This document outlines steps for a group activity investigating factors that contribute to a nation's long-term economic growth. It discusses the "natural resources paradox" where some countries with few resources have high growth and vice versa. Students are asked to consider why nations like Japan and Singapore can be wealthy with few resources while places like Nigeria and Russia have many resources but remain poor. The activity examines lists of countries by their levels of economic freedom and discusses how competitive markets, low inflation, political stability, and free trade can encourage long-term growth.
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5. STEP TWO:
Answer this question with
your group:
How can some nations with few natural
resources, such as Japan and Singapore, be
relatively wealthy?
6. STEP TWO:
Answer this question with
your group:
How can other nations with vast amounts of
natural resources, such as Nigeria and Russia,
be relatively poor?
7. !
The “natural resources paradox” is the
strange phenomenon that occurs when a
country has few resources and great economic
growth, and vice versa. Natural resources have
certainly contributed to the economic success
of some nations, including the United States,
South Africa, and the oil-rich nations of the
Middle East. But there are many examples of
nations such as Japan and Singapore that have
achieved great economic success with relatively
few natural resources. And some nations with
vast stocks of natural resources, such as Nigeria
and Russia, remain relatively poor.
8. STEP THREE:
Read about “factors
contributing to long-term
economic growth” on the
back of your handout.
9. STEP FOUR:
Examine a list of
countries with the
highest levels of
economic freedom.
10. COUNTRIES WITH THE MOST
ECONOMIC FREEDOM:
1. Hong Kong
2. Singapore
3. New Zealand
4. Estonia, Luxembourg,
Netherlands, United States
5. Australia, Chile, United Kingdom
6. Denmark, Switzerland, Cananda
7. Finland
!
11. STEP FOUR:
Examine a list of
countries with the
lowest levels of
economic freedom.
12. COUNTRIES WITH THE LEAST
ECONOMIC FREEDOM:
1. North Korea, Cuba
2. Zimbabwe, Iraq
3. Myanmar, Syria
4. Zimbabwe, Libya, Venezuela
5. Belarus, Uzbekistan
6. Turkmenistan
7. Iran, Laos
8. Democratic Republic of the Congo
!
13. WHAT CAUSES ECONOMIC FREEDOM?
• Competitive markets generate innovation and lower prices.
• A Low level of inflation enhances incentives by maintaining the
value of financial assets, which encourages saving and investment.
• Political stability means a change in government won’t cause
confiscation of its citizens’ property. There is an incentive for long-term
investment.
• Free trade. The high-income nations of the world are heavily
involved in world trade. Trading leads nations to specialize in the
production and export of the goods and services they can
produce at the lowest opportunity cost. Trading those exports for
other products that can be produced at a lower cost in other
nations reduces the total cost of production and allows higher
levels of consumption worldwide. Free trade also results in
increased competition, which keeps prices lower for consumers
and helps insure that businesses are responsive to consumer
demand.
