanish. Buy now

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