Before we get started, The Black Panther (top right) lives and rules Wakanda pictured above, oh and it’s not my photo. Copyright law proof?…check. I think… Anyway…
The movie The Black Panther was a box office smash hit, taking away an astonishing $1.3 billion at the box office on a budget of $200 million. It follows the protagonist, I’m sure many of you will know, Prince T’Challa who uses the made-up name ”The Black Panther”. For those of you who aren’t familiar, he essentially gains super-natural abilities from drinking a green-machine smoothie. One sip of this super smoothie sends Prince T’Challa on a psychedelic bender, but instead of waking up in the neighbour’s wheelie bin, he wakes up with enhanced speed, stamina, strength and agility.
For those of you who lived under a rock in 2018, the story of the Black Panther is set in the secretive nation of Wakanda, albeit a fictional one, sorry Marvel Fans, don’t hate. It exists somewhere on the African continent, and according to a quick google search, is located just North of Tanzania. But you may be asking yourself what has this got to do with business or economics? I’m getting there, be patient.
The imaginary nation is situated on top of a meteorite crash-site that deposited a massive amount of a precious metal known as Vibranium, again imaginary, and is dubbed “Earth’s strongest metal”. The metal possesses the ability to absorb all vibrations in the vicinity as well as kinetic energy directed at it and was therefore used in the creation of Captain Americas tea-cup sized shield and the Blank Panthers ‘onesie’. But Vibranium primarily fuelled Wakanda’s technological advancements to the benefit of its society. Throughout the film Wakanda has seriously advanced healthcare, transportation, and communication to name a few things. The nation far surpasses any economy on Earth and yet Wakanda has remained hidden from the world since its beginning. But spoiler alert for you hermits, at the climax of the story Prince T’Challa vows to open up Wakanda to the world without loosening his grip on the naturally abundant metal for fear it may be used to wage wars, fair point.
Here is where the economics of this kicks in. Never in reality has a wealthy, advanced society remained so isolated, then appeared out of thin air and engaged with the rest of the world. So here it is the economics of the Black Panther, if imaginary land was in fact reality.
This is a 2-part blog so I’ll start with how Wakanda, a remote and isolated nation that traded with nobody for nothing, became so advanced and I’ll finish in Part 2 with what impact the revelation of a superior nation would have on its own population and the globalised world.
Warning: I will only be discussing the economic implications of this thought experiment, we’ll put a pin in the geo-political arguments. Also, for the sake of my sanity some assumptions will have to be made to keep this focussed. But economics nerds, let me know if you think I missed anything big.
Okay as we have already established the properties of Vibranium have fuelled much of their rapid development but the birth of Wakanda must have started somewhere right? But rather than considering where Wakanda was formed its more important to explore when Wakanda might have discovered vibranium, because there are some parallels here that we can make to real life.
According to the Marvel franchise a meteorite crashing into the Earth is the reason Vibranium exists on earth which means Wakanda must have formed or moved on top of this vibranium deposit long after the Meteorite caused a big mess.
Let’s take a look at the real world, a nation with an abundance of any high value natural resource such as oil, gold, diamonds can be a significant path to prosperity, just look at USA, Norway and Dubai.
The basic economic theory is straight forward enough. Individuals and firms can invest in the extraction, manufacture and sale of the natural resource, and as long as there are buyers who need or want these commodities, there are profits to be made and they can be handsomely rewarded for their efforts. As classic supply and demand dictates the more useful, desirable or rare the item, the higher the price. The abundant resource lines the pockets of anyone willing to engage in this activity and everyone else benefits from the economic development that comes along with it in the form of jobs, higher wages, competitive pricing, better funded local services and so on.
However, this smooth process is not the norm, but why? Well, for this exchange between buyers and seller to happen without major mishaps, you need a stable and functioning institute (usually a government) to enforce the rule of law and property rights. Without an institute to enforce these, it becomes a burden to have a natural resource abundance, that ultimately contributes to stagnant growth or even a decline of an economy – Venezuela, Angola, Sierra Leone.
Think about it hypothetically, your family is struggling to make ends meet and you see a few young workers mining for gold, you know the value of this gold on the market and they have the all the equipment to do the job. A thought crosses your mind, “if I can overpower or threaten them who’s going to stop me?”, there is no governing institute remember. Desperate times call for desperate measures after all, you have mouths to feed. You make the decision to go for it and take ownership of the mine. Success. However, you soon realise that if you really want to take over this mine and reap the benefits into the future, you’re going to need some protection to deter any retaliation from the same people.
So through bribes, weapons or both you take over the mine. But you exploited the lack of rules and laws to access and control a valuable resource that could keep a small-town rich for a life time. Word spreads around the town and soon a queue of militia groups and corrupt officials with greater power are on their way to oust you, because again there is no institution strong enough to tap them on the wrist and say stop that.
So the spiral downwards commences. This is known as the natural resource trap.
Scale this problem to the size of an economy with large deposits over a vast landscape and a significant proportion of your population will direct their attention towards conflicts, power struggles, civil wars and corruption, evaporating the potential economic benefits that a natural resource abundance can bring, and eroding the foundations of a potentially functioning society.
Having strong institutions before a natural resource is readily available and easily accessible means that any competitiveness for control and ownership of extraction, manufacture and sale of the resource is regulated.
Who ever said red-tape was a bad thing…
Therefore our wonderous Wakanda, must have developed strong institutions well before it’s people discovered the vibranium mines and was able to maintain them afterwards too (ignoring the little Killmonger fiasco). Otherwise upon discovery of the natural resource Wakanda might have fallen into the same natural resource trap. This can partly explain the rapid development of this advanced society. Strong institutions coupled with a powerful natural resource abundance used in all manners of ways that go way beyond a dinner plate sized shield that defies the laws of gravity.