Globalism has certainly created a drastic paradigm shift in the functioning of societies around, well, the globe. Up until 1870, the sum of exports worldwide accounted for less than 10% of global output; by 2023, 25% of all the value produced in the world is from exports [1]. Through this exponential increase, increasing faster than economic development, specialization has been the key in securing prosperity for most developed nations around the world. As usually the specialization follows a through line from agricultural goods, to manufacturing and progressing towards the eventual developed service sector, the symbol of development in the 21st century, there are countries that betray that norm and have found more unique ways of specializing. They have found their own niche, their own weird and wonderful way of creating development.

One such example of an extreme niche driving a nation’s government revenue is Tuvalu. Tuvalu, a collection of small islands that barely etch themselves out of the pearly blue ocean, licenses it’s internet domain for up to 458,000 [3] websites contributing millions of AUD in revenue a year. The “.tv” is an attractive prospect for companies in terms of their marketing and brand recognizability online. For the additional revenue and traffic, companies valued in the hundreds of millions like Twitch Interactive are willing to contribute hundreds of thousands of AUD annually for the privilege of the domain. Countries usually count in the billions, however, with a small economy consisting of 11,000 people, these domain sales contribute about 8% to Tuvalu’s government revenue annually [2]. This is higher than most of Tuvalu’s taxes including inheritance and property tax revenue.

For Tuvalu, Globalism allowed an incredibly niche asset be utilized with a net economic benefit that certainly contributed to the last decades increase in HDI (from 0.597 in 1999 to 0.641 in 2021). [4] The lack of reliance of this source of revenue has made it a clear addition to surplus rather than a way to balance the budget, leading to an overall positive result with no drawbacks for the island nation. Only one thing sours the almost free source of revenue: missed opportunity and ownership. As mentioned by Baldacchino, G., & Mellor in their paper, the tale of state sponsored entrepreneurship brought in a clear net benefit [5], however, early in the development the licensing rights were sold to Verisign, an American company. The arguments in favor are obvious, a multinational corporation has the resources to sell the product and deliver on the legal, financing and human resource capacity that a small island like Tuvalu cannot. The authors, however, argument that potentially, the outsourcing has substantial opportunity cost. It is not simply about the lost profit from outsourcing, but also the missed opportunity of having a business in house providing employment for an island nation with, according to the world bank, a 27% unemployment rate. This is a clear issue of globalizing an economy, as comparative advantages and absolute advantages pill up leaving there little economic incentive for domestic competitors to begin their entrepreneurial endeavors. This develops a cyclical dependency; Tuvalu will never have the infrastructure necessary for anything more than fishing and tourism if there is not a concerted push for institutions to develop, both private and public, to allow the economy to fully capitalize on its potential; there will never be a concerted push until there is a venture that incentivizes the institutions to invest and develop an idea into a business; a business into an industry; an industry into an economy.

The issues of opportunity costs involved in a niche resource is a common problem when discussing the cons of a globalized world. Nauru, a country only a short sail away from Tuvalu, became the world’s wealthiest nation per capita due to its natural gift, but that dream could only last so long. During the early 20th century, rich deposits of phosphate were discovered on the top layer of sediment of the island. Basically, the excrement of seagulls and other marine birds had accrued developing into a super fertilizer that was immensely valuable. To the inhabitants, bird poo was their gold, and, fortunately, they were sitting on millions of metric tons of it. During the 1960s and 70s, about 168 million USD$ worth was being extracted and exported annually to foreign countries for fertilizer or as an ingredient to skincare products [6]. This propelled Nauru to have approximately double the GDP per capita than the USA during this time. To say that the lives of the inhabitants was luxurious was an understatement. During the boom, a large proportion, up to 25%, of the population of working age were “deliberately unemployed” living off of the royalties gained from the phosphate industry. [7] At the turn of the century however, Nauru’s government declared bankruptcy on multiple occasions, with a populus reeling from unemployment, crisis, and numerous health epidemics.

What caused the end of the dream? A case of Dutch Disease. The island nation had only gained independence in the late '50s, and by that time, the one industry where the workers had the skills, the equipment, and the resources to contribute to GDP was the phosphate mining industry. Once the country had developed an overreliance, workers and entrepreneurs had little incentive to develop other skills or business ventures since the opportunity cost of not mining more phosphate would always outweigh the benefit of any other investment. Eventually, the island was left barren, with exports decreasing significantly over time, contributing to negative economic growth for decades. Finally, this culminated in multiple financial crises at the turn of the century, marking the beginning of foreign aid dependency for Nauru. Unfortunately, the global market had demanded the island to be stripped of its rich soil, trees, and beaches to satisfy the insatiable invisible hand. The destruction of the land caused Nauru to no longer be able to provide basic agricultural produce, and over time, the country was forced into import dependency for food and water. This, in itself, led to an obesity crisis as the population was offered less and less healthy consumer choice regarding food. The troubles did not end there, however; the overreliance on foreign aid led to Nauru being nominated as a convenient asylum detention facility for its most generous donor, Australia. Despite resistance and challenges from the inhabitants and the asylum seekers, Nauru simply cannot refuse the millions in revenue provided by the Australian government, considering its financial situation.

There are countless stories that emulate, almost perfectly, the tragedy of Nauru. However, it is important to acknowledge the potential of globalism in wealth creation, without all of the consequences. A contrasting example of the approach to Globalism most nations take is Bhutan. The country’s government, most famous for its adoption of the gross national happiness index, is dedicated to the preservation of Bhutan’s culture and environmental heritage. In fact, in the constitution of the country, Bhutan is obliged to maintain 60% of its land area to forest [8]. This extreme protectionism expands to tourism, mining, energy production, foreign direct investment and any other economic activity that can disturb the government’s mission of preservation. As researcher Reinfeld discusses [9], the government’s philosophy is to invite the global world only to the extent that it does not homogenize the country’s culture or disturb its environment. The largest source of revenue for the country: carbon credit trading and renewable energy. Bhutan’s hydroelectric plant provides 50 million USD in carbon offsetting credits[11] , overall the total of energy and carbon offsetting results in 80% of the government’s annual revenue. These revenues over the past decade have allowed investments into education and healthcare in order for the population to enjoy a steady increase of HDI from 0.54 in 2014 to 0.666 in 2021. [10]

To this day Bhutan still maintains 70% of its land area as forest, is reaching a full coverage of renewable electricity, and is doing all this while maintaining steady economic growth at around 3% [9] Globalism is great and has caused massive wealth to develop, the people of Bhutan are certainly better off, and so are countless of other economies, by trading their strategic resources in order to benefit from the gains of trade. We see this with the rising average wealth of the globe, and the consistent increase of development indicators over the years. However, there are limitations. Nauru is a an important warning that overdependency leads to terrible outcomes and may destroy the standards of living if global trade is engaged in unsustainably. James Aingimea, former Minister of the Nauru Congressional Church, said this about his country “I wish we’d never discovered that phosphate. I wish Nauru could look like it was before when I was a boy, it was so beautiful. There were trees; it was green everywhere and we can eat fresh coconuts and breadfruit. Now, I see what’s happened here and I want to cry.”