What’s in it for me? Understand what makes the world’s greatest economies tick

Farming choices and shipping routes can dramatically influence a nation’s trade and economy.
Have you ever been grocery shopping in the United States and wondered why the asparagus comes all the way from Peru? It actually goes back to the 1980s when the two countries made a trade agreement. As a result, the United States gets tens of millions of dollars worth of asparagus every year and Peruvian farmers have an incentive that keeps them from making cocaine.
Decisions like these can play a big part in determining a country’s economic stability.
Take Egypt, for example. Centuries ago, the country grew its own wheat. But doing so today would take up a sixth of Egypt’s water supply, making it an economically unwise decision. Instead, the country, with a population of around 80 million, is the world’s second biggest importer of wheat.
On the other hand, crops like herbs and vegetables take far less water to grow. So Middle Eastern countries like Egypt find stability by growing these for export while importing water-depleting foods like grains and meats.
For some countries, instability can prevent them from having a lucrative export business.
Many African nations could be reaping the benefits of the booming coffee industry. But civil wars and dangerous military regimes have closed off shipping routes, making it increasingly difficult to get goods out of the countries.
Just to get across the border from Uganda to the shipping ports of Kenya can take 24 hours. Therefore, the price of keeping things refrigerated and getting safely through dangerous border crossings can be too costly for many businesses to earn a profit.


Natural resources can end up being more trouble than they’re worth.
You probably wouldn’t think that finding oil or a diamond mine in your backyard would be a bad thing. But for many countries, this kind of discovery has brought more economic chaos than prosperity.
Oil can bring economic stability, but only if you know how to manage it properly.
The oil-rich nation of Saudi Arabia might appear successful with a per capita income of $15,000. But it hasn’t been using that money to generate jobs. A closer look reveals an unemployment rate of 25 percent, a figure that is affecting many of the country’s young men.
And since half of Saudi Arabia’s male population is under the age of 22, the country is dealing with a large group of frustrated people. So it isn’t surprising that the nation’s society has become uneasy and volatile.
Let’s compare to Norway: the country has managed its oil resources well, putting any excess revenue into a national oil stabilization fund. The nation of Chile also uses a similar system for money earned from its copper resources. Stabilization funds like these allow for responsible spending and ensure that one natural resource isn’t relied upon as the only source of revenue.
African nations also reveal how a natural resource such as diamonds or copper can result in prosperity or unending turmoil.
The African nation of Sierra Leone is one of the world’s top diamond-producing nations. But the abundance of their natural resource led to illicit trading that helped prolong a civil war for eleven years.
In an effort to get rich quick, the African nation of Zambia pushed out foreign investors interested in their copper mines. But their inexperience and mismanagement of the resource has led to a highly unstable government.
The diamond-rich African nation of Botswana made a better decision by partnering with the foreign company De Beers. They established a long-term revenue sharing agreement, with De Beers handling the difficult task of managing the diamond mine. This allowed Botswana to create a national fund and achieve economic stability through a stable source of revenue.