Intelligent Nation 2015

As another example, Singapore has a project known as Intelligent Nation 2015 that aims to “fuel creativity and innovation among businesses and individuals” [3] through improved information technology, including making the entire country Wi-Fi enabled. An illustration of the importance of social infrastructure comes from the vastly different economic performance of artificially divided economies. At the time that North Korea and South Korea were divided, the two countries were in very similar economic circumstances. Obviously, they did not differ markedly in terms of culture or language. Yet South Korea went on to be one of the big economic success stories of the past few decades, while North Korea is now one of the poorest countries in the world. The experience of East Germany and West Germany is similar: East Germany stagnated under communism, while West Germany prospered. Natural Resources There is less to say about what determines the amount of natural resources in the production function. The natural resources available to a country are largely accidents of geography. The United States is fortunate to have high-quality agricultural land, as well as valuable deposits of oil, coal, natural gas, and other minerals. South Africa has deposits of gold and diamonds. Saudi Arabia, Iraq, Kuwait, the United Arab Emirates, and other Middle Eastern countries have large reserves of oil. The United Kingdom and Norway have access to oil and natural gas from the North Sea. For every country, we can list its valuable natural resources. Natural resources are divided into those that are renewable and those that are nonrenewable. A renewable resource is a resource that regenerates over time. A nonrenewable (exhaustible) resource is one that does not regenerate over time. Forests are an example of a renewable resource: with proper management, forests can be maintained over time by judicious logging and replanting. Solar and wind energy are renewable resources. Coal, oil, and minerals are nonrenewable; diamonds taken from the ground can never be replaced. It is difficult to measure the natural resources that are available to an economy. The availability of oil and mineral reserves is dependent on the technologies for extraction. These technologies have developed rapidly over time. The economic value of these resources, meanwhile, depends on their price in the marketplace. If the price of oil decreases, the value of untapped oil fields decreases as well. Economists and others sometimes use real gross domestic product (real GDP) as an indicator of economic welfare. One problem with real GDP as an indicator of economic welfare is that it fails to take into account declines in the stock of natural resources. [4] If the stock of natural resources is viewed—as it should be—as part of the wealth of a country, then depreciation of that stock should be viewed as a loss in income. (The same argument, incidentally, applies to depreciation of a country’s physical capital stock. Real GDP also does not take this into account.