Why some countries richer than others

Explore the latest strategic trends, research and analysis The Penn World Table has long been a standard data source for those interested in comparing living standards across countries and explaining differences in cross-country growth. The article describing version 5. Yet the data has also come under criticism.

Why some countries richer than others

Money isnt everythingThe first part of this article looked at several factors that could affect a countrys wealth, measured as Gross National Income per capita. It showed that neither total population nor population density make much difference, and that richer countries have liberal trading regimes and maintain inflation in low single figures, though these are not in themselves sufficient to guarantee prosperity.

However, the three most important factors that correlate with national wealth and almost certainly contribute to it are urbanisation, democracy and a good business environment.

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Measuring human developmentEconomists, like the rest of us, know that there is more to life than money, and so have sought to find broader ways of measuring progress in the things that matter in other words, to measure human development.

This index measures three axes of human development: Health life expectancy at birth Income Gross National Income per capita at purchasing power parity Education average of the mean years of schooling that each adult has actually achieved and the expected years of schooling that a child should normally receive These three indices are combined as a geometric average, to give the countrys overall HDI score as a value Why some countries richer than others 0 and 1.

In simple terms, it measures the extent to which people are healthy, wealthy and wise. The following graph shows that a countrys HDI score is quite closely related to its per capita Gross National Income GNIalmost regardless of how well endowed it is with the key natural resource of oil: Such a correlation should not really come as a surprise, since education increases income, income is income, and income buys health.

However, at lower levels of income there are some large and important differences in the level of human development between countries with similar levels of GNI: Countries may drop below the curve when their income from natural resources is not re-invested in health and education, whether due to politics, war or other causes.

Conversely, countries may rise above the curve when they devote a higher-than-average share of their national income to educating their youth and increasing health standards. Thus the Human Development Index is a useful tool for assessing how well countries are using their wealth to build a better future.

The Inequality-adjusted Human Development Index IHDI One of the criticisms of the HDI is that it looks only at average achievements in health, income and education, and does not take account of how these goods are distributed throughout society.

As the following graph shows, IHDI also correlates well with GNI, though again with considerable variation amongst the poorer countries: In order to measure this, UNDP has developed a Gender Inequality Index following the same broad dimensions as the HDI but also taking into account the separate scores for men and women: Health maternal mortality ratio and adolescent fertility ratio, for women Labour market female and male labour force participation ratio Empowerment female and male population with at least secondary education, and female and male shares of parliamentary seats The various scores are combined to generate an index between 0 perfect equality between the sexes on all indicators and 1 one gender or the other has the minimum possible score for every indicator.

The following chart shows that this index too is quite strongly correlated with GNI: For this index there are significant variations between countries at all levels of income, with women tending to get a worse-than-predicted deal in several but not all of the oil-producing Arab countries, as well as in Afghanistan and the USA.

The impact of democracy on human developmentTo recap quickly, the following graph shows the correlation between the Economist Intelligence Units Democracy Index and Gross National Income per capita once a country reaches a score of at least 6.

Oil producers generating at least one barrel of oil per person per year, and Non-oil producers: Most oil-producing countries have higher scores for human development than non-oil producers at the same level of democracy, probably because of the direct role of income in the HDI calculation.

However, it is for the non-oil producing countries small green dots that the correlation between democracy and human development is most striking.

Why some countries richer than others

The essence of democracy is that government responds to the needs and wishes of its people, and the things that people most expect of their government are security, a reasonable standard of living, health care and education; thus it is little surprise that the Human Development Index is so closely correlated to democracy.Scott Fitzgerald was right when he declared the rich different from you and why are some countries richer than others essay me.

The evidence that income inequality in the United States has been growing for decades and is greater than in any other developed democracy is possible essay topics for the bluest eye not much disputed What’s gone research paper thesis proposal wrong with democracy: Democracy .

countries by their per capita incomes, those in the top 10% are on average 30 times richer than those in the bottom 10%. The richest country is times more prosperous than the.

However, its video titled “Why Some Countries Are Poor and Others Rich”, seen below, wasn’t quite what I had expected. It should be noted that many of these conditions are present in Africa specifically and absent in other poor nations (albeit richer than Africa), despite the continuous generalizations.

Is geography why some countries are richer than others? I’ve pointed to the dangers of physical determinism many times.

Space and geography are important variables explaining how cities work. May When people care enough about something to do it well, those who do it best tend to be far better than everyone else.

There's a huge gap between . May 21,  · More than two centuries ago, Adam Smith wrote the book that is generally credited with initiating the science of economics. The central question he .

Wealth inequality in the United States - Wikipedia