Why are Some Countries Rich While the Majority Remains Poor?
There are 196 countries in the world. Out of these 196 countries, 25 are considered very rich, with ‘very rich’ being defined as having an average wealth per person of over 100.000 USD a year.
The richest countries are: Austria, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, UK and the USA. Of course the ranking depends on ‘who’ does the measuring, how ‘richness’ is defined and, of course, when and how it’s measured.
Now, why are the countries above so rich, while the majority of countries remain poor? The answer to this question certainly isn’t straightforward, yet, it’s generally accepted that there are three key factors that determine the wealth and prosperity of nations. In order of importance they rank as follows:
- Institutions (50%): Generally speaking rich countries have ‘good’ institutions while poor countries have ‘bad’ institutions. As there is also a link between poverty and corruption, it’s relevant to note that the richest countries are generally also considered the be the least corrupt countries, while the poorest countries are usually also the most corrupt.
- Geography (30%): Most poor countries are located in the tropical regions. Life in these places is generally much tougher. Think of agricultural related struggles, high prevalence of disease, and transport issues due to, for example, some countries being landlocked.
- Culture (20%): Generally the richest countries are the least religious, while the poorest ones are the most religious. 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 big exception here is the US, yet, that has to do with the fact that their religion goes hand in hand with materialism. Religion or belief is usually bad news for wealth creation, as religiosity in general is connected with the idea that the ‘here and now’ cannot be improved, meaning that people tend to focus on the spiritual and the ‘next’ world instead.
What can we take away from this? Firstly, knowing what makes countries prospers and others stagnate, may give us insight into what the rich countries are doing right and how we can apply these lessons to poor countries to better tackle their challenges. Secondly, it teaches ‘us’ to have some modesty and sympathy. Perhaps your success is not all due to your hard work and brightness, but partly due to circumstance. Enjoy the video below to learn more about this intriguing subject.