Question

How is it possible that Switzerland, a landlocked country with almost no natural resources, is one of the richest countries in the world while the Democratic Republic of the Congo, a huge country with vast deposits of many strategically important minerals, is one of the poorest? The case of Switzerland vs. the DR Congo highlights that:
A. it is important to extract as much of the natural resources as possible.
B. once you become rich, it is easier to get even richer.
C. natural resources are more important than the other components of productivity growth.
D. natural resources do not make up for all of the advantages that the other components of productivity growth bring.

Answer 1

Answer:

The correct answer is option D.

Explanation:

Even though the democratic republic of Congo is rich in natural resources while Switzerland has almost no natural resources, but Switzerland is among one of the richest countries while Congo is among the poorest.  

This indicates that abundant natural resources are not the only factor required for economic growth. Other factors such as human capital, physical capital, state of technology, etc. are also necessary for economic growth. Abundant natural resources cannot be efficiently utilized without these factors.  

Even if a country is not rich in natural resources but possesses these factors, it can still have high economic growth.