Malaysia in the Era of Globalization #10
Chapter 2: Why Some Societies Progress, Others Regress
Next: The Economics of Geography
Modern economists can quantify the effects of geography on the economy. Jeffrey Sachs, now at Columbia University, introduced the concept of GDP (Gross Domestic Product) density, a function of per capita GDP and population density, and showed that coastal, temperate Northern-hemisphere economies have the highest economic densities. They form the core of the economic zones of the world. These areas include Western Europe, the coastal regions of China, Japan, Korea, and the Western and Eastern seaboards of North America.
Geography affects economic development in three major ways. First is through the ease of transporting goods, people, and ideas. Because water transportation is much cheaper and more efficient than overland, coastal areas have distinct advantages over the hinterland. Second, geography affects the prevalence of diseases, especially those involving vectors (malaria and mosquitoes; schistosomiasis and snails). These diseases are endemic in the tropics and hold back economic development by significantly reducing workers’ productivity. Malaysia’s remarkable economic progress is in part attributable to its success in eradicating or at least controlling vector-borne diseases, especially malaria. Such diseases also alter the country’s demographic and fertility patterns. Last, geography affects agricultural productivity. The seemingly lush tropical jungles hide a fragile thin layer of topsoil that could be easily washed away in a heavy tropical downpour. Soil erosion is a major ecological as well as agricultural problem in the tropics. The burden it imposes on the economy is severe.
Climate also affects the crops that can be grown. In temperate zones there is little specie variation in the fauna or flora. An acre of temperate forest yields only a few species; an acre of tropical jungle, literally thousands. Thus temperate lands are uniquely suitable for large and efficient mono cultural cultivations. The American Midwest has thousands of acres of wheat, barley, and corn. Such large farms would be impractical in the tropics as they would easily succumb to pests and diseases. The biological diversity of the tropics is an intricate and complex ecological protective mechanism preventing the spread of pests and diseases.
Many tropical countries have successfully adapted the highly productive and efficient mono cultural agricultural techniques of temperate zones. Malaysia has its rubber and oil palm plantations. Despite this seeming success, the underlying fragility of the system cannot be over emphasized. Brazil’s entire rubber industry was wiped out by a single fungus infestation.
The hot tropical climate is not all liability. That warm weather brings with it equally warm waters and pristine beaches. The temperate countries may have their beautiful beaches but they are only for sightseeing. You cannot swim, not even in mid summer, as the water is too cold. Smart tropical nations capitalize on their warm climate to create a new major industry: tourism. The entire Caribbean is now a tourists’ paradise. Previously isolated and undeveloped fishing villages like Cancun in Mexico have become prized destinations for holidaying Europeans and Americans. In Cabos San Lucas and Mazatlan, Mexico, sport fishing is now much more lucrative and a steady source of income than commercial fishing.
Malaysia too should take advantage of its warm sandy beaches and market itself aggressively to the affluent and densely populated areas like Japan and Europe. Many rubber plantations are now converted into golf resorts that in the aggregate produce more for the economy than the old rubber trees they had replaced. As a foreign exchange earner, tourism is now second (albeit a distant second) only to manufacturing.
The least important aspect of geography is the bounty nature has bestowed on some countries. Why the Good Lord chose to place hydrocarbons, precious minerals, and other valuable resources in some countries and not others is not for us to question. But God’s bounty alone is not enough, as evidenced by the continuing poverty among citizens of the rich oil-producing Arab nations. Throughout history we have seen the same story repeated, of well-endowed nations and their leaders squandering their God-given wealth. That old adage, easy come easy go, applies to nations as well as individuals.
Additionally, what we consider as valuable varies with time and age. Hydrocarbon may be considered black gold today but there was a time at the dawn of the nuclear age, with its promise of cheap and bountiful energy, when the price of gasoline merely reflected the cost of production; the commodity itself had minimal value.
Current Malaysian headlines carry the news that the country is selling fresh water to Singapore at a ridiculously low price. And we are committing to a long-term contract. Clean water is now more precious than oil. In American supermarkets and elsewhere, bottled water costs more than gasoline! Water rights are highly contentious issues in the dry Western states of America and the Middle East. Canada is protecting its fresh water lakes and rivers from pollution, recognizing that they are now truly valuable natural assets on par with its oil and gas fields. Malaysia too must protect this precious resource more carefully.
Next: Culture Matters
Next: The Economics of Geography
Modern economists can quantify the effects of geography on the economy. Jeffrey Sachs, now at Columbia University, introduced the concept of GDP (Gross Domestic Product) density, a function of per capita GDP and population density, and showed that coastal, temperate Northern-hemisphere economies have the highest economic densities. They form the core of the economic zones of the world. These areas include Western Europe, the coastal regions of China, Japan, Korea, and the Western and Eastern seaboards of North America.
Geography affects economic development in three major ways. First is through the ease of transporting goods, people, and ideas. Because water transportation is much cheaper and more efficient than overland, coastal areas have distinct advantages over the hinterland. Second, geography affects the prevalence of diseases, especially those involving vectors (malaria and mosquitoes; schistosomiasis and snails). These diseases are endemic in the tropics and hold back economic development by significantly reducing workers’ productivity. Malaysia’s remarkable economic progress is in part attributable to its success in eradicating or at least controlling vector-borne diseases, especially malaria. Such diseases also alter the country’s demographic and fertility patterns. Last, geography affects agricultural productivity. The seemingly lush tropical jungles hide a fragile thin layer of topsoil that could be easily washed away in a heavy tropical downpour. Soil erosion is a major ecological as well as agricultural problem in the tropics. The burden it imposes on the economy is severe.
Climate also affects the crops that can be grown. In temperate zones there is little specie variation in the fauna or flora. An acre of temperate forest yields only a few species; an acre of tropical jungle, literally thousands. Thus temperate lands are uniquely suitable for large and efficient mono cultural cultivations. The American Midwest has thousands of acres of wheat, barley, and corn. Such large farms would be impractical in the tropics as they would easily succumb to pests and diseases. The biological diversity of the tropics is an intricate and complex ecological protective mechanism preventing the spread of pests and diseases.
Many tropical countries have successfully adapted the highly productive and efficient mono cultural agricultural techniques of temperate zones. Malaysia has its rubber and oil palm plantations. Despite this seeming success, the underlying fragility of the system cannot be over emphasized. Brazil’s entire rubber industry was wiped out by a single fungus infestation.
The hot tropical climate is not all liability. That warm weather brings with it equally warm waters and pristine beaches. The temperate countries may have their beautiful beaches but they are only for sightseeing. You cannot swim, not even in mid summer, as the water is too cold. Smart tropical nations capitalize on their warm climate to create a new major industry: tourism. The entire Caribbean is now a tourists’ paradise. Previously isolated and undeveloped fishing villages like Cancun in Mexico have become prized destinations for holidaying Europeans and Americans. In Cabos San Lucas and Mazatlan, Mexico, sport fishing is now much more lucrative and a steady source of income than commercial fishing.
Malaysia too should take advantage of its warm sandy beaches and market itself aggressively to the affluent and densely populated areas like Japan and Europe. Many rubber plantations are now converted into golf resorts that in the aggregate produce more for the economy than the old rubber trees they had replaced. As a foreign exchange earner, tourism is now second (albeit a distant second) only to manufacturing.
The least important aspect of geography is the bounty nature has bestowed on some countries. Why the Good Lord chose to place hydrocarbons, precious minerals, and other valuable resources in some countries and not others is not for us to question. But God’s bounty alone is not enough, as evidenced by the continuing poverty among citizens of the rich oil-producing Arab nations. Throughout history we have seen the same story repeated, of well-endowed nations and their leaders squandering their God-given wealth. That old adage, easy come easy go, applies to nations as well as individuals.
Additionally, what we consider as valuable varies with time and age. Hydrocarbon may be considered black gold today but there was a time at the dawn of the nuclear age, with its promise of cheap and bountiful energy, when the price of gasoline merely reflected the cost of production; the commodity itself had minimal value.
Current Malaysian headlines carry the news that the country is selling fresh water to Singapore at a ridiculously low price. And we are committing to a long-term contract. Clean water is now more precious than oil. In American supermarkets and elsewhere, bottled water costs more than gasoline! Water rights are highly contentious issues in the dry Western states of America and the Middle East. Canada is protecting its fresh water lakes and rivers from pollution, recognizing that they are now truly valuable natural assets on par with its oil and gas fields. Malaysia too must protect this precious resource more carefully.
Next: Culture Matters
posted by M. Bakri Musa | 6:46 PM
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