So, the nation can become richer by having an increasing (or longer working) population (ie. more hands to produce goods and services), attracting capital and investments (so we have for example more equipment) or by producing things much more efficiently (eg. by advancement in technology).
What is the difference between poor and rich countries?
The main difference between rich countries and poor countries is productivity. Corruption and all the rest only dampen productivity. Higher productivity doesn’t only mean that we have more stuff to buy but also that we have more money to buy stuff. The greatest direct cause of poor productivity is poor human capital.
Why are some countries richer than others in the world?
The first reason that the economists discuss for the countries to get richer or poorer is the institutions in the country. Institutions can briefly be defined as the laws and practices that motivate the people living in a country work hard.
Are there poor people in very wealthy countries?
In reality, there can be large differences in the incomes of people within a country. So, even in a country with relatively low GDP, some people will be better off than others. And, there are poor people in very wealthy countries.
How does the poorness of a country change over time?
The poorness and richness of countries change over time. The first reason for this change is the so-called globalization of the world. As the world gets globalized, the interactions between the countries increase and the poor countries can easily interact with rich countries.
Why are some countries classified as poor countries?
However the world has changed a lot in the last 20 years and the Brandt line is now too simplistic. For example, China and India are no longer seen as poor countries. A country’s level of development is now classified in a different way. The International Monetary Fund (IMF) uses the names:
