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What i never understood about it is where the "higher returns internationally" would come from. How can returns in a country where the capital is sorely lacking

What i never understood about it is where the "higher returns internationally" would come from. How can returns in a country where the capital is sorely lacking - and many businesses can be opened and operate in a virtually competition-free environment, are not created for not having money to start up - be lower than in developed nations that already have everything imaginable?

calvinmorrison 4y ago
higher growth potential. You can double gdp by having people make $2 a day more
FredPret 4y ago
You are right about the lack of competition in the third world. But there are sometimes structural and legal factors that make it harder to make money there; lawsuits, arguments, edge cases, and general agreement on how things should work that the West figured out long ago. You can’t invest lots of money with confidence until these things have stabilized. The other thing is that the economy is like an ecosystem - the richer it gets, the more nooks and crannies open up that can host thriving systems. That’s how a complex, rich economy can keep growing exponentially. Human needs are not limited - there’s always a way to improve life for someone.
acover 4y ago
There are benefits to colocation. The inputs to your business may already exist and are cheaper in a rich city than in a poor city. You'll see this where everyday shelf stable goods are more expensive in developing nations than in the usa.
imtringued 4y ago
You have to adjust returns by risk. The risk adjusted return of dollars and euros is much higher than the risk adjusted return in pretty much every African country. It only takes repossession, nationalisation policy or civil unrest and your investment is gone.
barry-cotter 4y ago
Poor institutions. Low trust. Absence of rule of law. Corruption. Enormous cultural mismatches. Atrocious or nonexistent infrastructure. Insane difficulties hiring competent staff. Investing in poor countries is really hard.

calvinmorrison 4y ago

higher growth potential. You can double gdp by having people make $2 a day more

FredPret 4y ago

You are right about the lack of competition in the third world. But there are sometimes structural and legal factors that make it harder to make money there; lawsuits, arguments, edge cases, and general agreement on how things should work that the West figured out long ago. You can’t invest lots of money with confidence until these things have stabilized. The other thing is that the economy is like an ecosystem - the richer it gets, the more nooks and crannies open up that can host thriving systems. That’s how a complex, rich economy can keep growing exponentially. Human needs are not limited - there’s always a way to improve life for someone.

acover 4y ago

There are benefits to colocation. The inputs to your business may already exist and are cheaper in a rich city than in a poor city. You'll see this where everyday shelf stable goods are more expensive in developing nations than in the usa.

imtringued 4y ago

You have to adjust returns by risk. The risk adjusted return of dollars and euros is much higher than the risk adjusted return in pretty much every African country. It only takes repossession, nationalisation policy or civil unrest and your investment is gone.

barry-cotter 4y ago

Poor institutions. Low trust. Absence of rule of law. Corruption. Enormous cultural mismatches. Atrocious or nonexistent infrastructure. Insane difficulties hiring competent staff. Investing in poor countries is really hard.