Wednesday, June 16, 2010

Afghanistan and the Resource Curse

When discussing economic development, the folks at National Public Radio have an interesting story to use with students in a discussion of "the resource curse." Most often we use that concept to refer to economies that are blessed with abundant natural resources but fail to diversify. Those economies frequently see the natural resources as a way to improve the lives of the people, but it only works if other resources are developed, as well.

You can also use this in discussions about the production function. One can put the equation (Y = A f (L, K, H, N)) on the board and begin by asking what the story means for Afghanistan. You can then extend by asking about the other factors and how they can be provided. And wrap up by asking about what happens if the only resource that is developed is N?

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