Economics Explained Eritrea Is the Worst Economy on Earth
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Feb 15, 2024 A podcast discusses Eritrea's dire economic situation, calling it the worst economy on Earth. The country is a military dictatorship and lacks free markets and trading partners. Its high debt to GDP ratio is due to its critical region for international shipping. Life in Eritrea is incredibly challenging.
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Eritrea's Strategic Location
- Eritrea sits strategically at the Red Sea entrance, near vital global shipping routes like the Suez Canal.
- Its location makes the country geopolitically important despite its poor economic state.
Government Control Stifles Economy
- Eritrea's command economy tightly controls all major industries and conscripts much of its population for forced labor.
- This government control stifles private enterprise and misaligns economic outputs from the needs of its people.
Limits of Command Economies
- Command economies struggle because central planners can't effectively manage billions of economic decisions.
- This often leads to instability and greater economic failures compared to free market economies.