Thursday, June 17, 2010

Lithium deposit in Afghanistan

One of the interesting stories which serves as a refreshing break from the usual monologue of insane taliban and a state of war in Afghanistan is the story of discovery of lithium deposits worth 1 trillion $ that has the potential to reform its economy enormously. You can read it here.

As we take a look at its economic potential in isolation without looking at the more structural aspects of this discovery, everything seems hunky dory about the huge demand of this element in manufacturing of batteries and hence the potential of seeing a beeline of nations like US, Russia and China to get access to this deposit.

A couple of days later a very insightful article written by Amity Shlaes using black hat thinking to understand how such deposits can cause further damage in the absence of structures of democracy and property rights which surely are critical to take the best advantage of such potential economic conditions. The writer shares interesting perspectives from nations which failed to use their natural bounty unlike Botswana which was able to attain what appears attainable at the outset only because it had the requisite political and legal underpinnings.

The correlation between economics and politics is very clearly elicited by this instance. Really liked the effort to examine the situation from a more objective standpoint.