Case Studies: How History, Resources, Debt and Conflict Shape Economies

Hook: rich in resources, different results

Norway, Botswana and the Democratic Republic of the Congo all have valuable natural resources. But their people's quality of life is very different. Why? In this lesson you will study case studies to find out how history, choices and events shape a country's economy, and how the economy shapes people's lives.

Case study 1: Norway, saving resource wealth

Oil was discovered off Norway's coast in 1969. The government decided that oil wealth belongs to all Norwegians, now and in the future. Much of the income is placed in a sovereign wealth fund, now one of the largest in the world. The government also spends heavily on health care, education and social programs. Norway is consistently near the top of the HDI (UNDP).

Connection to quality of life: careful management + social spending → high life expectancy, education and income for most people.

Case study 2: Botswana, diamonds and stable government

When Botswana became independent from Britain in 1966, it was one of the poorest countries in the world, with very few paved roads. Diamonds were discovered soon after. Botswana's governments have been elected and stable, and diamond income was invested in roads, schools and health care. Botswana grew into an upper-middle-income country (World Bank).

Challenges: the economy depends heavily on diamonds, income inequality is high, and Botswana was hit hard by HIV/AIDS, though treatment programs have greatly improved survival.

Case study 3: Democratic Republic of the Congo (DRC), resource wealth and a painful history

The DRC has huge mineral wealth. It produces about 70% of the world's mined cobalt (U.S. Geological Survey), a metal used in rechargeable batteries. Yet many Congolese people live in poverty.

• Colonial history: from 1885 to 1908 the territory was ruled as the personal colony of King Leopold II of Belgium, with forced labour and great loss of life; then Belgium ruled it until independence in 1960. Little was invested in education or local industry.
• Conflict: decades of armed conflict, especially in the east, have displaced millions of people and made it hard to build schools, roads and clinics.
• Foreign ownership and weak governance: many mines are owned or financed by foreign companies, and corruption means less of the profit reaches citizens. Some cobalt is dug by hand in unsafe conditions, sometimes involving children.

Connection to quality of life: wealth leaves the country or is lost to conflict, so health, education and incomes stay low.

Case study 4: Bangladesh, factories, growth and safety

Bangladesh's garment industry makes clothing sold around the world, including in Canada, and clothing earns most of its export income. The industry employs millions of workers, many of them women, and has helped incomes and life expectancy rise.

But in 2013 the Rana Plaza factory building collapsed, killing more than 1 100 workers. Afterwards, clothing brands, unions and the government signed agreements to inspect and improve factory safety.

Connection to quality of life: jobs raised incomes, but low wages and unsafe conditions show that growth alone is not enough.

Debt and conflict

• Debt: many lower-income countries borrowed money in the 1970s and 1980s. When interest rates rose, repayments took money away from schools and hospitals. In 1996 the IMF and World Bank started the Heavily Indebted Poor Countries (HIPC) Initiative, which reduced debts for more than 30 countries so they could spend more on services.
• Conflict: war destroys infrastructure, stops trade and forces people to flee. For example, the war in Syria, which began in 2011, forced millions of people to become refugees (UNHCR). Canada welcomed many Syrian refugees. Refugees often lose homes, jobs and schooling, so quality of life falls sharply.