I chanced upon two articles about the pacific island nation of Nauru on www.economist.com.
The nation's primary source of earnings came from exports of phosphates which are used in the manufacture of fertilizers. At one point in time in the late 20th century, Nauru was one of the richest nations on earth. Its 8000 citizens did not need to work as the government used the earnings from phosphates on largesse for its citizens and more importantly its members.
Nauru's investments at one time exceeded US$ 1 Billion when the going was good. But just as Oil exporting nations have neglected to develop their populations and their economies, Nauru relied way too much on phosphate dollars.
As such governments are wont to do, the Nauru government failed to recognize that its financial situation was in dire straits as the price of phosphates nose dived. Add to this a spate of bad investments including funding Broadway shows and aspiring artists, and the country is now bankrupt.
They have been coming up with interesting revenue streams to fund the
obesity inducing lifestyles of its citizens. Nauru has collected money first
from Taiwan and then from PRC for its vote at the UN on a number of issues.
Later, it relaxed rules on banking, so you could set up your own bank on Nauru
island for a fee of USD 25000. It is said that the Russian Mafia laundered
about $70 Billion through Nauru banks before banks from western nations refused
to transact with Nauru institutions.
Today, Nauru has an even more interesting model. They will agree to hold
Australia's boat people for a fee until Australia decides if they are refugees
admissible into Oz.
For all the blame we can lay at the feet of India's socialist governments in
the early days after independence, we have to grant that they did a reasonable
job of trying to get this country to stand on its own feet. If Nauru is not
sufficient example of what could go wrong, we only need to cast a glance
towards Nigeria, Congo, Zimbabwe, Yemen and even our neighbours Pakistan and
Afghanistan.
1 comment:
Shivram, while we did have the capitalist option open to us, we had few advocates of the system. At that point of time, we were choosing a less Western solution which hadn't displayed the weaknesses that we now so clearly know. And I think we followed more of a mixed economy, but just didn't get the priorities right.
But the first few governments did their job in ensuring that we have proper institutions compared to most of the world this side of the Atlantic. That they are now plagued by corruption isn't their fault
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