How Nauru became poor: when great resources are a curse | The cost of the state
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Most likely, you have never even heard of this country. A tiny island located in the Pacific Ocean appears on the map as a small dot between Hawaii and Australia. With a population of 12,000 people and an area of 21 square kilometers, Nauru is one of the smallest countries in the world, surpassed only by Monaco and the Vatican. For comparison, the smallest district in Kyiv, Pecherskyi, also has approximately 20 square kilometers. It only takes 20 minutes to completely drive around this island microstate.
This small remote island became extremely rich due to the enormous phosphate deposits, the mining of which became the main source of income for Nauru in the 1970s and 80s. Less than 50 years ago, Nauru was not just flourishing, it was the richest country on Earth. With a GDP per capita of $43,800 in 1975, the average citizen of Nauru was twice as wealthy as the average American.
Incredible profits created an illusion of eternal prosperity, but it quickly became apparent that relying on just one resource was a path to disaster. When the phosphates ran out, Nauru was left with ravaged ecology and a ruined economy. This vividly demonstrates the phenomenon of the severe case of "Dutch disease," where the extraction of natural resources and dependence on the export of one type of raw material undermines other sectors of the economy.
In this video, we will explore how a tiny Pacific island turned into a real economic disaster due to an inability to use excessive wealth, what consequences it had for people's lives, what steps were taken for rescue, and how Ukraine can avoid falling into a similar scenario and not repeat Nauru's bitter fate.
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This video is created with the support of Atlas Network
00:00 Introduction
02:32 Island's History
06:56 World War II and Post-War Period
09:03 Wealthy Independence
11:40 Dutch Disease
16:31 Financial Ventures and Bankruptcy
17:04 Failed Investments
19:50 Offshore Banking Activities
23:46 Consequences of Wealth
26:46 How Nauru Survived and What It Lives on Today
30:29 Nauru's Economy Today
31:26 What's Next?
33:29 Conclusions
#history #economy #nauru
