Why Some Countries Are Poor and Others Rich | The School of Life

Summary

This 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.