Economic decline is rarer than economic growth, but when it happens, it tends to be dramatic and persistent. The countries that have fallen furthest from peak relative prosperity share common pathways: political instability, institutional deterioration, resource mismanagement, conflict, or some combination of all four.
Argentina's century-long decline is the most studied case in economic history. In 1900, Argentina's per-capita income was comparable to France, Germany, and Canada. Its pampas produced agricultural wealth that rivaled the American Midwest. But a succession of military coups, Peronist populism, import substitution policies, hyperinflation episodes, and debt defaults gradually eroded its position. Today, Argentina's per-capita GDP is roughly one-quarter of France's. The question economists debate is not why Argentina declined, but why it has been unable to recover.
Venezuela presents a more compressed version of the same story. As recently as the 1970s, Venezuela had the highest per-capita income in Latin America, driven by oil wealth. Hugo Chávez's "Bolivarian Revolution" initially funded social programs with oil revenues but progressively destroyed private enterprise, rule of law, and eventually the oil sector itself. The result was the largest peacetime economic collapse in Latin American history.
These cases illustrate a crucial insight: natural resource wealth and initial conditions do not guarantee sustained prosperity. Institutions, governance, and policy choices are the decisive factors. Countries with few resources but strong institutions (Japan, South Korea, Singapore) have dramatically outperformed resource-rich countries with weak institutions (Venezuela, Nigeria, DRC).