Lets go opposite to L. Dutch answer, because why not and I am bored. We'll have to make bunch of assumptions and stretch some reality to make Moronland feasible.... But hey! In Multiverse it has to happen sooner or later!
- Lets ignore problems of IQ vs intelligence vs wisdom etc.
- Lets assume somehow your moron islanders can successfully exile
anyone capable of reading with closed mouth. Because island is full
of morons lets say Koalemos itself makes sure its favorite island of
cute dummies stays that way. Or maybe there is good reason to get away from that island.
- Lets assume that somehow that island is capable of maintaining
independence and stability. Somehow no one wants to invade or
otherwise mess with it, who would want to deal with bunch of moronic
fanatics on a barren rock anyway?
- Lets start early, because you have not specified era. Let's say morons got to their islands around 5000 BC, and for whatever reason they settled barren piece of rock instead of that green lush garden of Eden on horizon. Religion does not need to make sense.
Before GPD, you need food and water so...
- Islands are blessed by winds. Lots of short rainfalls provide water.
How much water? Just to sustain 2 million morons.
- Islands are blessed by sea. Make it in center of breeding ground (waters?) of fishes dumb and populous enough to be caught by bunch of morons with basic tools.
Then you need to regulate population, because it does not take morons to breed more than they can feed...
- Active volcanos. From time to time Great Cleansing Of Flames brings loyal believers into Koalemos blessed realm. Boom, splash, poof, sizzle. Barren, warm, island ready to repopulate.
- Several sources of Culling Of Unfaithful. Storms, tsunamis, pestilence, angry meteorites, etc.
Okay, we reached somewhat stable stone-age volcanic archipelago full of overbreeding morons.
Now the GPD. Islanders do not "produce". They fish, they eat, they breed, they die. But mostly worship Koalemos. Only thing they export are non-morons, and only thing they have is population. They need external assistance, which means that Moronland income has to be based on dispensable income of nearby nations. For that you need trade, for which you need neighbors...
So lets establish their neighbors.
- Bunch of non-volcanic islands with fresh water and greenery got inhabited by early exiled peps.
- Exiles, feeling superior to morons, establish opposite culture. They crave intelligence and are despite being feed up with religion decided to go neutral rather than negative toward Koalemos. After all morons just wants to sit on their islands for whatever reason.
- Neighbors, due to better brains and environment that won't wipe their progress each year, advance technologically. Farming, ships, some medicine etc.
- Turns out intelligence is not as inheritable as they wished to believe. Most of their children turns out to be Morons well fit for Moronland. Lest say 1 Brainiac out of 100 crotchgobblins.
- Brainiacs that want smart kid/servant/disciple/successor start to adopt new exiles, as they turn out to be superior source of offspring when compared to genetic roulette of fornications.
- What to do with dumb kids? Give 'em crate of potatoes and exile back to Moronland! You get to stroke your ego/morals by "returning them to their people" instead of inventing gas chambers.
- Now that you got to island where everyone is constantly fornicating because they got nothing better to do in-between volcano eruptions, and you need to wait for favorable winds anyway...
Fast forward few thousand years forward...
Moronland is effectively a fourth world country of religious fanatics with such high population... turnover... that despite low chance for smart kid they make up for it with quantity, of which exiled smart ones are primary export of Moronland.
Stability and independence, and containment, is guaranteed by coalition of nearby advanced nations that are too busy arguing about quark names and planet definition to engage in petty military conquest.
So the Morons breed and pray while their neighbors invest in infrastructure that improves crotchgobblin spawn rate while preserving pristine unsustainability of Moronland.
In meantime various groups use this neutral grounds for black market, sex holidays (aka STD import), testing new shampoo recipe on human subject, volcano bungee. Some might even pay premium for kid preorder of chosen characteristics.