Why Are Poor Countries Poor?

Wednesday, September 05, 2007 | 02:30 PM

Over at Slate, Tim Harford has an interesting discussion on a rather intriguing economic question: Why Are Poor Countries Poor?

The answer is less obvious than you might imagine. The usual explanation goes something like this: 

"One very plausible account of why at least some poor countries are poor is that there is no smooth progression from where they are to where they would be when rich. For instance, to move from drilling oil to making silicon chips might require simultaneous investments in education, transport infrastructure, electricity, and many other things. The gap may be too far for private enterprise to bridge without some sort of coordinating effort from government—a "big push."

However, a new line of thinking has bled over into Economics from Physics. It turns out that:

"Rich countries have larger, more diversified economies, and so produce lots of products—especially products close to the densely connected heart of the network. East Asian economies look very different, with a big cluster around textiles and another around electronics manufacturing, and—contrary to the hype—not much activity in the products produced by rich countries. African countries tend to produce a few products with no great similarity to any others."

Anyway, by thinking about this in network terms, the physicists have created a map (infoporn!) of the relationships between different products in an abstract economic space:

Png3000x3536labelslegends

Pretty fascinating thinking that has ramifications for what sort of might want to emphasize to poorer countries . . .



>


Sources:
The Product Space and the Wealth of Nations   
http://www.nd.edu/~networks/productspace/index.htm

Milton Friedman, Meet Richard Feynman
How physics can explain why some countries are rich and others are poor
Tim Harford
Slate, Saturday, Aug. 18, 2007, at 7:07 AM
http://www.slate.com/id/2171898 

Wednesday, September 05, 2007 | 02:30 PM | Permalink | Comments (56) | TrackBack (2)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e54ed54d6f8833

Listed below are links to weblogs that reference Why Are Poor Countries Poor?:

» Wydarzenia i linki from Black swan
Zaczęło dziać się tyle, że nie mam szans ani komptencji aby wszystko skomentować. Zatem parę linków do [Read More]

Tracked on Sep 5, 2007 4:18:11 PM

» Another interesting post on BigPicture from CharlEngels.com
A question that has been raised numerous times in the media, but never successfully answered is: Why do poor countries stay poor? Is it inept government practices, bad capital asset allocation or just plain bad luck? Tim Harford at Slate, has an intere... [Read More]

Tracked on Sep 7, 2007 6:36:01 AM

Comments

One of the fundamental reasons why most poor countries are poor is that they have unstable governments which are either unable or unwilling to protect private property rights.

Nobody would be willing to innovate/produce/risk capital when what they produce can simply be confiscated by fellow citizens (or even the government itself).

Africa is a varitable cornucopia of natural resources, yet it produces very little due to political instability.

Zimbabwe was actually making a bit of progress until Mr. Mugabe decided to start seizing private assets from the few productive farmers (mostly white westerners). Now he is discovering that nobody wants to play in a game where he can simply declare himself the winner and abscond with all the money.

Posted by: Pool Shark | Sep 5, 2007 2:43:21 PM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner