Why Some Countries Are Poor and Others Rich | The School of Life
Summary
TLDRThis script examines why some countries prosper while others remain poor. It identifies three key factors: institutions, culture, and geography. Rich nations typically have good institutions and low corruption, while poor ones suffer from the opposite. Cultural beliefs, especially religious intensity, correlate with wealth; less religious countries tend to be wealthier. Lastly, geographical disadvantages like tropical climates, disease, and poor connectivity hinder development. The script suggests institutions account for 50% of a nation's wealth, culture 20%, and geography 30%, encouraging a sympathetic view of the complex challenges faced by poor countries.
Takeaways
- 🌍 There are 196 countries in the world, with 25 considered very rich (average wealth per person over $100,000 a year) and 20 identified as the poorest (per capita wealth under $1,000 a year).
- 📈 Rich countries generally have good institutions, while poor countries suffer from bad ones, often linked directly to corruption.
- 💼 Corruption prevents poor countries from collecting enough taxes to develop the necessary institutions to escape poverty.
- 🏛️ Clan-based thinking in poor countries leads to nepotism, which restricts access to the intelligence and talent of the whole population.
- 🔮 Culture plays a significant role in wealth creation, with less religious belief correlating with higher wealth in countries.
- 🌱 Geography is a key factor in a nation's wealth, with tropical regions facing agricultural challenges and diseases that hinder development.
- 🐂 Historically, the presence of large domesticated animals was crucial for wealth creation, but tropical diseases like trypanosomiasis have hindered this in Africa.
- 🚢 Poor countries often suffer from poor connectivity, being landlocked or having limited navigable rivers, which affects trade and economic growth.
- 🌋 Natural resources can be a curse for poor countries, leading to the 'resource trap' where they become dependent on extraction rather than developing diverse economies.
- 💡 The factors determining a nation's wealth are institutions (50%), culture (20%), latitude and connectivity (10% each), and geological fortune.
- 🌐 Understanding these factors can lead to a sense of modesty about individual success and sympathy for the complex challenges faced by poor countries.
Q & A
How many countries in the world are considered very rich with an average wealth per person of over $100,000 a year?
-There are 25 countries considered very rich with an average wealth per person of over $100,000 a year.
What is the current growth rate of Zimbabwe, and how long will it take for it to become a rich country?
-Zimbabwe continues at its current growth rate, it will qualify as a rich country in 722 years.
What are the three main factors that determine whether a country will be rich or poor?
-The three main factors that determine the wealth of a nation are institutions, culture, and geography.
How does corruption relate to the wealth of a country?
-Corruption is directly correlated with poverty. Rich countries tend to have less corruption, while poor countries are often more corrupt.
What is the impact of clan-based thinking on a country's wealth?
-Clan-based thinking can limit a country's wealth by restricting access to the intelligence and talent of the whole population, leading to nepotism and disregard for merit.
What is the relationship between religion and wealth as discussed in the script?
-The script suggests that there is a correlation between lower levels of religious belief and increased wealth, with 19 out of the richest countries having 70% or more of their populations saying that religion is not at all important to them.
How does the United States defy the general trend of religiosity correlating with wealth?
-The United States combines great religiosity with huge wealth, which is attributed to its predominantly Protestant and materialistic religion that encourages building the 'New Jerusalem' in this world.
What challenges do tropical regions face that can hinder wealth creation?
-Tropical regions face challenges such as less productive agriculture due to less carbohydrate-rich plants, poor soil, diseases, and the presence of the tsetse fly which devastates domesticated animals.
Why are natural resources paradoxically a problem for poor countries?
-Natural resources can be a problem for poor countries because they can lead to a 'resource trap' where the wealth from resources can exacerbate corruption and conflict without requiring the cooperation of the whole society.
How does the script suggest allocating the relative importance of institutions, culture, geography, and other factors in determining a nation's wealth?
-The script suggests that 50% of a nation's wealth comes down to the state of its institutions, 20% is due to its culture, and 10% each can be allocated to latitude, connectivity with the rest of the world, and geological future.
What personal takeaways does the script suggest for understanding the wealth of nations?
-The script suggests personal takeaways of modesty, recognizing the broader society's role in individual success, and sympathy for countries facing difficult problems that are often beyond their control.
Outlines
🌍 Wealth and Poverty: The Role of Institutions and Culture
This paragraph discusses the disparity in wealth among nations, highlighting the role of institutions and culture. It states that there are 196 countries in the world, with 25 being very rich and many others being very poor. The rich countries have good institutions, while the poor ones suffer from bad ones, often linked to corruption. Corruption prevents countries from collecting enough taxes to develop necessary institutions, leading to a poverty trap. The paragraph also touches on the cultural aspect, noting that less religious countries tend to be wealthier, suggesting a correlation between belief in the supernatural and a focus on the afterlife rather than wealth creation in the present.
🌱 Geographic Factors Affecting Wealth
This paragraph delves into the geographic factors that contribute to a nation's wealth, such as climate, disease prevalence, and connectivity. It explains how tropical regions face challenges like less productive agriculture, poor soil, and a higher prevalence of diseases, which hinder wealth creation. Additionally, it points out that poor countries are often landlocked or have limited navigable rivers, which affects trade and economic growth. The paragraph also discusses the paradox of natural resources, where they can either intensify wealth in countries with good institutions or deepen poverty in those with poor governance, leading to a 'resource trap'.
Mindmap
Keywords
💡Wealth per Capita
💡Institutions
💡Corruption
💡Clan-Based Thinking
💡Culture
💡Religiosity
💡Geography
💡Tropical Diseases
💡Landlocked Countries
💡Natural Resources
💡Resources Trap
Highlights
There are 196 countries in the world, with 25 being very rich and the rest varying in wealth.
The 20 poorest countries have a per capita wealth under $1,000 a year.
Zimbabwe, if growing at its current rate, will become rich in 722 years.
Three main factors determine a country's wealth: institutions, culture, and geography.
Good institutions are crucial for wealth, with a direct correlation between poverty and corruption.
Corrupt countries struggle to collect taxes necessary for good institutions.
Clan-based thinking in poor countries can hinder access to the intelligence and talent of the whole population.
Culture plays a role in wealth, with a general trend of less religiosity correlating with wealth.
The United States is an anomaly, being both religious and wealthy, possibly due to its Protestant and materialistic culture.
Geography affects wealth, with poor countries often located in the tropical regions.
Tropical regions face agricultural challenges due to less carbohydrate-rich plants and poor soil.
The presence of the tsetse fly in Africa has hindered the development of technology and wealth.
Tropical diseases affect many low-income countries, impacting their ability to grow rich.
The optimal temperature for civilization is 16 degrees Celsius.
Poor countries are often landlocked or poorly connected, which negatively impacts trade and wealth.
Natural resources can be a curse for poor countries, leading to the 'resource trap'.
The Democratic Republic of the Congo's mineral wealth contributes to ongoing conflict and corruption.
A suggested breakdown of factors influencing a nation's wealth is 50% institutions, 20% culture, 10% latitude, 10% connectivity, and 10% geological fortune.
Policymakers should consider these factors when addressing wealth inequality.
Individuals should develop modesty and sympathy towards the challenges faced by poor countries.
Transcripts
there are a hundred and ninety six
countries in the world twenty-five of
them are very rich defined as having an
average wealth per person of over
$100,000 a year they are but far more
countries are quite poor and some which
we're considering here a very very poor
these are the 20 poorest countries in
the world where the per capita wealth is
under $1,000 a year or under 3 dollars a
day every country is now more or less on
a path to growth but the poor ones are
growing very very slowly
if Zimbabwe continues at its current
growth rate it will qualify as a rich
country in two thousand seven hundred
and twenty two years what we want to
know in this film is why some countries
prosper and other stagnate so that we
can understand what rich countries are
doing right and get a better grip on the
challenges and hurdles facing poor
countries there are basically three
factors that determine whether a country
will be rich or poor the first is
institutions institutions are beyond
important
broadly speaking rich countries have
good institutions and poor ones have
very very bad ones the correlation
between poverty and corruption is direct
the richest countries in the world are
quite simply invariably also the least
corrupt ones and the most corrupt
countries are also the poorest when
countries are corrupt they can't collect
enough taxes to get the good
institutions they would need to escape
the poverty trap half of the wealth of
the world's poorest 20 countries goes
into offshore accounts lost revenues in
these countries totals between 10 and 20
billion dollars a year meanwhile without
an adequate tax base poor countries
can't invest in police education health
and transport now a more generous way to
look at corruption is that it's really a
case of clan based thinking say you're
hiring someone in the rich countries
you're meant to do so simply on merit
interviewing lots of candidates then
picking the best one irrespective of any
personal connection but in poor
countries under the sway of clan based
thinking that approach would itself be
seen as corrupt it's your duty to
disregard the so called best candidate
from an anonymous Bunch
in order to pick someone from your own
team
your uncle your brother your second
cousin the guys from the same tribe as a
result poor countries don't allow
themselves access to the intelligence
and talent of the whole population
there's a second thing that keeps
countries poor culture what goes on in
people's minds their outlooks and
beliefs a striking statistic pops up
here in relation to religion if there's
one generalization you can make about
religion and wealth it's that the less
people believe the richer they stand a
chance of being 19 of the richest
countries in the world have 70% or more
of their populations saying that
religion is not at all important to them
the exception here is unsurprisingly the
United States which manages to combine
great religiosity with huge wealth more
on that in a second and conversely the
poorest nations in the world are also
extremely believing once here's how many
people think religion and the
supernatural is deeply important in the
following countries in the world's
poorest country simply everyone is a
believer why is belief quite so bad for
wealth creation because in general
religiosity is connected up with the
idea that the here-and-now
can't be improved so you should focus on
the spiritual and look forward to a next
world instead it makes quite a bit of
sense when you live here in the rich
world on the other hand people are
generally great believers in their
capacity to alter their destiny through
effort and talent incidentally to
explain the anomaly of the United States
religion seems not to slow down economic
growth here because it's a particular
sort of religion an overwhelmingly
Protestant and exceptionally
materialistic kind the American God
doesn't want you to think of building
the New Jerusalem in the next world he
wants it here and now in Kansas or
Houston there's another big factor that
determines the wealth and poverty of
Nations geography
poor countries are overwhelmingly
located in the tropical regions this
isn't a coincidence life is in many ways
simply far far tougher they're the
problems begin with agriculture tropical
plants are generally a lot less packed
with carbohydrates poor countries have
worse soil too also and perhaps
surprisingly a tropical climate can be
dis
Vantage's to photosynthesis historically
a key determinant in the likelihood of
societies growing rich was their
possession of large domesticated animals
such as horses and oxen which liberated
a huge part of the workforce from having
to plow by hand but in tropical Africa
domesticated animals have throughout
time been devastated by a further of
palling scourge that sits a fly this
small fly exclusively present in Africa
because of its heat and humidity knocks
out animals on an enormous scale making
them sleepy or inactive and has had a
profound effect on the ability of
Africans to develop technology increase
agricultural productivity and amass
wealth
it isn't just plants and animals that
suffer in the tropics in the middle
latitudes humans are open to a
terrifying array of diseases including a
hundred percent of low income countries
are affected by at least five tropical
diseases simultaneously the magical
temperature which has helped to make
rich countries rich is 16 degrees
centigrade however superficially
unpleasant that drop below 16 degrees as
autumn starts to bite is quite literally
a foundation stone of civilization
geography also encompasses transport and
poor countries are on the whole very
badly connected landlocked Bolivia and
semi landlocked Paraguay are the poorest
nations in South America Africa has only
one major navigable river the Nile and
hosts 15 landlocked nations 11 of which
have average incomes of $600 a year or
less not coincidentally the poorest
country in Asia Afghanistan is also
landlocked then there's the matter of
natural resources natural resources like
oil or precious metals can be real
trouble and paradoxically poor countries
tend to have them in spades these
natural resources are what economists
call intensifiers
they will help to make a country with
good institutions richer but one with
bad institutions get even poorer
precipitating what's called the
resources trap so the Democratic
Republic of the Congo is one of the
world's most mineral rich countries
holding most of the world's coltan which
every mobile phone has a bit of inside
but natural resource wealth helps
leaves to grab money without requiring
the cooperation of the whole society if
the only way to grow wealthy is to
assemble high-tech aero engines for
example you're going to need your whole
society to buy into the project but if
you just need to extract a few minerals
you can do so with a small labor force
some guns and an airstrip long enough to
ferry your loot out to market the wealth
from coltan keeps DRC armed rebels in
guns and corrupts every level of society
so how should one way up the relative
importance of all these different
factors institutional cultural and
geographic in determining the wealth of
nations there's no hard and fast rules
but as a guide one can suggest that 50
percent of a nation's wealth comes down
to the state of its institutions 20
percent is due to its culture and 10
percent each can be allocated to
latitude connectivity with the rest of
the world and geological future
if you're a policymaker this discussion
has wide practical implications but at a
more personal level one might take away
two things from it firstly modesty you
should have a better idea of what you
owe your individual success to which is
not so much your own hard work or fine
mind as the broader society you live in
which was produced over centuries and
which you now draw benefit from
unknowingly at the same time sympathy an
ability not to see failing societies
just as basket cases but rather as
countries facing comprehensible and
hugely difficult problems our sympathy
can be enhanced by reflecting that the
troubles of desperate lands are to a
considerable extent to do with malaria a
lack of navigable river and the horrific
buzzing of that city fly rather than
always some more intimate human failing
which we would ourselves never manifest
[Music]
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