Thursday, August 7, 2008

Natural Resource = Economic Development?

Many would argue that the situation is far from it. Natural Resources = Economic Exploitation by foreign multinationals, political backwardness and corruption, human rights violations, forced removal of indigenous people from their lands and so on. Given the relevancy of this argument to Mongolia, I did some research. One of the interesting examples of a success story I have come across is Botswana. Since its independence in 1966, Botswana has had a multiparty system headed by a president, independent judiciary, strict anti-corruption measures and has been one of the more successful African economies to pull itself out of the poverty line to a middle-income nation with GDP per capita of $16,450 in 2007. It has had one of the fastest growth rates in the world for a time thanks to its diamond mining and tourism.

Of course, the country is not without its problems. After Swaziland, it has the second highest HIV infection rate in the world, with the average life expectancy at birth reduced to 34 years by 2005, which is simply insane. The economic growth rate has slowed down due to the HIV epidemic as well as, my guess, a lack of diversification in the economy, to which the government has started paying attention. There are also articles which point out the increasing wealth gap between the rich and poor.

A country from whom our politicians could learn a pointer or two, far as their ability to funnel the proceeds of diamond mining to economic development. There are certain surface similarities between Mongolian and Botswana, we're both landlocked, rich in natural resources and somewhat economically dependent on our neighbours, Botswana on S.Africa and Mongolia on Russia & China. We both have multi-party systems.

There's a lot of buzz in Mongolia about Singapore's rapid economic growth, but what they must realize is: 1. Singapore is a key shipping port city 2. It is small, has no natural resources and relies heavily on their service industry and foreign talents. 3. It is also a SEAsian airport hub, which means tourists on their way to other SouthEast Asian countries tend to spend a day or two in Singapore, boosting their income from tourism significantly. Mongolia? Unless you are travelling from Moscow to Beijing and transitting in Mongolia, most people stopping by Mongolia intended to visit Mongolia. 4. It is more or less a one-party system with the government keeping strict control over everything, which they would have to given their reliance on service efficiency and political stability.
On the other hand, Singapore has effective anti-corruption measures, including high salaries for civil servants and ministers. Now that is something Mongolia could learn from. A cynic might argue that the government can never pay the ministers enough, seeing the exorbitant amount of money some make through various means.

For more on Botswana, read here and here. It would be interesting to hear from someone who has actually been to Botswana and seen firsthand the situation there.