Question

Why some countries are developed, rich and other countries stay poor inn the world Economics 121.

Why some countries are developed, rich and other countries stay poor inn the world

Economics 121.

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Answer #1

The words "rich" and "poor" are sometimes used in a quantitative context in popular language: A "poor" person has less wages, property, products , or services than a "rich" individual. Economists also use the per capita gross domestic product ( GDP) as an measure of average economic well-being within a country when comparing nations. GDP, measured in dollars, is the overall market value of all the final goods and services produced in an economy in a given year. In a way, the GDP of a nation is as its annual income. So, dividing the GDP of a particular country by its population is an estimate of how much income the economy generates per person per year (per capita)

Less-developed economies' economic growth is key to closeing the gap between rich and poor countries. Differences in nations' economic growth rates also result in differences in TFP inputs and differences in labor and capital resource productivity. Higher productivity favors faster economic growth, and faster growth enables a nation to escape poverty. Factors that can improve efficiency include organizations that include innovation and manufacturing opportunities. Government may play an important role in the growth of the economy of a nation in some cases.

North and South Korea also serve as an indication of the institutional significance. They are in a sense a natural experiment. These two nations have a mutual history , culture and ethnicity in common. By 1953, very different governments officially separated these countries, and controlled them. North Korea is a communist dictatorial nation in which property rights and free and open markets are largely absent and the rule of law is repressed. Institutions provide good support for innovation and growth in South Korea. North Korea is one of the world's poorest nations while South Korea is one of the richest.

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