Why are poor countries poor?

I read an amazing analysis that poor countries are poor not because of the productivity of poor and their counterparts in rich countries because they are comparably the same or often more productive but rather the country is more poor because of a disparity in the productivity of the rich or the highest percentile of productive.

For instance a western rich person may be 100x as productive as the rich in a poor country.

 

In rich countries people work smarter.

 

Generally speaking an agriculturally-based economy will be poorer than an economy based on manufacturing or technology. And depending on how the agriculturally based economy operates there can be minimal or huge disparity between the wealthy and the not-wealthy.

 

Poor countries are poor because most of them have a corrupt government ran by liberal socialists. Don't worry the US will catch up.

 

because usually a "poor country" hosts the base level of the production chain, so that the higher margins are somewhere else [in the rich countries].

Think to the production of Asian countries [India, China, Vietnam ...]; they are base production and when we import those goods here we sell them with a well considerable margin of profit. Just because our workers earn well more money that theirs. This create the internal demand which sustains our rich economies.

Does Chine want to become a rich country? Beijing has to multiply by 10 the wages of the mean Chinese workers ...

 

Most of them haven't had the good fortune of going to war with the U.S.

 

They key to the mystery is in how the rich in these countries got rich...I know but you can research it.

 

Most poor countries manufacture cars and electronics and etc. So the whole "base level of production chain" hardly accounts for the gap, if the only value added to such a device is the mere fact it is being sold in America instead of Burma.

 

I know this one.!

poor countries are poor because they don't have enough money.

Or maybe it has to do with culture, education, infrastructure, corruption, resources, governance, religion, history and the like.

 

This is true. You'll find most of the poorest countries are subsistence agricultural based economies, where basically, people eat what they grow and little is sold on the market or exported. Laos is one such country. This doesn't mean the poor are lazy. A subsistence farmer will toil from sunup to sunset to put food on the table.

The gap between the wealthy and poor is huge in these countries. Often corruption gives the wealthy a 'kick along'. What industry there is either partly government owned, Beer Lao for example is one of Laos' biggest industries and is 52% government owned. Those industries that are wholly privately owned don't really contribute (except for taxes) to society. Philanthropy is rare.

Many poor countries have had long histories of warfare, religious interference, government interference and even geographic and climatic interference. The general population lack opportunities like education to break the poverty cycle.

 

Excellent observation!

 

it's usually due to lack of education, social structures, and low IQ's -

 

most poor countries are poor cause they have conservative dictators

their rich do not believe the poor deserve to have more than a living wage....

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that is a factor, but so is the blinding apathy, and petit-bourgeios attitudes of the peasants etc..

 

Your confused use of terms suggest you really don't know what you're talking about.

The petite bourgeois and the peasantry are two separate societies/classes and are attributed by different mannerisms.

 

That's why a shipbreaker in Bangladesh makes $.50cents a day to take apart a ship (arguably one of the most dangerous jobs in the world) but a higher educated and higher IQ'd American gets paid $10/hr to pour coffees?

You make yourself and all capitalists look pathetic.

 

Neither has anything to do with poverty in the third world which is a function in general of too much government or too little. Too much and the government steals everything you make meaning there is damn little reason to do more than what is necessary to stay alive. To little and brutal thugs bring about the same circumstance. You have to have the rule of law to both reign in the government and the thugs.

 

The classes may be different in economic terms, but in mindset they are very similar.

For example, the low skilled rural or urban dweller in the developing country (where many urbanites are fresh from the countryside), have little concept of unity - and clearly want to have higher status than their neighbour, even if it's just a fancier phone or whatever. The mentality of heirarchy is extremely pervasive here - Trotsky and Lenin clearly touched on this.

 

cost of living in Bangladesh is lower , so that 50c has far greater purchasing power than it would in the West.

Even so , there's usually little in the way of democracy and social institutions in the developing world, and this helps to keep wages low.

 

Rule of law and economic freedom is what's it about. What poor countries often have in common is poor property rights and corruption, which serve to limit the radius of trust within which economic activities can happen. Which is to say, that you can't trust strangers as well as you could in say western countries because of the corrupt legal system. Deals with strangers might not be enforced by the legal system, meaning that pooling resources from a larger group of people is more difficult, leading to less investment. And poor property rights make sure that much potential growth is thwarted by governmental intereference, because successful people will have no safety in their success, obviously leading to less incentives. It's also much harder to plan future economic activities with the lack of rule of law. And of course, economic freedom is vital. Poor countries are typically not very free with either trade, labour, financial, monetary etc. freedoms.

Wheter a country has much natural resources, or has income inequalities, isn't really that interesting. In my view, it's mostly about the laws and systems of a country. Just look at the link and note how economic freedom is strongly correlated with prosperity. And note that countries like botswana, singapore and hong kong are rich despite very little natural resources.

http://www.heritage.org/index/heatmap

 

it's quite true that these counties' leaders are only too happy to sell out to the White man, whist foreign aid and NGO's (IOW: imperialist tactics) simply perpetuate the situation

solution: everyday people of the developed world need to take control of their own destinies and stop being sheep

 

And which conservative dictators would that be?

 

most of South America for a start, in the past especially, and SEA

 

That's hardly the primary reason, but there is a bit of truth to that. When smart people create wealth it doesn't just sit in a vault in their home. It's spent in their area.

But the main things are resources, and not just natural resources - skills. If the poor in every country are just as productive it wouldn't make sense for us to have stuff made in China when western Africa is far closer. Workers are paid far less in western Africa, too. The reason why we make stuff in China is because they have a skilled workforce. It's one of the few third world (or formerly third world) countries that has a truly rich tradition of education. In addition to that, its pretty stable. We don't have to worry much about worker strikes - that just doesn't really happen in a country as authoritarian as China. And we don't have to worry about civil war, invasion, warlords etc. Thr country is stable.

So nk, the primary reasons for countries being poor is not that their rich aren't productive, though that plays a role.

 

Why do you think we import Japanese cars and not Chinese, or Burmese?

Have you ever read even a summary of "The Wealth of Nations"? There's a lot in it I think you'd benefit from. Particular here is the idea that nations produce what they can best produce. For example, America is great at producing food - that's why we export hundreds of billions of dollars worth of food. Japan is good at making reliable and cheap cars, so they export them to us.

Now there are a variety of factors that go into what country will be good at what. For example the US has an abundance of good land. What's important is just the concept. There is a reason why Japan doesn't export a bunch of grain products and we do - we are better at it, we can produce far more.

The general idea is that we produce something so well that we can do it better (combination of higher quality and cheaper), and so when we trade it for what they do better, both parties gain. So trade makes nations wealthier. TRADE is the key. Take a look at the poorest countries in the world and in general, do they do much trading? No.

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You mean conservative dictators like in Venezuela?