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Why Some Countries Are Poor and Others Rich

Why Some Countries Are Poor and Others Rich

There are 196 countries in the world.
25 of them are very rich, defined as having an average wealth per person of over $100,000
a year. They are: But far more countries are quite poor, and
some – which we’re considering here – are very very poor. These are the 20 poorest countries in the
world: where the per capital wealth is under a $1,000 a year, or under three dollars a
day. Every country is now more or less on a path
to growth, but the poor ones are growing very, very slowly. If Zimbabwe continues at its
current growth rate, it will qualify as a ‘rich country’ in 2722 years. What we want to know in this film is why some
countries prosper and others stagnate: – so we can understand what rich countries
are doing right – and get a better grip on the challenges
and hurdles facing poor countries. There are basically three factors that determine
whether a country will be rich or poor. The first is: INSTITUTIONS Institutions are beyond important.
Broadly speaking, rich countries have ‘good institutions’ and poor ones have very, very
bad ones. The correlation between poverty and corruption
is direct. The richest countries in the world are quite simply invariably also the least
corrupt ones. And the most corrupt countries are also the
poorest. When countries are corrupt, they can’t collect
enough taxes to get the good institutions they would need to escape the poverty trap. Half of the wealth of the world’s poorest
20 countries goes into offshore accounts. Lost revenues in these countries totals between
$10 and $20 billion dollars a year Meanwhile, without an adequate tax base, poor
countries can’t invest in police, education, health, transport. Now, a more generous way to look at corruption
is that it’s really a case of clan-based thinking. Say you’re hiring someone. In
the rich countries, you’re meant to do so simply on merit, interviewing lots of candidates
then picking the best one irrespective of any personal connection. But in poor countries under the sway of clan-based
thinking, that approach would itself be corrupt: it’s your duty to disregard the so-called
best candidate from an anonymous bunch, in order to pick someone from your own team:
your uncle, your brother, your second cousin, the guys from the same tribe. As a result, poor countries don’t allow
themselves access to the intelligence and talent of the whole population. There’s a second thing that keeps countries
poor: CULTURE – what goes on in people’s minds, their outlooks
and beliefs… A striking statistic pops up here in relation
to religion. If there’s one generalisation you can make
about religion and wealth, it’s that the less people believe, the richer they stand
a chance of being. 19 of the richest countries in the world have
70% or more of their populations saying religion is not at all important to them. The exception here is – unsurprisingly – the
United States, which manages to combine great religiosity with huge wealth (more on that
in a second). And conversely, the poorest nations in the
world are also extremely believing ones. Here’s how many people think religion and the supernatural
is deeply important in the following countries: In the world’s poorest country, simply everyone
is a believer. Why is belief quite so bad for wealth creation? Because in general, religiosity is connected
up with the idea that the here and now can’t be improved, so you should focus on the spiritual
and look forward to a next world instead. It makes quite a bit of sense when you live
here. In the rich world on the other hand, people
are generally great believers in their capacity to alter their destiny through effort and
talent. Incidentally, to explain the anomaly of the
United States, religion seems not to slow down economic growth here because it is a
particular sort of religion: an overwhelmingly Protestant and exceptionally materialistic
kind. The American god doesn’t want
you to think of building the new jerusalem in the next world, He wants it here and now
in Kansas or Houston. There’s another big factor that determines
the wealth and poverty of nations: GEOGRAPHY Poor countries are overwhelmingly located
in the tropical regions. This isn’t a coincidence. Life is, in many ways, simply far far tougher
there. The problems begin with agriculture: Tropical plants are generally a lot less packed
with carbohydrates. Poor countries have worse soil too.
Also, and perhaps surprisingly, a tropical climate can be disadvantageous to photosynthesis. Historically, a key determinant in the likelihood
of societies growing rich was their possession of large domesticated animals (such as horses
and oxen) which liberated a huge part of the workforce from having to plough by hand. But in tropical africa, domesticated animals
have throughout time been devastated by a further appalling scourge: the Tsetse fly. This small fly—exclusively present in Africa
because of its heat and humidity— knocks out animals on an enormous scale, making them
sleepy or inactive – and has had a profound effect on the ability of Africans to develop
technology, increase agricultural productivity and amass wealth. —
It isnt just plants and animals that suffer in the tropics. In the middle latitudes, humans
are open to a terrifying array of diseases including 100% of low-income countries are affected
by at least five tropical diseases simultaneously. The magical temperature which has helped to
make rich countries rich is 16 degrees centrigade. However superficially unpleasant, that drop
below 16 degrees as autumn starts to bite is quite literally, a foundation stone of
civilisation. Geography also encompasses transport and poor
countries are, on the whole, very badly connected. Landlocked Bolivia and semilandlocked Paraguy
are the poorest nations in South America Africa has only one major navigable river,
the Nile and hosts 15 landlocked nations, 11 of which have average incomes of $600 or
less. Not coincidentally, the poorest country in
Asia, Afghanistan, is also landlocked. Then there’s the matter of natural resources. Natural resources (like oil or precious metals)
can be real trouble – and, paradoxically, poor countries tend to have them in spades. These natural resources are what economists
call intensifiers: they will help to make a country with good institutions richer, but
one with bad institutions get even poorer, precipitating what’s called the resources
trap. So the Democratic Republic of the Congo is
one of the world’s most mineral rich countries; holding most of the world’s Coltan, which
every mobile phone has a bit of inside. But natural resource wealth helps elites to
grab money without requiring the cooperation of the whole society. If the only way to grow
wealthy is to assemble high tech aeroengines, for example, you’re going to need your whole
society to buy into the project but if you just need to extract a few minerals, you can
do so with a small labour force, guns and an airstrip long enough to ferry your loot
out to market. The wealth from Coltan keeps DRC armed rebels
in guns and corrupts every level of society. So how should one weigh up the relative importance
of all these different factors, institutional, cultural and geographic, in determining the
wealth of a nation. There’s no hard and fast rules, but as a
guide, one can suggest that: 50% of a nation’s wealth comes down to its
institutions 20% is due to its culture.
and 10% each can be allocated to latitude, connectivity with the rest of the world, and
geological good fortune. If you’re a policy maker, this discussion
has wide practical implications. But at a more personal level, one might take away two
things from it; Firstly, Modesty: you should have a better
idea of what you owe your individual success to – which is not so much your own hard work
or fine mind, as the broader society you live in which was produced over centuries and which
you now draw benefit from unknowingly. And at the same time, Sympathy: an ability
not to see failing societies just as basket cases, but rather as countries facing comprehensible
and hugely difficult problems. Our sympathy can be enhanced by reflecting that the troubles
of desperate lands are to a considerable extent to do with malaria, a lack of navigable river
and the horrific buzzing of the tsetse fly – rather than always some more intimate human
failing which we would ourselves never manifest.

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