Botswana vs. Nigeria: Divergent 20th Century Economic Growth

Analyzing Divergent Economic Paths

Imagine two countries, Country X and Country Y, both discover significant diamond deposits of similar size and quality. After 20 years, Country X has experienced robust economic growth, improved public services, and a rising standard of living. In contrast, Country Y has seen little overall economic improvement, with wealth concentrated among a small elite and persistent social instability. Based on principles of economic development, which of the following is the most likely explanation for their different outcomes?

The presence of abundant natural resources is the most reliable predictor of a nation's long-term economic prosperity and development.

Explaining Divergent Economic Paths

Explaining Divergent Economic Paths

Institutional Quality and Economic Growth

Match each institutional characteristic with its most likely long-term economic consequence for a nation.

A developing nation has recently discovered vast reserves of a valuable natural resource. The government's stated goal is to use this discovery to foster long-term, sustainable economic prosperity for its entire population. Based on the factors that determine economic success, which of the following policy initiatives should the government prioritize to most effectively achieve this goal?

Institutional Factors in Economic Stagnation

An economic advisor, speaking about a developing country with vast oil reserves but high poverty, states: "The most direct path to prosperity for this nation is to secure a large international loan to immediately build advanced oil extraction and refining infrastructure. This will maximize revenue from their natural resources, which will then fund development." Which of the following critiques of the advisor's plan is most sound, based on the principles of long-term economic development?