As Liza Minnelli sang in Cabaret, “Money makes the world go round / A mark, a yen, a buck or a pound / A buck or a pound, a buck or a pound / Is all that makes the world go around / that clinking clanking sound / Can make the world go round / Money, money, money…”
Ever since humankind decided to avoid the inefficiencies of a barter system by creating a medium of exchanging, money is, indeed, what makes the world go round.
Money makes the world go round, makes the world work, for it plays an important role in businesses and in economic activities. It allows people all over the world to make exchanges and transactions, so that goods and services can move around the economy generating wealth and improving people’s standard of living.
Nevertheless, money doesn’t grow on trees. What produces money is not only money. Wealth in the world is much more about people – and about education, let me say – than about money: many countries which are rich in natural resources have poor growth performance.
This can be easily understood by going through oil-exporting countries, which have multimillionaire profits in dollars and keep them as reserve currency and commercial transaction.
Many of these countries end up neglecting economic diversification, going poorer than other countries which, far from being rich in natural resources, are democracies with a well educated population. Since the resource extraction, in the former, is much more lucrative than other industries, even when governments try to diversify the economy, this is difficult to achieve. The fact that those countries tend to be politically unstable and corrupted does not help to make their money boost wealth generation either. Thus, economists see a link between natural resource abundance and poor economic growth.
On the other hand, creative people are able to make money since they can offer in free markets products and services other people are interested in. That’s why knowledge, innovation and wealth are interconnected and why money is much more about people than about any other thing.
American computer engineer Steve Jobs explained it in a very simple way: “innovation has nothing to do with how many Research and Development dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”
Money makes the world go round, but just ingenious and inventive people can make the world a better place to live in.
By Helga Maria Saboia Bezerra