Natural resources have long been viewed as critical factors in a country’s economic development. However, the true engine of prosperity lies not only in having land, minerals, oil and other natural wealth but in having highly educated, hard working, and talented population. A few examples come to mind.

Israel vs. Saudi Arabia:

Knowledge-Based Israel, a country with scarce natural resources, has achieved remarkable economic success when compared with Saudi Arabia. By prioritizing human capital development, Israel has nurtured a thriving technology based economy. The nation has emerged as a global leader in innovation, particularly in defense, cybersecurity, biotechnology, and agriculture. Groundbreaking research and development endeavors have paved the way for high-value products and services. This emphasis on human resources has propelled Israel to surpass Saudi Arabia in terms of GDP per capita, despite the latter’s abundance of oil reserves. Latest figures showed Israel GDP per capita at $52k vs $20k of Saudi Arabia.

Netherlands vs. Argentina:

The Netherlands, renowned for its highly advanced agricultural sector, exemplifies the power of human resources in maximizing a nation’s potential. Despite the fact that you need 177 Netherlands to make one Argentina, and it having very limited arable land, the Netherlands ranks among the world’s top exporters of agricultural products beating Argentina on $100bn of agricultural exports vs $65bn. The country’s commitment to innovation, adoption of advanced farming techniques, and investment in research and development have fostered high agricultural productivity. Conversely, Argentina, with its vast land resources, faces challenges in infrastructure, technology adoption, and value chain development, constraining its ability to fully capitalize on its agricultural potential. Decades of corruption and poor government have left the Argentine countryside barren compared to the tiny agricultural land of Netherlands. Holland’s success underscores how skilled human resources can overcome physical constraints, driving economic prosperity.

Costa Rica vs. Venezuela:

Sustainable Development through Human Capital Costa Rica and Venezuela present divergent examples of human resources’ impact on economic development. Despite its smaller land area and limited natural resources, Costa Rica has positioned itself as a leader in sustainable development. By making substantial investments in education, healthcare, and environmental conservation, the country has nurtured a skilled workforce while attracting international investment. In contrast, Venezuela, blessed with abundant oil reserves, has experienced severe economic decline due to mismanagement and the neglect of human capital. Insufficient investment in education, healthcare, and other critical sectors has impeded Venezuela’s ability to effectively harness its natural resources. The result is that Costa Rica GDP per capita is $11k, slightly higher than that of Argentina and Venezuela who has the largest oil reserves in the world has a GDP per capita of $1350.

Japan vs. Brazil

Japan’s transformation from post-war devastation to an economic powerhouse exemplifies the transformative power of human resources. Despite minimal natural resources, Japan prioritized the development of a highly skilled workforce through investments in education and training. This cultivated human capital served as the driving force behind Japan’s industrialization and technological advancements. In contrast, Brazil, endowed with vast natural resources, has faced challenges in translating its resource wealth into sustainable economic development. Insufficient investments in education, infrastructure, and innovation have hindered Brazil’s ability to diversify its economy and fully leverage its human potential. Result is that Japan has a GDP per capita of $40k and Brazil of $8k.

While natural resources can contribute to economic growth and if you are a country like Norway that is lucky enough to have both natural and Human Resources you become the world champion on GDP per capita (over $80k). But if you have to choose Human Resources invariably beat natural resources. By investing in education, skills development, research and development, and fostering a culture of innovation, countries can nurture a highly productive workforce capable of driving economic growth, diversification, and sustainable development. Recognizing the power of human resources allows nations to thrive and overcome the constraints imposed by limited natural resources.