Can a Poor Country Become Rich?


Can a Poor Country Become Rich?

Can the people of a poor country realistically expect to gain more wealth relative to other countries in the future?

To answer these questions, it is necessary to state the specific requirements for higher incomes and then look historically at the geographies, economies and polities that affect these requirements for the tabulated countries to see if some generalizations can be drawn that will be useful to country leaders and their contenders. In doing so, we must recognize that we indulge ourselves in a value-judgment — acquiring material wealth is "good," and not doing so is "bad." This statement acknowledges that the leaders in countries who eschew these values, who prefer to spend the studies and labor of their people in the pursuit of spiritual wealth, who consider material wealth a necessary evil that must be tolerated only to the extent of sustaining life and no more.

Note, too, that we are talking about relative wealth (i.e., the wealth of the rich countries versus the wealth of the poor countries). There will always be an increase in absolute wealth, in varying amounts, by all countries because some wealth will inevitably spill over from the rich countries to the poor ones via trade, industrial globalization (the transfer of businesses from rich to poor countries) and repatriated income from nationals working in foreign lands. However, a perennial state of poverty in a nation leads inevitably to revolution, or emigration, or both.

The direct causes of per capita income and living standard increases are technologies, new and old. These are the tools, machines, materials, power sources, medicines, and manufacturing and commercial practices that are transformed into consumable goods and services, comprising basic living standards.

Technologies affect living standards in three ways: (1) They create goods and service that people want, but don't have. Automobiles, telephones, most medicines and medical care did not exist at one time, but were created by innovators; (2) They improve the quality of goods and services that people already have. Medicines, foods, clothing, medical care are improved compared to those available in former times; (3) They increase the availability of goods and services to more people by reducing the effort, waste, and cost to produce them.

Food, clothing, housing, medicines and medical care became cheaper and, simultaneously, their quality improved since earlier times. Technologies and associated incomes devoted to preventing people from killing and stealing from each other (i.e., judiciaries, prisons, police and military personal and institutions restrict their being used to raise incomes and basic living standards). So however necessary they are in a world of aggression and acquisitiveness, they are counterproductive to raising incomes.

There are other ways to increase per capita incomes, of course, but they are limited. Leaders can put more people to work and compel them to work harder. But how far can you push people? Maybe an additional 10 percent, and then what? They can extract more raw materials (ores, lumber, etc.), assuming they are available to exploit, but there are limits to how much can be obtained and used. They can put more land under cultivation, but that too is limited by peoples' appetites. As an alternative, a poor country that wants to be richer cannot expect to develop its own technology. Therefore, a poor country must import technology that produces more and better goods and services for its own people and for producing goods and services for trade with foreigners.

This acquisition of technology requires large amounts of money ("capital"), which cannot be accumulated at home because that requires technology. It's a vicious cycle — technology depends on capital, which depends on technology, etc. Karl Marx acknowledged this cycle in his discussion of "M-C-M" (the general formula for capital). Thus, an initial loan or grant of "seed money" is required by poor countries from rich countries. Such loans, as we have seen from World Bank, IMF, and WTO efforts, do not necessarily make poor countries rich. There is an complex interplay of technology, geography, economy and polity, that produce unknown, uneven effects, thus preventing guaranteed success of capital and technology inputs.

Geography is important in determining whether a country has any prospects of becoming richer. Countries that have poor transportation facilities must devote much of the acquired technology to improving it. This was done in the formative years in the U.S. Otherwise, supplies cannot reach producers and products cannot reach customers cheaply enough to be bought by those with modest incomes. Mountainous countries and those without access to navigable rivers and oceans are especially disadvantaged in their quest for wealth, since the capital and technologies to "move mountains" and "tame water" are prohibitively expensive.

Even within countries with relatively few mountains and many waterways, such as in the US, the government of which has spent enormous sums of money, effort and technology to reduce the inequalities of location, the poorest people today are located in mountainous, waterless regions. In the US, the state counties located in the Appalachian, Rocky, and Ozark mountains are the poorest. In contrast, those counties located in watered plains are the richest. Scanning the U.N. list from top to bottom, the only rich country that has too many mountains and too few navigable waterways is Switzerland.

However, its geographical disadvantage is offset by its geographical location at former trade routes between rich countries that allowed it to accumulate sufficient capital and technology to "move mountains" (or, at least penetrate them with tunnels and cross the valleys with bridges) and prosper. The Balkan countries in southeastern Europe enjoyed no such advantage and suffered economic stagnation.

Switzerland also has the advantages of culture, economy, and polity. We will find nations with too many mountains and too few navigable waterways: Tajikistan, Nepal, Mongolia, and Bhutan. If Afghanistan and Tibet were included, they would, no doubt, also fall into this group for the same reasons. Therefore, the geography of a country is an important determinant of its ability to achieve greater wealth.

In particular, countries with too many mountains and too few waterways are unlikely to become richer relative to other countries, although they certainly will become absolutely richer because of the inevitable trade of cheaper goods and services provided by their richer neighbors. However, absolute wealth breeds envy by its citizens who see the richer countries enjoying goods and services which they cannot afford, and this envy may lead to revolution or emigration, or both.

The use of technologies depends not only on geography. Nations that have no basic schools will forever be dependent on the largesse of the wealthy nations. How can you teach a farmer or factory worker to perform simple tasks efficiently if he/she cannot read or write? Those nations that have a developed educational system, but whose leaders prefer to teach children how to read and interpret their holy books rather than mathematics, science, engineering, and programming may achieve spiritual wealth, but surely will not achieve material wealth, because technologies depend on technical education.

We are talking here, not only of innovative scientists and engineers — the unattainable for the poorest countries — but technical operators (i.e., "technicians"), the people who must know enough math and science to make small decisions involving the operation of increasingly complex machinery. With a few exceptions, like China, Philippines, Indonesia, India, and some South American countries, the educational systems are abysmally antiquated.

Therefore, even if these countries had adequate technologies, which they don't, they would not even be able to adequately maintain imported technologies because of their poorly educated technicians.   

Redistribution benefits the poor at the expense of the rich, but it does not promote increased incomes generally because of the lack of incentives. Therefore, where does it obtain the capital and technology to increase incomes?

In summary, the kind of economy and polity determine the ability of poor countries to become rich and the successes of political system have prevailed over other forms the world over. 

From the above discussion, it is clear that a country with an unfavorable geography, or economy or polity is severely handicapped to make sufficient technological advances that increase the wealth and living standards of its people. It is likely to remain poor, despite the enthusiastic and sanguine projections of its leaders, planners and would-be leaders, the revolutionaries.