Nominal GDP per square kilometre is a rough estimate of a nation’s productive use of land. It can also be used as a rough estimate of the relative maturity stage of national economic development. Lower ranking nations presumably maintain more potential for future development of land.
|Nation||GDP Density (USD/Km2)||GDP USD x 106||Land Area Km2|
Comparisons such as in the above table can be useful to stimulate hypotheses, although on their own they have little meaning. But when just a bit of background information is added, such comparisons can be seminal.
To make more use of this comparison, one would also need to look at national average IQ, population, demographic trends, economic diversification, percentage of land that is arable and easily developed, and business and investment friendliness of the regime currently in control.
We recently learned that Russia’s economy is smaller than the economy of California, in GDP terms. We would expect Russia’s economy to expand significantly, given the massive natural resources of Russia combined with a relatively high average IQ. Unfortunately, under the Soviet system the spirit and motivation of the Russian masses was beaten down, and has yet to show signs of recovery. Russia’s best brains and most pro-natal wombs are leaving the country for greener pastures abroad. Russia may lose up to 40% of its current population by 2050, according to the UN and other demographic estimates. The current Russian economy is overly dependent upon natural resource exports, suggesting an excessive vulnerability to swings in global commodities markets.
Despite Russia’s demographic problems, its natural resource wealth is massive. The same applies to other nations which score low in the GDP/Land Area comparison, such as Australia, Canada, Brasil, and to a lesser degree, India.
A takeover of Siberian wealth by multiple foreign powers is not out of the question, over the next several decades — if the current decline of Russia continues.
“Back in 2008 the perception was of unstoppable demand growth from China and other emerging economies,” he said. “Today the perception is of a fragile recovery, a very slow moving recovery in the global economy. China is slowing down. Demand growth is not ramping up as fast as was the case previously.”
… “Back in 2008, we were at the peak of a cycle of resource nationalism among producing countries,” Halff said in an interview. “Now we’re in a completely different situation, where some of the very same countries that had indulged in resource nationalism are back-pedaling, and making their investment terms more attractive to foreign companies.” __ Grant Smith in Bloomberg
And yet we see Russia’s Putin stuck in a 2008 mindset, unable to adapt to changing circumstances. This could bode ill for the long-suffering Russian people, who have never had the chance to develop to their potential, due to bad leadership.
Over the next five years, the effects of the global oil-and-gas boom should prove a grim object lesson for the Russian economy on the downside of the “resource curse.” Russia’s economy “largely depends on energy exports,” according to a study from the U.S. Energy Information Administration. That works well when prices are high, but quite badly when prices fall.
Oil-and-gas revenues account for 70% of Russia’s total exports and more than half the income of its federal government. Russia exports more than seven million barrels of oil a day, second only to Saudi Arabia. One key difference between Russia and the No. 1 exporter is that more than 60% of Russian oil is produced in Siberia, where costs are much higher. A fall in the world price to $75 from $100 would therefore have a much greater impact on the net revenues that Russia earns from oil than is earned by the Saudis.
The downside of the resource curse could also be felt in Russia’s reliance on sales of natural gas. About 75% of Russia’s natural gas exports go to Western Europe, providing 30% of its requirements, at prices that are two and three times the price in the U.S. _Barrons