Im learning about economics atm... What of a country with no intensive resource?

[LuckySevens]

Ok, you can be land-intensive, or capital intensive.

Obviously Australia is land-intensive, while Japan is capital intensive.


What about small countries with neither capital nor land? How do they fit into economics?

[tygerbryght]

Originally Posted by LuckySevens

Ok, you can be land-intensive, or capital intensive.

Obviously Australia is land-intensive, while Japan is capital intensive.


What about small countries with neither capital nor land? How do they fit into economics?

Uhhhh, are you just reading an econ text for fun? Or are you taking a class this semester, and started reading ahead in the textbook??

I'll point you in the right direction this time, but unless you give some background on why you're asking some fairly basic macroeconomics questions, I, for one, will ignore any future questions from you on this topic, charter member or not. Not to be mean, or anything, but this comes awfully close to doing your homework (if that's what this is). You don't have to give your life history, you know; just a bit of detail.
















Services are the most common answer. :wally

Try looking up (tiny) Luxembourg or (minuscule) Liechtenstein in the CIA World Factbook. And then there's Monaco, which the Factbook says is "about three times the size of The Mall in Washington, DC." I don't doubt that Monaco was the model that Native American nations who've been able to open casinos had in mind. Living standards in any of these three tiny European nations are enough to make many US citizens green with envy.

Or you could go to the factbook area section. Look for small countries (total area is the first line, land area is the second), and then open their files. Economic information is near the bottom of each individual page. You'll see that the vast majority which haven't managed to establish either a manufacturing (e.g., Ireland or Taiwan) or a service (e.g., some other small European states) economy subsist on foreign aid from the "first world" countries. OTOH, many of them are dependencies of some more prosperous nation; of these, not all are economically backward through their own lack of ambition (but I'll stop there; this is GQ, after all).

[hawthorne]

You've not quite go the right end of the stick here, plus you've missed the magic word "relatively".

A country may be abundant in a factor of production (labour, human capital, land, natural resources, capital), but really, these things are scarce in all countries. There are lots of ways to produce many goods with a given technology and a country that has lots of capital will produce most goods if it produces them using capital intensive methods of production. So in the US it makes sense to clean with vacuum cleaners and in India it makes sense to clean with cloths.

In a world without international trade countries would also more heavily consume those goods that were most easily produced with their factor endowment. International trade gives a country the opportunity to partially escape this constraint.

Factor abundance is just one of the reasons a country may have a comparative advantage (others include tastes, technology and scale economies), but other things being equal you would expect a country to specialise in the production of those goods that are most easily produced by methods intensive in their abundant factor (and export those goods). But it's important to remember that what counts here is relative factor abundance. If country A has three times as much capital as labour and country B has twice as much capital as labour, then country B is relatively labour abundant and you would expect them to have a comparative advantage in the production of labour intensive goods.

I think what you're really asking is whether a country can be left without a good that it can sell on export markets because it's not "intensive" (read "abundant") in any particular factor. But even if a country is not blessed with a great endowment of a particular factor, or even if it is worse than every other country at producing anything, it will still be relatively good at producing something.

[Sam Stone]

Consider that Hong Kong, which has virtually no natural resources, has one of the strongest economies in the world, and it may help you gain some insight.

By the way, if you want to learn some economics in a very entertaining fashion, I highly recommend The Commanding Heights. You can watch it online, and it's one of the best documentaries I've ever seen. It's also a great use of the web, because hyperlinks pop up as topics are discussed, allowing you to click them for further background information. Everyone should watch this, and in fact I understand it is recommended in a number of economics courses.

[fortytwo]

Another suggestion would be Singapore. One of the most successful modern day economies. Mainly based on trading and tourism.
http://www.fco.gov.uk/servlet/Front?...=1019041596993

Singapore is a model of economic development. From independence in 1965, it achieved almost uninterrupted growth of nearly 8% per annum for over three decades. By the 1990s, it had GDP per capita levels similar to many OECD countries and it was acknowledged widely as one of Asia’s “tigers”. The contrast between Singapore and some of its regional neighbours is all the more striking given its size and lack of natural resources.

[js_africanus]

Originally Posted by hawthorne

I think what you're really asking is whether a country can be left without a good that it can sell on export markets because it's not "intensive" (read "abundant") in any particular factor. But even if a country is not blessed with a great endowment of a particular factor, or even if it is worse than every other country at producing anything, it will still be relatively good at producing something.

I may have missed it in your post, so sorry if you said this: The idea has to do with what is called comparative advantage. Basically, while my country may only to produce two sheep and four-hundred paper clips in a year, I can still trade with the USA if my relative cost of producing paper clips is cheaper than America's relative cost of producing paper clips. This is in spite of the fact that the U.S. can outproduce me on sheep and paper clips by an astronomical amount.

It has become popular, IIRC, to diss the notion of comparative advantage. This essay on comparative advantage is pretty interesting in that light.