Why There Are Poor Countries And Rich Countries?

Photo by Chitto Cancio on Unsplash

What makes some countries rich and others poor? Why most Western countries are so developed and most African countries can’t get out of poverty? Is it all decided by geography? If yes, then why are some countries with good climates and abundant natural resources still so poor? What stops countries from making the jump to a bright and better future?

Those who studied economics know that the growth of any country is built on labor, capital, and productivity. So, the nation can become richer by having an increasing population, attracting capital and investments (so we have more new equipment), or by producing things much more efficiently (by advanced technology). That theory works well in explaining the growth of a country over the medium and short-term period. Yet, it doesn’t answer the fundamental question, why throughout history some countries become successful and rich and others are still struggling and failing.

Let us begin with some interesting facts:

Institutions and Culture

Many research studies are looking at the growth of nations over a very long term, and conclusions are usually very identical. The most important thing deciding about the long-term prospects of a country depends on the strength and qualities of its institutions. Other important factors intersect…