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Why Are Some Countries Rich and Others Poor?
- LeonigMig 9y agoNo mention of colonialism or imperialism here. Not the whole answer, but part.
- sumedh 9y agoWell check the section about Korea, look at South Korea now.
- gaius 9y agoOr East vs West Germany.
- tpeo 9y agoThe impact of colonialism is studied under the institutionalist approach to growth theory, with the two most proeminent recent authors being Acemoglu and Robinson. The submission doesn't elaborate on it, but the literature is out there.
- aaronbrethorst 9y agoI'm not sure what your comment is supposed to mean. Can you explain in such a way that a non-domain expert can better interpret it?
- tpeo 9y agoI'm not sure what you think I suppose to mean. The economic impact of colonialism is already an active area of study. I'm just pointing out that it exists.
- aaronbrethorst 9y agoThe impact of colonialism is studied under the institutionalist approach to growth theory What is the institutionalist approach? What is growth theory? authors being Acemoglu and Robinson. Who? The submission doesn't elaborate on it, but the literature is out there. I'm not trying to be a smart-ass, but I'd like to know more after reading your comment than I did before.
- tpeo 9y agoWell, the submission itself has a section entitled "Institutions". Institutional economics is a field of economics that studies the impact of the strength, stability and overall design of "institutions", in the widest possible sense, on economic activity. Stuff like the impact of the credibility and strength of property rights or the impact of minority rule, for instance, goes in here. Growth theory, or rather development economics, studies how and why wealth grows. And here go ... pretty much any economic growth models. I really don't know how else to say it. Finally, an institutional approach to development economics studies how institutions might cause nations either grow or not, depending on their institutions, and the guys who kick-started this approach were Daron Acemoglu of MIT and James Robinson, of Chicago University. They have a book on it called "Why Nations Fail", released in 2012, which has already been recommended by another commenter. Their main thesis being that certain patterns of colonialism induce certain patterns of institutions, which they call "extractive", by which a minority appropriates most of a country's wealth for itself, while setting the country on a low growth path. The classic example being a resource-based economy under either a minority or authoritarian rule. If this all sounds really general, that's because it is. I haven't read much on institutional economics, much less on the economics of colonialism. But I know it's out there.
- aaronbrethorst 9y agoBravo, thank you.
- deleted 9y ago[deleted]
- qualitytime 9y agoLOL. And there we have the academic misdirection while brushing it under the carpet.
- hasenj 9y agoJapan and Germany were completely devastated after WWII, on a scale we have never witnessed in our lifetimes, yet they rose out of the Ashes. So no, it's not colonialism. It has to be something less visible. Something that a country like Afghanistan for example severely lacks. You might point to dictatorships, but I would point to South and North Koreas. South Korea was ruled by a brutal dictatorship for decades, in a way not so different from Egypt today. Yet that did not stop it from developing. Even North Korea fares a lot better than many third world countries that have little to no enmities with their neighbors. I suspect the only reason North Korea sucks is because of the pressures/blockades imposed on it by the US (mostly for historical reasons).
- egeozcan 9y agoI say moderate weather and higher percentage of fertile land.
- sddfd 9y agoAfter WWII, the US invested /massively/ in Germany. Also, many people were trained in some profession, so even though everthing was destroyed, they knew how to rebuild it.
- Synaesthesia 9y agoSame with South Korea, which actually made a lot of money during the Vietnam war, as did Japan. Japan trade with Zeus boomed at that time, and Korea supplied 300 000 mercenaries. Before that North Korea was faring better economically than the south.
- rohit2412 9y agoI believe Japan and Germanys still had an educated and skilled population. And working systems against corruption and rule of law in society.
- tormeh 9y agoI thought that was pretty amusing at first, but at least in Germany there was a system that could be resurrected after Hitler. In Japan, I don't know.
- throwaway8591 9y agoIndeed. How rich would Finland, Sweden, Austria, and Poland really be today had they never colonized Africa or subjugated and enslaved its industrious inhabitants, and how rich would Ethiopia be if it had been spared from the ravages of European rapacity?
- mcv 9y agoIt's hard to say. Some countries were rich before they were colonised and had all their riches stolen, others were poor to begin with. Ethiopia is actually often mentioned as the only country in Africa that wasn't colonised (though that's not entirely true), and has been rich and powerful in the past, but it poor now. One of the poorest countries in Africa, Mali, was once the home of one of the richest empires ever. China has been the richest and most powerful countries in the world for 2000 years before European nations crippled it in the Opium Wars. Finland was never a colonial power, by the way. Sweden was, but Finland was still largely tribal a bit over a century ago, and was kind of a colony of Sweden and Russia alternately. The rise of Finland to one of the most civilised countries in the world over the period of a century is really interesting. I fear racism is also a big factor. White people in Finland are more likely to get a break from other white people than black people in Ethiopia are. But culture is also a big factor. In Europe, the most powerful economies are in the traditionally protestant north, whereas the Catholic south tends to have somewhat weaker economies. But why? And why were Muslim countries rich, powerful and advanced in the Middle Ages, and now not anymore?
- distances 9y ago> Ethiopia is actually often mentioned as the only country in Africa that wasn't colonised > Finland was never a colonial power, by the way. That was the whole sarcastically made point of the grandparent comment. Rich non-colonizing states vs. poor non-colonized states.
- mcv 9y agoYou're probably right, but the grandparent wasn't entirely correct. Sweden has had colonies in both Africa and the Caribbean, and Ethiopia has been colonised, although both for only a fairly short period. Colonisation obviously does play a role. It's ridiculous to claim that pillaging or oppressing another country doesn't hurt it, nor enrich the country that takes the profits. But it's not remotely the only factor at play. And the further in the past some events are, the more they get overshadowed by more recent history. I don't think Italy has much remaining benefit from the slaves the Roman Empire took from the Kelts they conquered.
- icantdrive55 9y ago"Because GDP per capita is simply GDP divided by the population, it is a measure of income as if it were divided equally among the population. In reality, there can be large differences in the incomes of people within a country. So, even in a country with relatively low GDP, some people will be better off than others. And, there are poor people in very wealthy countries." Enough said. As a US citizen, I don't consider my country as rich. We are in debt. The rich boys, and their span always do well, and own oh so--so much, and I'm not even talking just money. Crazy? No. It's pretty basic. I'm sick of it personally. I had a chance to move to France, or Norway years ago; regret not going.
- Melchizedek 9y agoOne important factor could be differences in intelligence. https://infogalactic.com/info/IQ_and_Global_Inequality https://infogalactic.com/info/IQ_and_Global_Inequality
- gumoro 9y agoCorrelation, causation... Tomahto, tomayto...
- zimzim 9y agoFor the past century raw scores on IQ tests have been rising; this score increase is known as the "Flynn effect," named after Jim Flynn. In the United States, the increase was continuous and approximately linear from the earliest years of testing to about 1998 when the gains stopped and some tests even showed decreasing test scores. For example, in the United States the average scores of blacks on some IQ tests in 1995 were the same as the scores of whites in 1945.[61] As one pair of academics phrased it, "the typical African American today probably has a slightly higher IQ than the grandparents of today's average white American."[62] https://en.wikipedia.org/wiki/Race_and_intelligence https://en.wikipedia.org/wiki/Race_and_intelligence IQ is a culture thing not a brain thing
- sumedh 9y agoAs someone who migrated from a developing country(India) to a developed country(Australia) and observing the difference in quality of life of average citizens among the two countries, I always wonder why politicians/dictators from developing countries who can also observe these differences ever wonder that the average people in a developed country are living a good life so why not just copy what the developed country is doing and apply the similar policies back home to improve the lives of their own citizens.
- emrahayanoglu 9y agoBecause controlling people, who are struggling in their life, are much easier by dictators. Even with religious activities, dictators can make citizens pray for him. if politicians allow you to have lots of chances, then you'll start criticizing and want more. More improvement on life conditions gives you less control on citizens. I'm Turkish living in Switzerland, I can say that it is the same shit in every developing country and i can ensure you they won't be developed due to the facts that i mentioned above. We need really high numbers of citizens to break the borders.
- donquichotte 9y agoAlso, corruption. This is anectotal, but in the countries I've visisted, which include a hand full of ex Soviet republics, the median quality of life seemed to be negatively correlated with the amount of corruption.
- egeozcan 9y agoI'm also Turkish, and believe me, when you have a dictator with his troll army, sucking the life out of the whole country, you'll wish you had the typical corrupt but manageable government from the 90s. The types we have these times would stand next to a kilometer-long list documenting their illegal business and say "we did what needs to be done for our great country" and everyone would cheer while you make escape plans. Hi from Germany(the risk of being falsely labeled as a teenager won't stop me: I<3🇩🇪).
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- F_r_k 9y agoI recommend everyone interested in this subject to read "Why Nations Fail: The Origins of Power, Prosperity, and Poverty" by Daron Acemoglu It's a great book that tries to explain why.
- cinquemb 9y agoI came across this 36 page lecture[0] with the same title in by another person with the author, for those who want some insight without buying the book. Interesting to read, and it seems like it comes down to: - Because they have extractive political and economic institutions. - These are difficult to change though they can be successfully challenged and altered during critical junctures. - The roots of modern world inequality lie in the emergence of inclusive institutions in Britain and the fruits of this - the industrial revolution - spread to those parts of the world that had similar institutions (settler colonies) or quickly developed them (Western Europe). - Other parts of the world languished with extractive institutions which have persisted over time and thus remain poor today. With caveats of: - History is not destiny. - Effective reforms towards inclusive institutions possible. - But it often necessitates a minor or major political revolution. Two examples: 1 End of Southern equilibrium in the United States 2 Botswana I think I was drawn to this part in the lecture and started thinking about what modern day analogous of this could look like (Jamie Dimon's position on crypto-currencies as of late [specifically bitcoin] as modern day Sultan wrt firing employees trading such [and other well politically entrenched financial institutions around the world], DPI on internet networks by various nation states from blocking easy access to information, etc) : - In 1445 in the German city of Mainz, Johannes Gutenberg invented the printing press based on movable type. Spread rapidly throughout Western Europe. - In 1485, the Ottoman Sultan Bayezid II issued an edict to the effect that Muslims were expressly forbidden from printing in Arabic. [0] http://www.lse.ac.uk/assets/richmedia/channels/publicLecturesAndEvents/slides/20110608_1830_whyNationsFail_sl.pdf http://www.lse.ac.uk/assets/richmedia/channels/publicLecture...
- AstralStorm 9y agoI "like" the use of North Korea as example of bad institutions and not of effect of embargoes. Likewise South Korea definitely did not receive (and properly used) foreign aid. /s The article clearly contradicts itself on the point by showing how ineffective Qing dynasty policy reforms were in China while later even bigger changes in communist China worked. And definitely does not address anything related to USSR or rise of the USA. Or further back, British empire. (Each employed very different policies was successful for a time.) And then you have to look even further back... Conclusions are therefore a joke toy model.
- dba7dba 9y ago> Likewise South Korea definitely did not receive (and properly used) foreign aid. South Korea did receive quite a lot of foreign aid from US, UN. South Korea is the only nation to transition from receiver to giver in international aid. https://poldev.revues.org/1535 https://poldev.revues.org/1535
- erikb 9y agoNot just that nobody's helping and their system may be outdated, more powerful players are playing to keep them weak and use them as pieces in their competition with each other. The more powerful countries also don't really have an alternative, since stopping to compete means becoming weaker oneself, and helping others become stronger doesn't guarantee that they wouldn't become a new competiitor at the "big table".
- wheresvic1 9y agoI'll save you all a click: The article answers the question with the following two points: - lack of strong institutions - trade barriers It provides an example of North vs south Korea in defense of the theory. It's a ridiculously simplistic synthesis in my opinion.
- imperfect_cat 9y agoThis criticism is always so weird. What should the article - not thesis note, ARTICLE - have been: 10 times longer? It is almost like people expect comprehensive, bulletproof writing in under 1000 words.
- aninhumer 9y agoThe criticism is not that the article should be more comprehensive, but that the title implies that it is.
- bronz 9y agoeconomics as a field seems to be poisoned with fuzzy thinking. this guy says that the division of korea is an experiment that shows the results of communism vs capitalism, essentially, and then concludes that the lack of a free market in NK is the reason that it is very poor. is it not relevant that north korea is currently and has been for quite some time the target of heavy sanctions by the united states and its allies? a centralized economy is perfectly capable of performing as well as a decentralized one, provided that it is centralized well. pointing to this implementation of a centralized economy does nothing to advance the argument against the viability of centralized economies. this guy says that the output of people is what determines the wealth of a country. this confuses me a little because isnt it true that if all the countries in the world were filled with productive people, there might not be enough demand for all of their services? would a large chunk of people not be left behind? and, according to my introductory economics textbook, if such demand exists that every person on this earth can be employed at a high salary, would that demand not have already been naturally met in this global free market of nations that has existed for some time now? and lastly, here in the united states, a very rich country, most people have relatively meaningless jobs. people are wildly overpaid for the work that they do here in many cases. there are professors of womens studies and social network or engagement experts who are paid a lot of money to essentially do nothing. i would be happy to be corrected.
- whb07 9y agoI gather you're of the belief that the economy is like a pie of fixed proportions to be divided rather than an ever changing pie which can grow bigger every year with productivity ? I once read a wonderful thought experiment on the Mises page about a Dorothy sized storm. Imagine a tornado swept by and grabbed a large number of hard working and smart people randomly and placed them in a random town. While people are temporarily shuffled, the brain surgeon(or some highly skilled technical person) is forced to pick up another trade like carpentry or any other less technical job in the meantime to provide and be productive in this new economy/town. The storm swept up and carried him elsewhere and so is temporarily stopping his highly skilled activity to become productive in some other one. The same is to be said of the economy at large. People are shuffled due to many events and will never be at "full" productivity due to unforeseaable events, for example, a bad weather event. Jobs come and go. Same goes for industries. Even more so for trends.
- alborzmassah 9y agoWhy don't countries just merge or join each other? Doesn't all the division simply create more fear and us VS them.
- tanto 9y agoTo put it a bit colorful: Because in the Game of Nations many people want to be King. To have many Kings you need many Kingdoms. Also Unity makes you strong and usually your enemies will do whatever they can to divide and conquer.
- mantas 9y agoMore like people don't like when people from far away try to enforce seemingly stupid laws. Having a vote that actually matters is awesome. The other question is how those tiny kingdoms organise into bigger structures to have economy-of-scale, while still retaining their sovereignty on internal matters.
- mantas 9y agoCultural differences and tendency for bigger cultures to push theirs onto smaller cultures. Source: living in a country that run away from bigger brother few decades ago.
- tim333 9y agoThey're kind of trying that with the EU. Mixed results.
- nostromo123 9y agoYeah, that usually ends well, as we have seen in history. /sarcasm Just look at Austro-Hungarian Empire, Yugoslavia, etc. You can't force cultures to merge, a problem also acutely experienced in the EU at the moment.
- mc32 9y agoWasn't there a significant divergence in fortunes as economies transformed from resource based to value added economies? Around the turn of the XX century, many struggling economies today were on par with middling countries in Europe. Think Czech, Finland, Hungary, Polen, Japan. Brazil, Mexico, etc., were competitive with them back then, but now, the latter are seen as basket cases of mismanagement. And empire and colonialism didn't give even Japan aby advantage till the 30s, arguably one could say that sapped their vigor. On the other hand LatAm had become independent from Iberian powers while inheriting a system of government (not the best but arguably better than monarchies), yet with the exceptions of Chile and Uruguay, the rest have underperformed.
- anovikov 9y agoBrazil became a basket case of mismanagement only since a few years ago, that isn't something they are doomed to forever. They are already well on the way to fix that.
- te_chris 9y agoBy deposing a democratically elected president? Not Brazilian, but I'm not sure how this is 'fixing it'. The key strength of the West, IMO, is, as others have said, the things you don't see. Trustworthy institutions that mean you're not always second-guessing whether or not something is as it seems. That's why it's so important for us Westerners to be vigilant to attacks on the integrity of our institutions and systems.
- hikarudo 9y agoDemocratically elected, and democratically deposed. The March 2016 demonstrations were the largest in the history of Brazil, and for good reasons.
- tpeo 9y agoYes, there was. It is literally called "The Great Divergence". https://en.wikipedia.org/wiki/Great_Divergence https://en.wikipedia.org/wiki/Great_Divergence
- jamesmattis 9y agoThere must be a definition of rich and poor. It should not be devised by looking at the wealth. It should be devised by looking at the living standards, education system, environment, law and order, equality, zero racism. And where people can live an anxiety/depression free life. Where there is welfare, care, love grows everyday for each other.
- amrrs 9y agoOne metric come across in these discussions is 'GNH' - Gross National Happiness https://en.wikipedia.org/wiki/Gross_National_Happiness https://en.wikipedia.org/wiki/Gross_National_Happiness
- stun 9y agoThe zero racism part is not gonna slide with the so-called developed countries
- imperfect_cat 9y agoSadly, that defines one race countries. No racism possible when there are no races but one. Personally, I think this definition is bad because it progress free. Anxiety free is has no scale. If you are massively anxious I. Country A, and mildly anxious in B, both fail. Need to rethink this.
- tim333 9y agoThere still seems a fair bit of racism in mostly one race countries, say Japan for example. There seems less in widely mixed places, say London or Singapore.
- nostromo123 9y agoYeah, London, where not being of the "correct" religion can get you killed in some areas! (I know, religion is not a race, etc....my point is that mixed places are not necessarily more tolerant)
- meric 9y agoWhy are there bigger numbers and smaller numbers?
- bluetomcat 9y agoAhh, productivity. You'll be highly productive deforesting your lands, I'll be highly productive in selling pop-culture to the entire world. I get wood and you get obese. Deal?
- smithmayowa 9y agoI like to think that countries that are rich have figured out things about themselves that they have and are really needed by the rest of the world, and so they provide those services to the rest of the world for a price and use the proceeds from those services to develop the infrastructure and well-being of their country; for instance a very important well-being improving task is diversifying their economy, this they do to protect against unforeseen shifts in the global market. The summary of this is that rich country figured out low hanging and easy fruits of services(for them that is, as if it was easy for others they could not hope to sell such services.) they could provide for a fortune and use those proceeds from those services to chase after high hanging fruits of services they could deliver to the world as those one's usually require intense capital. Poor countries therefore either have not figured out services they could provide for the world or they have figured it out but are not investing the proceeds from it in the infrastructure and well-being of their country, being a Nigerian I would say most poor African countries are poor not because of the former but the later due to corruption,tribalism,e.t.c.
- js8 9y agoI think it just happens randomly, and here is the answer about the mechanism: https://www.youtube.com/watch?v=iyHVwUe66qw https://www.youtube.com/watch?v=iyHVwUe66qw
- wallace_f 9y agoEconomists can sometimes be the equivalent to the priests of the past--basically making justifications for the ruling class. I was once passionate about economics and public policy... If we are to be honest about it, at some point you just realize that the world is much less nice than I imagined, and it's that way because of people's greed. That's not to say there aren't a fair good number of decent people out there, but those people are rarely found in powerful positions; and if they are, they are still susceptible to being corrupted.
- justboxing 9y ago> it's that way because of people's greed. Came here to say this. The poverty and richness (this word doesn't sound right) of every country can be directly tied to the greed (or lack thereof) of 1 or more rulers, aristocrats, businessmen, dicatators, prime ministers, presidents = "ruling class". That's all there is to it. No amount of analysis or economic theories, justifications or "studies" can hide that.
- andriesm 9y agoThe beauty about free market economics is, it doesn't depend on people's niceness to maximize productivity, capital utilization and consequently the aggregate standard of living of a country. Supply and demand, and pursueing self interest will achieve all of this in the aggregate despite any localized exceptions.
- charlesism 9y ago> The beauty about free market economics is, [etc] So Economics is a science after all!
- sgift 9y agoThat's the believe. The proof in the real world is quite lacking.
- wallace_f 9y agoThere is a lot of proof markets do work very well when you get close to perfect (and I'd add, fair) competition. Outside of that, things begin to break down quickly.
- sus_007 9y agoAs a citizen of a developing country (Nepal) which has been haunted by its unstable politics, I'd still like to (partially)advocate that even less-developed nations(at least some) have invaluable resources (mostly natural) that the urbane nations can't renew for themselves. For instance, here in Nepal, there's a massive open market for tourism due to the remarkable landscapes(mountain ranges, "Everest", geographically blessed I'd say) & ancient cultural heritages(sacred Hinduism & Origin of Buddhism). Had there been a proper salutation of foreign indulgence in exploiting the resources over here, Nepal would have done much better. Hence, the political mayhem has led our country nowhere productive. :(
- bolololo1 9y agoMost rich countries are rich because they build their wealth on free labor (slavery), and this countries include USA, UK, France, Germany, Belgium, etc. Some are really poor because they've been exploited by the countries mentioned above (Africa and former German, British, Belgian, French colonies). Some are poorer because they've been destroyed by war multiple times (Poland).
- throwaway8591 9y ago> Most rich countries are rich because they build their wealth on free labor (slavery), and this countries include USA, UK, France, Germany, Belgium, etc Don't stop there. Throw in Austria, Switzerland, Finland, Sweden, Norway, the Czech Republic, Slovakia, Croatia, Hungry, etc. > Some are really poor because they've been exploited by the countries mentioned above (Africa and former German, British, Belgian, French colonies Including Ethiopia, right? > Some are poorer because they've been destroyed by war multiple times (Poland). Poland is poorer, but not poor. It's in the top 50 of countries ranked by GDP adjusted for PPP: https://en.wikipedia.org/wiki/List_of_countries_by_past_and_projected_GDP_(PPP)_per_capita#IMF_estimates_between_2010_and_2019 https://en.wikipedia.org/wiki/List_of_countries_by_past_and_...
- kbart 9y agoPlease, make your facts straight. It's not the first time in this thread you blame countries for their colonial past that have never had any colonies: Switzerland, Finland, Czech Republic, Slovakia, Croatia -- none of them had colonies. "Hungry" That's not even a country (though can't argue that it would be a fun name).
- tormeh 9y agoPoe's law in action.
- Supernaut 9y agoThis is an absurd generalisation. The only nation in your list that benefitted greatly from slave labour is the USA, and even that period is over a hundred and fifty years ago. Furthermore, the civil war that was waged to end slavery ultimately brought economic ruin to the southern States that had relied on slave labour. In the post-WWII era, the countries that have prospered have done so because they have enjoyed stable government and long periods of peaceful relations with their neighbours. This allows for an educated populace, fruitful use of their natural resources and human ingenuity, and remunerative trade with other nations.