Wikilatief - The explanation of countries that used to be rich but are now poorer and even poor. I was going to answer based on the perspective of economics. According to economics, many countries that were rich or triumphant continue to fall poor because the country experienced the Phenomenon of Dutch Disease.
Dutch disease? What's that?
Dutch Disease is a kind of death trap from natural resources. Countries that are awarded abundant natural resources tend to rely on most of their income from the sale of natural resources extraction results.
Instead, they ignore other sectors of the economy because they are considered unprofitable. Other sectors of the economy are also under developed.
When natural resources reserves start to thin or the price of their mainstay natural commodities decreases, the country's income will certainly shrink drastically. Their economy has finally suffered a major blow.
Here are 8 Countries that were once rich but are now poorer and even poor:
1. Zimbabwe
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| Zimbabwe map and flag |
Zimbabwe was once a prosperous country in Africa. This country with the Capital Harare went from a booming bread basket to a country with bad economic problems with financial disasters and extre weme hyperinflation.
During 1980, Zimbabwe's economy was in strong condition thanks to abundant natural resources and a strong agricultural sector.
However, economic collapse began when in the 1990s, the country's finances began to deteriorate. Currently, Zimbabwe's GDP per capita only reaches USD 1008 or around Rp 14.2 million.
2. Iraq
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| Irak map and flag |
During the 1960s and 1970s, Iraq quickly became a developed country. Abundant oil and gas reserves make Iraq more successful.
However, bad circumstances struck when Iraq was under the leadership of SAddam Hussein in 1979. Internal corruption and falling oil prices exacerbate the situation.
Iraq's GDP per capita was so severe that it reached USD 938 (Rp 13.2 million). However, the situation began to gradually improve with a GDP of USD 5000 (Rp70.6). Nevertheless, Iraq still has a fairly low GDP.
3. Spain
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| Spain map |
During the 16th century, Spain experienced the Gold Boom Influx from its colonies in Latin America.
The country has entered an era of unprecedented prosperity and became a sovereign state of the sea during the exploration period.
When experiencing a splash of gold, their consumption certainly increases. To meet the uphill consumption they inevitably have to import. Imports are up.
Unfortunately, during this time Spain lacked diversification of its country's economy because it felt there was no incentive to develop new industries in other sectors.
Other sectors of the economy began to decline due to lack of attention and became underdeveloped.
As gold reserves in the colony began to dwindle and many colonies began to gain independence, Spain's economy began to decline as the country's income declined dramatically.
It was this condition that caused spain's economy to lag behind and the declining standard of living of their people compared to other European countries in the centuries that followed.
4. Nauru
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| Nauru flag |
This country located in Oceania has a very abundant phosphate reserves. Their phosphate mining proceeds are sold to foreign companies.
The country became very rich in a short period of time. In the 1970s, Nauru was named the richest country by GDP per capita.
Unfortunately, the people of Nauru are spending their money on a spree. They buy luxury goods and vacation abroad.
Supposedly, they began to diversify their economy by building new businesses so as not to rely too heavily on income from phosphate mining.
In the late 2010s, as phosphate reserves began to decline, Nauru residents began to fall.
They're running out of money because of the spree. As phosphate reserves have slumped, Nauru has fallen into poverty.
In 2012, Nauru began to rise due to us$20 million in debt relief from Australia to rebuild its economy.
5. Venezuela
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| Venezuela flag |
Venezuela is endowed with abundant oil reserves. Oil export revenues contribute 95% of the country's overall revenue.
When President Hugo Chavez came to power from 1999 to 2013, global oil prices were at a high. Venezuela is also experiencing an oil revenue boom.
Chavez issued a variety of consumptive social policies such as subsidies for basic necessities and house construction.
The Venezuelan government is too focused on consumptive social policies that cost a considerable amount of money without any obvious future benefits.
The Venezuelan government should start diversifying its economy, or investing in education or other more productive sectors.
The fall in world oil prices in 2014 was one of the causes of Venezuela's economic collapse.
Crude oil prices began to plummet in 2014. From approximately US$ 113 in 2011, to US$ 33 in 2015.
As oil prices continued to plummet and political turmoil continued, Venezuela's economy began to fall.
Because it relies too much on the oil sector, the country's income has dropped dramatically. These conditions have devastated Venezuela's economy.
6. Turkey
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| Turkey map |
Turkey is far from poor but they also cannot be said of rich countries. The country has a GDP per capita of around USD 11000 or around RP 115 million.
The number is more or less the global average. However, it is still relatively low from the majority of countries in Europe.
Numerous internal divisions in the early 20th century caused the empire to break up. In fact, Turkey had achieved its glory in the 16th century.
The confiscation of Germany in World War I confiscated part of its territory. The Ottoman Empire was reborn in 1922 as the much smaller Republic of Turkey.
7. Latvia
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| Latvia flag |
Ruled by foreigners for centuries, Latvia declared independence in 1918. The country adopted a liberal constitution in 1922.
Throughout the 1920s and 1930s, the country was even richer than neighboring countries, such as Finland and Denmark. It's very prosperous.
Unfortunately, the prosperity did not last long. During World War II, Latvia was ravaged by the Nazis and soviets, making the country under Soviet control until 1990 and making their economy slump.
Successfully re-independent, Latvia's GDP only reached around USD 14000 (Rp 197.9 million). Latvia is still a long way from other Scandinavian countries.
8. Cuba
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| Cuba map |
Communist rule and United States sanctions have impoverished Cuba. This Caribbean country only has a GDP per capita of USD 7815 or around Rp 110.4 million.
Local authorities find it very difficult to provide decent housing, transportation, and other essentials.
Long before that, the country was once one of the countries with the highest GDP per capita in America. Cuba was also the second-highest in terms of car and phone ownership. However, it's all in the past.
Conclusion
Dutch disease teaches a country not to rely on most of its income from only one sector, especially the natural resources . Every country must diversify its economy. When a sector declines, another sector can still sustain its economy.
When experiencing an income boom from a sector, each country must set aside a portion of its income to build new industries that aim to meet future consumption in order to maintain the economy.
If the splash of wealth is only used for sprees or is spent on consumptive sectors that do not generate benefits in the future, then be prepared for the country to experience long and bleak poverty when their natural resource reserves run out.
As a result, they have to rebuild the country's economy from scratch. It can be very difficult to rebuild the economy as the country's income plummets dramatically, while debt or spending remains bloated and must still be paid. Inevitably, of course, we have to add more debt.
If not managed properly, increasing the amount of debt can actually make things worse.
In addition, to rebuild the economy will certainly take a little time and the potential for failure will also continue to lurk. Therefore, their standard of living will certainly continue to decline.
The state of the economy in some countries can change in an instant or even after centuries.
Conflict, colonization, leadership mistakes, and various other reasons can be the cause. Unfortunately, due to these unexpected things, many countries have advanced, but still lag behind other prosperous countries.
(Countries that used to be rich but are now poorer and even poor)