Having discussed population density and ease of transport, it’s time to finish off our discussion of land by talking about natural resources—and some surprising implications that natural resources can have for economic development, and politics.
(And in retrospect, this one really should have been the first subtopic in land that we discussed, since it really conditions all the others. I’ll correct that in the book to come!)
“Natural resources” can mean many things. One of the most fundamental will be the presence of available food production, from fertile soils and rain or rivers for agriculture, wild plants and herbs for gathering, animals to be hunted, or fish to be—err, fished. If a region does not have enough food production to feed its populace, it will have to depend on imports, which means that it will have to have something to sell to the outside world in order to pay for those imports.
Other things might or might not be a natural resource, depending on the details of your setting. For example, deposits of aluminum will only be valuable if the society has figured out how to smelt aluminum, a surprisingly difficult process. Small streams might be good places to fish, but if the society has developed the technology of the gear (meaning the round turny thing with teeth), streams can also drive watermills to provide kinetic energy for machines in a workshop.
(This also means that advances in technology, or other changes that turn something that was previously useless into something valuable, could bring new prosperity to formerly backward regions—or make them tempting targets for invasion!)
For each region you would need to decide what the key natural resources are for your story, and how abundant they are. The details of them obviously matter; but for our model, we will abstract away from the details (for the moment) and characterize each natural resource (in relative terms) as
- rich or poor, and
- concentrated or widely available.
If a region is poor in necessary resources, the people will have to either trade for them, substitute some other inferior resource, or do without.
If the people are wealthy—perhaps they are skilled businessmen or traders, or perhaps they are successful pirates—they can sustain a society even in a place with few resources; but they would be dependent on the outside world for most of their essentials, like food, fuel, raw materials, and the like. Essentially, a region with few natural resources stands in a similar relationship to the outside world as a city does with its surroundings: it must produce a lot of economic value to pay for its imports, and it lives and dies with the ability to transport the needed goods.
If the people don’t want to trade for the good they are missing, or the good is simply not available, they may try to use substitutes. For example, the Scottish Highlands had few trees for firewood; instead, the Scots burned peat (something halfway between coal and mud). Few people would prefer burning peat to wood; but it did the job. Similarly, early iron weapons were actually inferior to bronze in most respects, contrary to the common assumption; but bronze is made from both copper and tin in a specialized process, and when the tin trading network across Eurasia was disrupted for unknown reasons, local communities fell back on iron, which was readily available and easy for blacksmiths to forge. (That was a gross simplification of a complex process with many causes, but for our purposes it makes the point.)
If no substitute is available, then the populace will do without. The typical result is widespread poverty (at least in “objective” terms; a people that has never known the telephone will not mourn its lack, and will find plenty of other prestige goods to compete over). If the missing resource was critical to sustaining life, its lack may put a hard cap on how many people can live in the region. In the worst case, the region may simply be empty of people.
(The concentration of the resource matters, but only on the micro-scale; if you have a small amount of wood and no one else has any, you will be prosperous personally, but it won’t affect the rest of the region much.)
If a region is rich in natural resources, on the other hand, it could have wildly varying effects depending on whether the resource is mainly used by the region itself, or mainly exported. If the resource is mainly used by the region—either directly, such as foodstuffs, or as an input into some other production, such as timber into shipbuilding or iron into machine production—it will contribute directly to the region’s prosperity. Not only will the region use the resource, the availability of rich resources will tend to encourage the growth of new industries that require that resource (though not automatically; see our later discussion of entrepreneurship). In ideal circumstances, the natural resource serves as fuel for the larger economic engine, being transformed into ever more valuable uses as products move up the chain of production, and the economy will develop in healthy directions.
Problems emerge if the resource is produced mainly for export, however. The economy will tend to develop mainly to facilitate the export of resources, and other industries will be relatively less developed. An economy that is heavily unbalanced in the direction of exporting natural resources (or really, by any other single desirable export) is prone to Dutch Disease. For our purposes, Dutch Disease happens when a particular economic sector generates massive amounts of money from external sources; this could be oil, or timber, a wildly successful service sector such as London banking, or even foreign aid or foreign direct investment. People end up using that money to import new luxuries or to enjoy more local services, diverting revenue and labor away from local productive industries to a degree. (It gets worse if countries have independent currencies with fluctuating values; the vast exports of oil or whatever will cause your country’s currency to strengthen, making imports relatively cheaper, but also kneecapping your other industries such as manufacturing or tourism.)
The result is that even as the growing sector prospers, the other parts of a region’s manufacturing economy will tend to stagnate. If allowed to continue unchecked, the end result of Dutch Disease is to turn the region into a supply region with a hypertrophied primary export sector and a bloated service sector, and relatively little industry otherwise. The region will be excessively dependent on its main export industry and suffer booms and busts along with that industry. (This often happens on a smaller scale with oil towns, mining towns, and the like.)
The Resource Curse
We must also ask if the rich resources are concentrated or widely available. A large timber forest is relatively hard to monopolize, though kings certainly try; and as a result, it would allow a relatively large number of people to support themselves from the resource. But a much more concentrated resource is easier to monopolize, either by the state (a common occurrence) or by a private actor (which might accumulate much of the effective power of a state, as with the “Shell police” in Nigeria). Often, this actually leads to worse outcomes for the region—the so-called “paradox of plenty” or “resource curse.”
Investigating the paradox of plenty, Terry Lynn Karl in her book identified a common pattern in modern oil-dependent states. When oil is first discovered in a previously poor state, the state has a sudden budget surplus—either because it takes control of the oil directly, or heavily taxes the oil companies. With the sudden influx, the state massively raises its spending, usually first on social services, then on subsidies for new heavy-industry as the state tries to translate its new wealth into durable prosperity. Often, taxes on the broad populace are reduced, sometimes to zero. (This is not an unmitigated good; often, regimes reduced taxes and increased subsidies in order to demobilize their populaces and render them indifferent to national politics, the better to rule tyrannically in the absence of popular opposition.)
However, state spending often grew much faster than oil revenues, as new interest groups form to feast on the new state largesse. Moreover, efforts to nurture new industries often failed, overcome by the mismatch between the planned new industries and the existing technological competence of the society, the resulting inability of the economy to support the planned new industries (as Jane Jacobs discusses), the eventual growth of political patronage in subsidized or state-owned industries, and their resulting implosion from ineptitude. Factor in the effects of the Dutch Disease and consequent inflation, and the economy as a whole actually suffers from the new oil wealth. Many petro-states found that they could no longer feed themselves without imports, as local food production was crowded out by inflation and the lack of farm labor.
The ultimate beneficiaries, however, are the state itself (which grows massively from the new revenue) and the new stratum of state functionaries that fills all the new state jobs. But such prosperity is brittle, depending as it does on the revenue from oil. When oil prices suddenly fell in the mid-1980s, these states faced crippling crises that lasted decades.
Matters are less bad in states that already have strong state institutions, even if their economies are heavily dependent on the resource in question. Alaska, for example, managed to avoid the worst ravages of the resource curse by distributing much of its oil wealth directly to its citizens each year. The temptations of rentier-state gluttony are certainly present, but mitigated by the preexisting power of the citizenry and the strong tradition of limited government.
This post has already gone on too long, but you can already see that the effects of a region’s natural-resource endowment can provide great fodder for plot conflict. And once you add in a few elements from the other building blocks of an economy? Yowza.
(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Wealth [Commerce?] for Worldbuilders, along with some overlap with the planned third book, working title Tyranny for Worldbuilders. No idea when they will be finished, but it should be fun!)