Mind over Mines

PARIS – According to the Bible, Moses led the Jews on an arduous 40-year journey through the desert – just to bring them to (virtually) the only Middle Eastern country without oil. But Moses may have gotten it right; today, Israel boasts an innovative economy, and its population enjoys a high standard of living.

In general, resource-rich countries tend to be less developed economically and socially, because exporting their natural resources often triggers currency appreciation, making imports cheap and industrial development difficult. Moreover, governments in these countries are under less pressure to tax their citizens, so they are more prone to autocracy.

But there is more to this distinction. A study by the OECD’s Program for International Student Assessment (PISA) has found that there is a significant negative relationship between the money that countries extract from national resources and their school population’s knowledge and skills.

Israel is not alone in outperforming its oil-rich neighbors by a large margin when it comes to educational outcomes. Indeed, this pattern is evident across 65 of the countries that participated in the latest PISA assessment – and is a powerful predictor of a country’s long-term wealth and social outcomes.