Why is the world so unfair? In some countries, people die of hunger trying to survive, while in others, the population suffers from obesity and is bathed in luxury. But why? Why do countries differ in wealth? And how to make a poor state rich?
The economy depends on technology: the better they are, the better it turns out to produce and process resources, as well as trade and move
We must admit honestly: experts do not fully understand why some countries are rich and others are poor. Previously, it was believed that it is enough to involve as many people as possible in the labor process, build many factories, install more machines, and economic growth will be ensured.
But as it turned out, another important component is missing — technical progress. For example, developed countries spend more than 2% of GDP on research and development.
Inequality in the distribution of a country's wealth among its citizens also plays an important role in economic growth.
The difference between the rich and the poor. Mumbai, India
Very high levels of inequality lead to social and political instability. It's not fair, is it?!
However, income equality also has a negative impact on economic development: only rich people (adequate rich people) can invest in the construction of factories and plants, in innovation and development. Thus, they have a positive impact on economic growth.
Geography defines everything
There is a certain regularity: the farther the country is from the equator and from the cold poles, the higher its economic level. Why?
Why do some countries have money to build skyscrapers in the open field, while others live in small apartments in slums?
If the climate is too favorable (warm weather), then why build factories, take care of plans for life? Stuck a stick, grew a tree, gathered fruit and enjoy life.
If the climate is extremely harsh, you have to think about how to survive, not how to trade and build factories. To have time to collect food until next winter...
The presence of rich flora and fauna, allowed to engage in agriculture and animal husbandry, which guarantees population growth. A lot of people, a lot of goods. So, the growth of wealth.
There are exceptions to the rule. Singapore, Italy, and Saudi Arabia are quite rich countries with a warm climate. And Canada, Sweden, Norway — with cold. This means that there are other underlying causes of wealth and poverty of States.
Map of rich and poor countries of the world. From white to red — to increase income per person. Countries with hot and cold climate — outsiders
Development of economic institutions in the country
Obviously, geography, inequality or technology are not all that explains why a country is rich or poor. Today, many economists believe that the wealth of the state depends directly on the economic institutions, the strength of the laws adopted and in force, as well as on political accountability.
What does it mean?
Under the institutions understand certain rules of the game, which are adopted in a particular country. It may be the law or tradition, the framework of morality, the Constitution, etc.
If without bribes to solve any question, any business will flee this country
For example, if the country's laws and the court guarantee the inviolability of business, the citizens will not be afraid to develop it. And if officials in the country are engaged in corruption and bureaucracy, then any person with ideas will run away from such a country...
Also, an important institution is the financial support of the state. Business for your money — it's good but risky. And if the state has free money, why not instead of subsidies and allowances to direct them to business development in the country? The main thing that they got ideological and clever people, but not approximate in power.
We hope that you understand the main point: the more citizens care about each other and do not allow the "powers that be" to create lawlessness, the better they live!