There are about 200 countries in the world, 25 of them are very rich defined as having an average wealth per person of over US $100,000 a year. Yet there are countries that are extremely poor with per capita wealth of under US $1,000 a year or under US $3 a day.

Every country now is more or less on a path to growth, but the poor ones are growing very slowly indeed. What is of concern now is why some countries prosper and others stagnate, so we can understand what the rich countries are doing right while we get a better grip on the hurdles and challenges facing poor countries.

Two first basic factors identified to determine whether a country will be rich or poor are Institutions and Culture.

Institutions

Institutions are very important. Broadly speaking, rich countries have good institutions and poor countries have very bad ones. The correlation between poverty and corruption is direct. The richest countries in the world are quite simply and invariably also fall among the least corrupt ones. And the most corrupt countries fall among the poorest. When countries are corrupt, they cannot collect enough taxes to run the good institutions that they need in order to escape the poverty trap. Half of the wealth of the world poorest countries goes into private offshore accounts. Meanwhile, without an adequate tax base poor countries cannot invest in Police, Education, Health and Transport.

A more generous way to look at corruption is that it is really a case of clan-based thinking. Imagine you are hiring someone. In rich countries you merely interview qualified persons and pick the best one on merit irrespective of any personal connection. But in poor countries, under the sway of clan-based thinking, it is your duty to disregard the so-called best candidate in order to pick someone from your own clan. As a result, poor countries do not allow themselves access to the best intelligence and talent of the whole population.

Culture

This is the second thing that keeps countries rich or poor – what goes on in people’s minds. There are values and beliefs. A striking statistic pops up here in relation to religion. If there is one generalization you can make about religion and wealth it is that the less people believe in religiosity, the richer they tend to stand the chance of building wealth as a group. Nineteen of the richest countries of the world have 70 percent or more of their populations say that religion is not at all important to them. Conversely, the poorest nations of the world are also the most religious ones, believing in the supernatural. The exception here, surprisingly, is the United States of America (USA) which manages to combine great religiosity with huge wealth.

Why may religious belief link badly with wealth creation?  In the rich world, people are generally great believers in their capacity to alter their destiny, through their efforts and talent. Incidentally to explain the anomaly of the United States, religion seems not to slow down economic growth there because of the particular sort of religion that is overwhelmingly protestant of the predominantly materialistic kind. The American God wants you to think of building your New Jerusalem here and now.

This was an interesting narration sent in through WhatsApp. Author and sender not identified.

Like us on Facebook:  www.facebook.com/tomassociates