Resource rich countries are often the considered lucky by those who don’t have much of natural resources. This is also one of the biggest demotivating factors for the general public in countries that lack natural resources. In this blog post I will show some historical evidences of how some countries overcame that limitation through science.

The first major revolution that laid foundation for human health and prosperity was Agricultural Revolution. For the crops to grow and the soils to remain fecund fertilizer was a major requirement. The oldest and best known fertilizer was cattle manure. The cattle manure was dried in the sun and then used as fertilizer. The reason for drying the manure in sun was to kill the pathogens. This was going on for centuries. This was not a sure and safe aspect of agriculture. Just like human beings cattle were affected by epidemic diseases. This reduced the amount of cattle manure to be produced. This was also one of the causes for famines in the earlier days of agriculture revolution.

Few centuries later people discovered Sodium Nitrate (saltpeter) as another natural fertilizer. Countries such as Peru and Chile became a leader in saltpeter export which created a boom in their economy. Countries that didn’t have saltpeter deposits felt unlucky. In 1909 a German chemist named Fritz Haber synthesized Ammonia in a lab and with the help of Carl Bosch the process of producing Ammonia was industrialized by BASF a German chemical company. Even today this method of industrial production of Ammonia is widely used in most of the countries. Once the cost of production of synthetic ammonia became cheaper than the cost of extraction of saltpeter the dominance that Chile and Peru had on saltpeter export was lost. Today the major portion of Ammonia used as fertilizer is synthetic compare to the natural ones.

There are many such examples. Few of the notable materials which are being produced synthetically are medicines, paper, cloth materials, fibres and chemical dyes.

The early scientific revolution focused on producing synthetic version of natural materials. The new technology revolution is taking some products to a new level called virtual. The best examples are books. In early days books were written in paper made of natural materials like leaves, few centuries later synthetic paper was invented and used by printing press to print large scale books, now these books are sold in virtual editions for the users to read. Similarly banks substituted money with plastic cards (in some areas) and now with virtual currencies and virtual mode of money transfer, the banking model itself has changed considerably.

The above examples might give motivation to countries that lack natural resources but there are few countries in the world which have natural resources that don’t have a synthetic alternative but are still unable to capitalize on their natural resources. There are two major reasons for this problem.

  • Lack of technology to extract and process the resources
  • Economic model of the country
  • Government restrictions

Australia exports large amount of raw Iron ore to industrialized countries like China and Germany. If Australia exports processed Iron ore, the cost of the export goes up and it loses its competitive edge in Iron ore export. One of the reasons is high labour price in processing. The processing can be done cheaply in the exported countries. This is called as “Failure of Factor Endowments” in economics. The economic model, currency valuation and available labour force play more important role in export than just the plain raw material. Oil exporting countries also face a similar problem and they export most of their oil as crude oil.

There are some countries in the world which has natural resources that cannot be used or exported due to political conditions like war, government restrictions, unable to import technologies due to international sanctions etc.

The conclusion is, countries that lack natural resources should focus more on science and technology to overcome it. Countries that have natural resources should use science and technology to improve the extraction, processing and production of material from natural resources. However factors other than Science and Technology are also important in capitalizing the natural resources and their synthetic alternatives.

Credits and References

  • Demystifying the Chinese Economy – Justin Yifu Lin
  • Economics The User’s Guide – Ha-Joon Chang
  • The origins of the modern world – Robert B. Marks