University of Eldoret
Question
Asked 9th Jan, 2018
Why are some countries in the world rich and others poor?
- Any Scientific or empirical evidence / reasons why out of 196 countries in the world only 25 of them are very rich.
Most recent answer
That is life, those reach countries have been hardworking since mankind started. If you are ahead, you are likely to scale higher heights unlike the third world countries which are doing copy and catch-ups which is hard.
Popular answers (1)
Baghdad College of Economic Sciences University
Because some countries have a management system for their resources, and others do not have a management system
13 Recommendations
All Answers (52)
Economica
Edward, you probably know the basics of microeconomics and macroeconomics. Some countries (like Russia) had a social experiment in 1920s. Land was equally distributed across peasants, but in 10 years they have stratified into 3 classes: rich, medium and poor. There are many reasons for that: difference in labor productivity, difference in capital endowment (they may have initially different quantity of horses), random shocks (weather).
Countries did not start from equal initial endowment, and thus their race of growth gives even higher difference between winners and losers. But it does not exclude a possibility of growth miracle (USSR in 1930s, Japan in 1960s, China in the last 20 years). Some countries suffered more from wars. There are also many other factors. Liberal markets do not support convergence; a winner in the past often has an advantage in future.
About endogenous growth models, there is a book by R.Barro and X.Sala-i-Martin "Economic growth". There are different production factors (classical are labor and capital, but I would also add land and energy). There is also TFP (total factor productivity) that accounts for R&D and other unaccounted production factors.
8 Recommendations
Arab American University
HI
The following articles can be helpful
Hibbs, D. A., & Olsson, O. (2004). Geography, biogeography, and why some countries are rich and others are poor. Proceedings of the national academy of sciences of the United States of America, 101(10), 3715-3720.
Hall, R. E., & Jones, C. I. (1999). Why do some countries produce so much more output per worker than others?. The quarterly journal of economics, 114(1), 83-116.
Lucas, R. E. (1990). Why doesn't capital flow from rich to poor countries?. The American Economic Review, 80(2), 92-96.
Carlin, W., & Soskice, D. (2005). Macroeconomics: imperfections, institutions, and policies. OUP Catalogue.
Matsuyama, K. (1996). Why are there rich and poor countries? Symmetry-breaking in the world economy. Journal of the Japanese and International Economies, 10(4), 419-439.
Good Luck
4 Recommendations
Faculdades Oswaldo Cruz
Dear Edward,
I agree with all said above and suggest :
- Bad politicians
- Misused resources
- Corruption
- Unprepared policymakers
4 Recommendations
Belarus State Economic University
Edward you could look through this book:
Erik S. Reinert. How Rich Countries Got Rich ... and Why Poor Countries Stay Poor (London: Constable, 2007)
4 Recommendations
International University of Sarajevo
take into consideration some indicators below....
difference in levels of living and productivity , human capital , inequality and absolute poverty , greater social fractionalization , lower and higher levels of industrialization , adverse geography, poor or better quality of institutions etc
5 Recommendations
Kwame Nkrumah University Of Science and Technology
thx a lot to you all, I guess these are some of the reasons why none of the Africa countries could not make it to the top 25.
1 Recommendation
Private Entrepreneur Educator Scholar
Hall & Klitgaard opine that the access to and use of energy is decisive. In their ranking, trade and human ingenuity are secondary. This is the argument from biophysical economics.
5 Recommendations
University of London
Is it the case that if rich nations help poor nations grow richer, then rich countries may grow poorer? Control of your own resources, as a rich country, and other's resources (through economic means, belligerence, secondary-forced corruption) is surely important?
4 Recommendations
Bradley University
Stanley, the UK has coal but nowhere near the natural resources of Saudi Arabia and yet the UK is one of the richest nations on Earth!
2 Recommendations
University of London
Why, Amir, do you think it is?
Do you think infrastructure makes a difference for example? China's initial economic spurt was achieved-and still is-building up internal structures and internal markets?
And, UK uses all its adult population, where poss., in wealth creation while Saudi pins down half theirs in ritualised infantalisation. Resources surely arn't enough, otherwise Japan would be extremely poor. Anyway, UK has hardly any cheaply obtained coal left.
1 Recommendation
Bradley University
Stanley, I was commenting on your statement "Control of your own resources, as a rich country, and other's resources (through economic means, belligerence, secondary-forced corruption) is surely important?".
1 Recommendation
Hello Edward, in addition to all the well-informed viewpoints and recommendations above, my favorite work on this subject matter is, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, by Acemoglu and Robinson (Crown Publishing Group). Acemoglu and Robinson, attributed everything to the potency or otherwise of the political institution.
4 Recommendations
Kwame Nkrumah University Of Science and Technology
I agree with the cogent views of Prof. Yuri
1 Recommendation
University of London
Sorry, Amir, I mistook tone!! But also I did want to widen discussion!! I would not challenge you where Britain is concerned, as the country's behaviour, if as told to me by residents of African countries is correct, causes me concern.
I lived in Africa, close to being my favourite continent, and I could not understand the poverty I saw in Port Harcourt and Niger regions with knowledge of the oil reserves close by.
I do believe, in addition, that creating intrastructure is a means to wealth creation and perpetuating wealth, and goes someway to explaining European retention of wealth.
2 Recommendations
University of London
It may be that for there to be rich countries, there must be poor countries, with complex reasons and activities to keep them poor. Competition for resources must be suyppressed, economic growth controlled and leavened.
In the UK benefits are provided for the unemployed, sick, vulnerable, poor but this is usually within 'punishment' constructs or in ways that they can never escape from poverty. Often they are demonised, particularly by the right wing press. But wealthy countries require large sections of the population to receive little, thereby minimising and controlling cash flow, andrestricting opportunities-often to a large but identifiable elite.
2 Recommendations
Bradley University
Stanley, I agree with you. While I do believe that a nation is judged by the degree to which it cares for its weakest citizens, we do need greater expectations for personal responsibility and accountability, instead of encouraging dependancy. I see similar trends in the USA. Amir
2 Recommendations
Kwame Nkrumah University Of Science and Technology
Because some have more resources that others.
Because some maximize the use of their resources than others
Because some have politician who think about others
Because some have citizens who are ready to lay down their lives for the future generation
Because some sold out their best brains as slaves
Because some found ways to evolve earlier than others
The list goes on and on and on .......
2 Recommendations
Universiti Malaysia Sabah (UMS)
As mentioned above Education (human capital) is one of the most important element for development, not so much on natural resources. Good governance, transparent, inclusivity, are some of the ingredients towards prosperity. Helping the less develop country through Capacity building should be inculcated and implemented by developed and resourceful countries like USA, European and others. Instead of supplying armament to these countries for "personal agenda and self interest"
4 Recommendations
INSTITUTE OF NATIONAL ECONOMY, I.N.C.E. ROMANIAN ACADEMY
There are many factors that influence the richness and / or poverty of a country. I think culture is the most important.
3 Recommendations
It seems to me that I found a very good answer to the question of this discussion from the source
"Tatyana Voevodina's interview: Russia and the free market are incompatible" (in Russian). I reproduced by using captions the initial phrase of this interview, which fully reveals the essence of the answer:
"We need our economy to be closed. There is no special news in this. In 1817, in Germany and the United States, the economist Friedrich Liszt's book was simultaneously published, which is called the "National System of Political Economy" http://livros01.livrosgratis.com.br/mc000167.pdf There, he considers the economic history of different countries on a large factual basis. It shows that in order to develop, in order to produce industrialization, it is necessary to close economically. This does not mean that everything should be strictly done by oneself, not at all. This means that no free trade, that is, an open economy, when everyone can come and sell anything, this should not be. Because in this case, the backwardness of this country will only increase. And he said such a thing that in the absence of external competition and control by the state domestic competition is growing among producers within the country and this leads to progress. But will it ever be useful to open, YES, he answers, VERY USEFUL, this is when the countries will be at the same level of industrial and economic development. Only such countries will develop to mutual benefit. And if there is a country that is more backward and it opens up to a country less backward or vice versa, as a result, a more advanced country will suck up resources and aggravate its backwardness. But, in fact, this is called Protectionism. "
Tatyana Voevodina: The book "Managed Chaos or the Project of the Closing of Russia" https://www.ozon.ru/context/detail/id/143338453/
Some key phrases of the book:
1. With children today, no one seriously says, they just turn out to be "educational services"
2. Institutions of Higher Education are just points of overexposure of young guys to avoid the army
3. The state will rather build a cosmodrome than organize a decent network of eateries
4. When the basic industries are in the hands of foreigners, there is no need to talk about independence
5. We can learn to do everything that is necessary, if there is no temptation to take and buy
6. The modern world is the grinding of the planet's resources, which multiplies dump
2 Recommendations
PhD Mgt Walden University, Teach at various schools
Some countries are poor because of war and corruption and over dependence on foreign aid. These countries do not irrigate, grow enough food or use their resources wisely. A huge factor is the lack of free and universal education and equal access to healthcare for all citizens. Also countries that abuse women through prostitution, domination, domestic violence, limited occupational and educational opportunities and human trafficking tend to be poor. EducateD countries with equal opportunities for all tend to be richer
Dr Réagan
#ISTANDWITHELI
4 Recommendations
Government of West Bengal
They have
1.Good amount of resources (petroleum , gold, diamond etc. underground resources, good fertile land with good source of water etc.) and/ or
2. They have less population density in ratio with resources and/ or
3. Human resource with good efficiency of work with merit and labour and/ or
4. Know tricks for gathering of intelligent people from other countries and sale of their merit based products worldwide.
4 Recommendations
University of Monastir
I agree with Dr. Yuri and Dr. Shibabrata.
With my best regards!
- Adel
1 Recommendation
Kwame Nkrumah University Of Science and Technology
I also agree wit Dr Yuri and Dr. Shibabrata.
1 Recommendation
National University of Political Studies and Public Administration
First, will you excuse me, for first congratulating our colleague for his question: I feel like here having a new question like the one related to ‘Marxism’. That will be a ‘long run’ one, i.e. with many researchers feeling like having something to say about, and especially from a country like mine or from Southern countries.
So, let me have just a little introduction on a subject that might equally let enough aspects to skip. The first question is: ‘What does it mean a ‘poor’ and/or a ‘rich’ country?’ Example: between the US and, let’s say, Sweden. Which is richer/poorer ? If your answer is the US, one could retort that, despite the obvious difference between the two economic powers, the US keeps a soar poor people problem, the one that Sweden (the other 'little' one) is rather missing. Another example: might be India poorer than, let’s say, Netherlands ? Answer: Might India be typical for its poorness problem ? Yes, of course. But, my Goodness, could these two countries really compare to one-another, be it for richness/poorness ? Or let us have Kuwait comparing to Russian Federation, and so on… That is why, let us have a new ‘long run question’, but so (pardon me) a not so ‘proper sense’ one.
Finally, let me have a REAL answer of mine here about two types of countries, as on the best of my knowledge. Large countries versus small countries. A small country has a small home market, so low resources of industry development on its own. This country sees itself forced to economic openness, will play on exports – basing on international market --, then on foreign direct investments (FDI), then, roughly, on economic dependence on international forces, e.g. superpowers, multinationals… Whenever these forces, plus international market and world economy will get unstable or enter recession/crises our small country will automatically be suffering. But in exchange – or let us rather ask why this country or all small countries would chose such a strategy ? --, this (small) country so succeeds to solve what the opposite big countries hardly do: the citizens’ welfare – i.e. the poorness problem rather isn’t.
On the opposite: big countries. They might have large home market areas, then not too much dependence on international markets and forces and on world economy. World forces, other countries, multinationals etc. have much less to say in these countries and home governments are rather strong. A big country could do something at the best, i.e. solving foreign and international problems. Its economic and political force and influence are actually exogenous. Or, this is something that such a country – i.e. such group of world countries – then sees itself forced to pay. Large countries pay their international advantages by domestic welfare problems, e.g. some people will always be suffering in such a country.
4 Recommendations
Kwame Nkrumah University Of Science and Technology
thx Liviu Catalin Andrei according to
some countries in the world are very rich whilst others are so poor per income capital was only seeking to find out attributions for these fallouts
Technical University of Sofia
I think that the factors that influence the definition of countries as poor and rich are: natural resources; geography; political institutions;demography;culture;science;industrial revolution, government; taxes;secure property; rights; economy growth.
2 Recommendations
National University of Political Studies and Public Administration
Edward, here there is one more detail aspect where you highlight that countries and very rich and very poor, „given the income per capita”. I hope I’ve got it quite properly – if not, I appologise and invite you to skip this answer of mine.
What I like to highlight for you, in my turn, is that there are international statistics noting for some southern countries incomes per capita as low as US$ 300-400 a year. What ???
Might someone figure out living with the equivalent of this amount during a year ? Of sourse, it’s unhuman, I fully agree with you, but... Don’t you believe there is something wrong in ? Me, yes. Something might be mistaken. One might wonder how exactly these statistics are filled. Might someone lie in these documents? Could be. But as for me, there is something more serious to take into account in this respect. This might be that numbers we have in statistics are just formal economy. There might here be parts of the ecnomy yet not accounted, due to modern procedures, but so they are limitted capability. In other words, some natural economy persists nowadays, in the Internet era.
2 Recommendations
Federal University Wukari
The differences between the rich and the poor countries are political and socio-economic in nature. Good and effective politic system, good and effective economic system, effective utilization of economic and natural endowments, visionary leaders, effective administrative process, effective human capital development and utilization, inculcation and exhibition of the right values, among others makes the difference.
1 Recommendation
HP Inc.
Why are some countries in the world rich and others poor?
May be those rich countries are strong or stable in the following 4 areas i.e. political, economical, social (more towards education, healthcare, laws etc.) & technological.
1 Recommendation
The Maharaja Sayajirao University of Baroda
Economic conditions , economical planning approach ,industrial development ,natural resources may be the likely cause for the development of such country for his progressive growth which may provide employment to well many people & industries growth has remain the target for making the industrialist ,capital .
While thinking of poor countries it is said poverty is a crime but it is not so as it is person who have to make their progress of their living in their own way for which even if it demands a mobility than such person should go to nearest place of the country to make livelihood & bring the money for the family .
Other countries remain poor that due to the poor resources they have not planned their approach which the country economic demands ,in such cases the government should plan a proper economical planning approach which may help the local natives for creating the job for such natives .
This is my personal opinion
3 Recommendations
Kwame Nkrumah University Of Science and Technology
cant help agreeing with you more Rohit M Parikh, excellent piece
Middle Technical University
Countries are rich for the following reasons and vice versa:
Presence of natural wealth
Scientific and technological progress
Rational governments
Conscious people
8 Recommendations
Al-Zaytoonah University of Jordan
Rich countries have good management for their resources but poor countries have bad management for their resources.
1 Recommendation
جامعةالقادسية
الادارة الجيدة والمفكرة من قبل الحكومات فهناك دول تعيش حالة من الفقر الشديد على الرغم من امتلاكها الموارد التي تجعلها في مصاف الدول الغنية, وهناك من الدول الفيقرة التي لاتمتلك من الموارد الا الشيء القليل الا أنها متقدمة في شتى المجالات .
3 Recommendations
Baghdad College of Economic Sciences University
Because some countries have a management system for their resources, and others do not have a management system
13 Recommendations
INSTITUTE OF NATIONAL ECONOMY, I.N.C.E. ROMANIAN ACADEMY
Not that some are rich and others are poor. It matters to have the chance to build your future as you wish. So the interference in the internal affairs of other states and equivalent exchanges counts.
4 Recommendations
Swiss School Of Business and Management Geneva
optimization of a resource is better used in those few rich countries as compared to the poor countries. The so-called poor countries' leaders are self-centered to amass wealth to themselves for the common good of society. there are so many roots you can look at when it comes to the rich and the poor divide
1 Recommendation
Universiti Malaysia Sabah (UMS)
Policies matters couple with implementation. For an effective implementation of the policies we need Human capital and good governance, these are the prerequisite to development.
Ritsumeikan University
Fruitful management along with hard working to enrich its all sectors utilizing the available man power and efficient use of the resources, i think one of the most cause for development.
1 Recommendation
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