Why Are They Poor?

11. Economists have identified some of the conditions that help determine whether a country is rich or poor. There are some obvious ones, such as the amount of physical capital. Countries that have few factories and machines, and lack a solid infrastructure of roads, bridges, and utility systems, are not going to have a very high standard of living.

A second factor that economists identify is human capital, or the skills that people have. A country with a low literacy rate is unlikely the have the human capital needed to make it prosperous in today's world, even if it has everything else going for it.

A third factor is the political environment. Does the government provide a stable environment that encourages people to engage in production and trade, or does it have policies that effectively discourage business activity? A fourth factor is culture. Some cultures or subcultures encourage risk-taking and commerce, while others look with disdain on business activity.

Two other factors that are sometimes mentioned are technology and the abundance of resources. Technology, which is knowledge, is vital over the long run, and largely explains why we live so much better than people did a few centuries ago, but it may not explain the vast differences among nations today. Because it is a form of knowledge, it can flow readily across borders. And abundance of resources may not predict anything--some countries that have prospered have been resource poor, while other countries that are resource rich have gone nowhere.

If this listing of are right, a country that has these six factors should be rich, which implies that a poor country must be missing at least one of them.

There are many countries that have dramatically lower living standards than the U.S. Choose one of the following: Bolivia, Cuba, Haiti, Dominican Republic, Zimbabwe, Angola, Ethiopia, Yemen, Burma, Afghanistan, Somalia, Sudan, or Liberia.

Spend a couple of hours researching the country you chose. You can use the regular search engines on the Internet (the Google search of News might be especially interesting). A place to start might be the CAI factbook at <http://www.cia.gov/cia/publications/factbook/>. You might compare whatever country you are looking at to the U.S. to get an idea of the differences we are talking about. Also, are you confident your sources are reliable? Why or why not? Did you find any sources that had an obvious bias of any sort?

After you have done your research, rate your chosen country on the six factors above. Write a few sentences explaining what you found for each factor and make sure that you properly reference your sources. (For some of them there will be little to write, and for others there will be a whole lot.) After you finish the six, note if you found any other suggested reasons for the poverty of your chosen nation that were not listed above.


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