Influence of Surface Features in The Creation of Differences Among Nations

Surface features refer generally to the geographical and physical aspects of different countries which are bound to create differences among nations. Each country may not have the same features and the fact that it forms part of different continents, a country can have a surface difference and its own particularities.

Just imagine the following image. A camel is carrying a traveller across the very hot desert of the Sahara and the man has his face covered with cloth in order to avoid the problem of being burnt by the scorching sun. There are some sand dunes that are moving as the camel makes its way through the desert. The earth is full of cracks and the traveller might be looking for an oasis. Compare it with the following image. It is very cold and the blizzards have been striking the igloos constructed by the little community of people in the Lapland. More animals are being hunted in order to get the fur to protect the body and logs of wood are purchased in the nearby market in order to have heat inside the igloos. The temperature is minus 11 degrees Celsius.

These two contrasting images show how surface differences exist and contrast among nations and this leads to differences in many areas. Earlier, the comparative advantage theory was discussed paying attention to production factors that varied from one country to the next. Surface features concern the land and topography respective for any country. Tropical nations are bound by warm weather, rainy conditions but, more importantly, fertile soil that becomes the ideal condition for cultivating cash crops like sugar, tea, coffee or cassava. This develops a business condition that tropical nations abide by and find it favourable for trade.

Rich countries, though technologically advanced, do consider the genuine importance of surface features. France is an agricultural nation based on the land available for the cultivation of cash crops but also the large scale cultivation of grapes used to make wine. The United States has large scale cultivation of wheat for its local consumption. It has also vast plains like Texas, Montana or Dakota for cattle rearing and agriculture.

Emerging economies will rely on surface features. The discovery of oil a few centuries ago claims this statement where Arabian nations were essentially desert-based land with sand had no business opportunity. Drilling desert land for oil prospect developed the major oil industry in most Arabian nations that have become quite prosperous at some time in history like Libya, Saudi Arabia, Kuwait, etc.

In the modern world, more trade opportunities are sought through other forms of surface feature exploitation. The blue economy does not concern the land but more ideally the sea whereby apart from the exploitation of fish for consumption, new opportunities might be developed like the exploitation of nodules, the development of cooling systems in coastal cities, the possibility of exploiting marine oil.

To this extent, it is worth mentioning the need to have sustainable development of resources from the surface features and see that there do not adversely affect the natural environment thereby causing externalities that become insurmountable. This is usually the backyard of emerging nations that have to face the problems of smog, trash and environmental hazards.

Economic development

The chart below provides an explanation of the economic development which results from the physical features of a country. Denmark, for example, has a flat land which is quite similar to most countries in Northern Europe, has a potential for economic development because a flat land provides opportunities for the development of agriculture and related industries. Saudi Arabia is a country covered with deserts and has to rely exclusively on its only natural resource, petrol. This is not the case for Gabon which is found in the region of Equatorial forests and which can benefit from such a resource quite easily. In the African mainland, countries dispose of natural resources but are hampered in their economic development because of a lack of specialist knowledge and technical know-how to operate in such fields.

Economic differences

The above chart provides an explanation of the economic development which results from the physical features of a country. Denmark, for example, has a flat land which is quite similar to most countries in Northern Europe, has a potential for economic development because a flat land provides opportunities for the development of agriculture and related industries. Saudi Arabia is a country covered with deserts and has to rely exclusively on its only natural resource, petrol. This is not the case for Gabon which is found in the region of Equatorial forests and which can benefit from such a resource quite easily. In the African mainland, countries dispose of natural resources but are hampered in their economic development because of a lack of specialist knowledge and technical know-how to operate in such fields.

Political differences

Political differences may be contrasting among countries in different continents. Let us fist devise one important characteristic between developed and emerging economies. Because of the high level of literacy in developed countries, democracy is common in most of the countries and they experience few political upheavals. Third world countries are mainly governed by one-party system that practically allows room for different people to be involved in the political process. In certain cases, potential dictators may exist namely in Africa and Latin America.

Let us look at a few political differences among some nations.

It can be seen that in countries where the feudal system is still being practised, or where dictatorship is still present, the political system still influences business linked with surface features. In the case of Saudi Arabia, for example, the government practises feudal or quasi-totalitarian system because of the material possessions in the country namely petrol. Anyone discovering petrol can become a rich man.

It is quite similar in the case of South Africa where economic power was and is still in the hands of the White population. Nevertheless, with the arrival of Thomas Mbeki in power followed by Mandela’s rule, the country is paving its way for more democracy.

Cultural and Social differences

It is also argued that social and cultural differences can be created because of surface features in a country. If a country is small, as in the case of Mauritius, such a difference might not be clear-cut. Nevertheless, this is evident from what we have analysed when we look at different countries. The use of land for agricultural purposes might also illustration the way of living in different places. Subsistence living might be common in rural areas compared to more amenable living standards in urban areas.

How new physical resources can impact business

The influence surface features had on the economic, political, social and cultural development of a country was discussed. Because the world has a varied topology, each country has a particular way of managing its resources. Therefore, differences tend to exist. Arabian countries, for example, do not have any other natural resource apart from petrol and have to manage their economic development on petrol itself. Further, because petrol a prized product which is so much coveted by other countries and people in the country itself, because it provides lots of material wealth, governments tend to be possessive and adopt a system of near totalitarianism where they can take control of the country’s resources and assets.

In a similar way, the surface feature of each country creates a difference or particularity in its way of managing resources. We cannot say that surface features have a direct influence because differences among nations also depend upon the type of government in power and the way country matters are handled.

Influence of climate

Climate is the weather we usually have. In a tropical country, it can be said that people enjoy a fairly mild climate. In summer, the temperature averages 32 degrees Celsius while in the cool season, the average temperature is around 24 degrees Celsius. With such topography, the country gets lots of rain in summer whereas in winter, rain is scarce.

Climate and natural calamities can therefore have an incidence on the business activity of countries. Natural disasters put a country’s activities at stakes and it may have to look for international aid in order to survive. Countries which are affected by famine provide evidence of the precarious situation that is created if an economy is solely agriculturally-based. To counteract to a certain extent, the hazards of climate, better storage facilities should be devised as well as developing modern methods of farming. This is hampered to a certain extent in developing countries which have the tendency of sending more on armaments rather than on the essential needs of the country. Climate is also a consideration for the development of industry. The French have a strong agricultural base namely with regards to the availability of fertile land across the counter.

Discovery of new resources and development of business

Oil

When the motorcar was invented, then it became important for the inventors to think about the fuel which would best meet the needs of their invention. It was found that petrol would be the most appropriate fuel to make the machines work. Therefore, people from the west started believing in the importance of purchasing petrol from Arab countries.

This could therefore be referred to as black gold. In America, oil production was developed by the Texas Oil Corporation and Texaco. However, for reasons of practical and strategic importance, the United States prospected the Arabian market for large scale use of this commodity in its industries.

Gold

Economic power is still held by the White population and this had led to apartheid, whereby blacks and coloured people were segregated from the Whites. With democratisation going on in the country, South Africa is now in the post-apartheid era and is progressing slower but quite steadily.

Not all countries can boast having natural resources as the United States of America (gold), England (Gas oil and paraffin), Arabian States (Oil) and South Africa (Diamond and gold). Island nations have little natural resources and bet rather on agriculture and marine resources for their economic development. One attraction that they might have can be their physical beauty namely beaches, hills and scenery.

Natural Resources

Countries which do not have natural resources have to rely otherwise. Islands like Malta, the Seychelles, Mauritius and Martinique are obliged to bet upon their human resources for its economic development. This is the same for Singapore which is an island state but which has developed to a great extent its services industry as well as manufacturing industries due to the presence of multinationals in the country.

Case Study: Natural resource exploitation in Madagascar

Madagascar, the fourth largest island in the world, is famous for its biodiversity – it is home to thousands of species of plants and animals found nowhere else on Earth. It also has a wealth of mineral resources: graphite, ilmenite, chromite, coal, bauxite, rare Earth elements, salt, quartz, tar sands and semi-precious stones.

But the country’s recent history has been blighted by violence. A political coup in 2009 was sparked by an attempted land grab by South Korean multinational Daewoo, seeking to grow agrofuels, maize and palm oil on 1.3m hectares of ancestral lands.

Madagascar is one of the world’s poorest countries. According to the World Bank, 70% of the island’s 22.6 million population live on less than $2 a day and 59% on less than $1.25. But its richness in natural resources means that foreign mining, oil, tourism and agricultural businesses have all set their sights on Madagascar. The island, therefore, has the potential to serve as a testing ground for sustainable development.

Foreign investors, generally, acknowledge the principle of free, prior and informed consent (FPIC), which requires communities to be informed about commercial projects and given the opportunity to approve or reject them, and many of the big extractive players have committed to follow these rules.

Holloway explains that Malagasy civil society is, in general, fragmented and very often insufficiently organised to be able to voice their concerns and apply pressure to government to reverse decisions over the lease of land to international companies. Has Rio Tinto taken a different approach?

Holloway suggests so. ‘Rio Tinto has publicly committed to integrating sustainable development into its corporate strategies because it makes good business sense.’ The company’s operation in south-east Madagascar, QIT Madagascar Minerals (QMM), is ‘a test case for this commitment’ she says, as it is located in an area of extremely rich and unique biodiversity where poverty levels are high and dependence on natural resources such as food from the forests is widespread.

Rio Tinto’s stated aim is to achieve a net positive impact on biodiversity over the course of its operations in Madagascar. It will do this, Holloway says, through implementing a ‘mitigation hierarchy’ of avoidance, minimisation and rehabilitation. But is Rio Tinto in fact acting positively, for either the land or the people?

Development of new physical infrastructure

If surface features matter for a business opportunity among nations, the search for resources either for domestic or international business matters. The use of new forms of energy creates possibilities for improving business locally and can be the source for lower dependency of raw materials like oil or coal. At the same time, they help to make important savings to the country. Emerging economies are now moving ahead in considering with greater attention the development of new physical infrastructure.

Since natural resources cannot be created nor renewed, governments have been thinking about developing new physical infrastructure which would otherwise sustain business development in such countries. Let us consider the concept of new physical infrastructure. Given that natural resources are being used up at a rapid extent, people are speculating whether the countries where natural resources are actually being tapped will still be the ‘gold mines’ that they are actually. For this reason, new physical infrastructure is being sought out. To replace petrol is something very difficult. Nevertheless, as we are approaching the new millennium, we are busy thinking of solar energy as a natural resource that could be effectively used by populations. It is said that harnessing solar energy can assist in the development of many economies, or many countries throughout the world.

Physical infrastructure for solar energy

The physical infrastructure for solar energy would be as follows:

  1. Special mirrors to converge the rays of the sun.
  2. Solar cells to attract and store solar energy.
  3. Mechanical devices to make use of the energy.

Application of solar energy

  1. As a substitute for petrol for automobiles.
  2. For domestic purposes, heating, bathing.
  3. For lighting purposes; light energy.

Commercial viability of solar energy in emerging economies

According to a study commissioned by IFC, the World Bank’s Energy Sector Management Assistance Programme (ESMAP) and the US Department of Energy, energy storage development in emerging economies is expected to grow by 40% annually over the next decade, up from today’s capacity of 5 GW, resulting in about 80 gigawatts of new storage capacity. This will open up new markets and offer tremendous opportunities.

IFC expects the energy storage sector will grow significantly in the coming years leading to economies of scale. It has been tracking the storage market over several years and continues to support energy storage deployment in emerging markets. To date, we have engaged by means of early-stage venture capital investments, helping to prepare the market for mainstream investments. Some of our noteworthy investments included Microvast, a China-based manufacturer of especially fast-charging lithium-ion batteries Fluidic Energy, a manufacturer of zinc-air batteries used to power telecom towers; and AST, from India, which deploys photovoltaic solar plus batteries to power telecom towers.

Perspective

Africa’s natural resources can be a blessing, not an economic curse

New discoveries of natural resources in several African countries—including Ghana, Uganda, Tanzania and Mozambique—raise an important question: will these windfalls be a blessing that brings prosperity and hope, or a political and economic curse, as has been the case in so many countries?

On average, resource-rich countries have done even more poorly than countries without resources. They have grown more slowly, and with greater inequality—just the opposite of what one would expect. After all, taxing natural resources at high rates will not cause them to disappear, which means that countries whose major source of revenue is natural resources can use them to finance education, healthcare, development and redistribution.

  • Resource-rich countries tend to have strong currencies, which impede other exports
  • Because resource extraction often entails little job creation, unemployment rises
  • Volatile resource prices cause growth to be unstable, aided by international banks that rush in when commodity prices are high and rush out in the downturns (reflecting the time-honoured principle that bankers lend only to those who do not need their money).

Moreover, resource-rich countries often do not pursue sustainable growth strategies. They fail to recognise that if they do not reinvest their resource wealth into productive investments above ground, they are actually becoming poorer. Political dysfunction exacerbates the problem, as conflict over access to resource rents gives rise to corrupt and undemocratic governments.

There are well-known antidotes to each of these problems: a low exchange rate, a stabilisation fund, careful investment of resource revenues (including in the country’s people), a ban on borrowing, and transparency (so citizens can at least see the money coming in and going out). But there is a growing consensus that these measures, while necessary, are insufficient. Newly enriched countries need to take several more steps in order to increase the likelihood of a ‘resource blessing’.

Points to ponder

Resource-rich countries have done even more poorly than countries without resources. They have grown more slowly, and with greater inequality. Such countries often do not pursue sustainable growth strategies as they do not reinvest their resource wealth into productive investments. There are antidotes to each of these problems namely a low exchange rate, a stabilisation fund and careful investment of resource revenues.