Economics
The Problem with REITs
February 7, 2025
The world has witnesses the rise and fall of many great economic empires. It is safe to say that we have enough empirical data that we can analyze what spurs economic growth.
In this article, we will look at some of the important factors that lead to economic growth.
- Natural Resources
Natural resources are the number one factor that spurs economic growth. It makes economic growth considerably easier.
Consider the case of countries like Dubai or other Middle East nations. The fact that they are rich in oil resources has literally been the defining factor of their economies. There are other countries like Singapore which have a good natural harbor and therefore have become a major transit point. Other countries also have resources like coal deposits, iron ore deposits or even arable land.
In an era when shipping was strategic, locations with harbors experienced exponential growth. Nowadays, since energy literally controls the world, any deposits of fossil fuel or other energy sources drastically increases the economic prowess of any nation.
- Deregulation
People were meant to trade with each other. That is simply the natural order i.e. how things are supposed to be. Some repressive governments try to take this freedom away. Rules and limitations are imposed and trading becomes limited. This could benefit a small group of people at the expense of others. However, it could almost never benefit the entire nation.
Economic superpowers have traditionally been known to be trade allies of the entire world. They gain their power because they are indispensible in trade and not because they are isolated. The record of history is absolutely clear. Superpowers have always been following free trade policies and will always be.
Notice that countries like United States and United Kingdom only developed when they implemented a policy of free trade. As and when protectionism became rampant, the economic prowess steadily deteriorated.
- Technology
Technology has always played a pivotal role in economic growth. The industrial revolution was started because of technological advances. Mankind has never looked behind since. Only the applications of technology changed over the years.
From manufacturing to services and then to social media, technology still drives employment and business growth. It is for this reason that countries that build technological prowess develop much faster than others.
Consider the case of Germany. The country has been destroyed twice in both the World Wars and also has been under communist occupation for decades. Yet its economy is much more developed compared to its European counterparts who have not nearly faced as much turmoil. Analysts have concluded that this success is because of the German emphasis on the development of technology.
- Human Resources
Human resources of a nation can be either a boon or a bane depending on how they are utilized. For instance, consider the case of a country like India. The population is simply astounding. A large proportion of the population is in the working age. Also, most of them have good education and job skills.
This is what has led an otherwise poor country like India to quickly become one of the fastest growing economies in the world. These human resources which have made India an IT superpower could also have resulted in large scale crime if the people weren’t educated!
Any nation that wants to progress economically must ensure that its citizens have access to high quality education at affordable prices.
- Infrastructure
Last but not the least is the Chinese model of development. The state of China has heavily invested in huge infrastructure projects. These projects created employment and spurred the economy once they were underway. Also, since they were infrastructure projects, they literally paid for themselves later.
China now has one of the lowest manufacturing costs in the world. This has been enabled by the large scale infrastructure. Electricity is cheaper in China than anywhere else in the world. Also, Chinese carriers can transport goods across continents cheaply. This has made China the largest exporter and the second largest economy in the world.
Why are Countries Unable to Grow?
The factors that lead to growth are relatively straightforward. Therefore countries can chart a well defined path to growth if they want to. However, most are unable to do so!
This is because economic growth is an inside job. In most countries people want to grow at the expense of one another. Therefore, economic policies are not based on what’s good for the economy but rather on what is good for a certain group of people that have the capability to influence this policy.
In most countries it is the infighting between the haves and the have nots that prevents a synergistic solution that would make life better for everybody involved.