The Necessity of Economic Diversity

Law Talking Guy makes some fair points, especially about Iraq's economy being distorted by the sanctions. I looked at an old atlas with data from 1982 and it said Iraq was already dominated by the oil sector as early as the 1950s but that there was some agricultural exporting and even a little iron and copper ore exporting. However, the idea that sanctions contributed to the perverse concentration of the Iraqi economy wouldn't contradict what I am saying, namely that we need to get the non-oil economy in Iraq growing before democracy will take hold. Keep in mind, I'm not making an argument about how Iraq got the way it is, just about how to get it out of its current dilemma.

The counter argument that the determining factor is institutions rather than economics begs the question of what conditions favor stable institutions. The mechanism of my argument was that the concentration of the economy distorted the development of government institutions by producing an unbalanced distributive arrangement for national resources. So in effect I'm saying that the institutions are crucial but that they are not the original causal variable.

Nauru has a population of 12,000! Student Council elections at major universities probably involve more voters. I looked at a map of it and the country is barely big enough to hold both the phosphate mine and an airport.

As for Alaska, it's not an independent country, so it's not a reasonable example.

As for Venezuela, I already looked into that and its economy is both somewhat more diverse than Iraq's and its democracy is not very stable right now. There have been recent coup attempts, riots in the streets, extra-legal confiscation of private property by the President's supporters etc. What's more, control over the oil industry is a key dimension of the conflict between the opposition and President Chavez...so, not the best example to refute my argument. I'll say you get a quarter of the way to convincing me with Venezuela.

Of all the examples you mentioned, I'd be most willing to accept defeat based on the Caribbean thing. They are overly concentrated in banana exporting but also have big tourism and mining sectors. I looked up Jamaica (a reasonably stable democracy) for a start. Jamaica is heavily dependent on tourism and bauxite mining but there is also agricultural exporting (especially bananas) as well as textiles and other light manufacturing.

Overall, I'd be prepared to say you're 75% to convincing me. You'll win me over if you can show that the Caribbean economies are really as one-dimensional as stereotypes indicate.... For example, Jamaica was more economically diverse than I expected.