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Why relying on our natural resources alone is a mistake

Want to predict how a country will fare in the 21st century?

Don't look to its mineral riches. Instead, check out how its teenagers score on tests. 

A team from the OECD has just come out with a study mapping the correlation between total earnings from natural resources as a percentage of GDP and performance on the Program for International Student Assessment, or PISA, exam. The PISA tests the maths, science and reading comprehension skills of 15-year-olds in 65 countries.

Andreas Schleicher, who oversees the PISA exams for the OECD, told the New York Times: “Today’s learning outcomes at school are a powerful predictor for the wealth and social outcomes that countries will reap in the long run.”

He said the results pointed to “a significant negative relationship between the money countries extract from national resources and the knowledge and skills of their high school population".

According to Schleicher, students in Singapore, Finland, South Korea, Hong Kong and Japan stand out as scoring high on the PISA with few natural resources, while Qatar and Kazakhstan came out with the highest oil rents and the lowest PISA scores. 

The average PISA score was 450 points and the average earnings 6.02 percent of GDP.

New Zealand was more or less on par with Australia on test scores (well over 500) but made less than half of what Australia raked in from natural resources.

Schleicher said Canada, Australia and Norway, countries with high levels of natural resources, still scored well on PISA because all three countries have established deliberate policies of saving and investing these resource rents, and not just consuming them.

Looks like the case for building a knowledge economy just got even stronger.