Question

Q13) Please explain why different countries around the world have developed at different rates?

Answer 1

For the past two decades, global growth has been focused on an explosion in awareness about what can be achieved, and how. A Scrabble game is a fitting metaphor: products and services are generated by mixing efficient capacities, inputs, technology and functions, just as words are generated by bringing letters together. Countries with a greater range of capabilities can create more diverse and complicated items, just as more and longer words can be produced by a Scrabble player who has more letters. If a country lacks a letter, the words that use it will not be formed. In addition, the more letters a nation has, the higher the amount of uses it can find for every additional letter it has received.

This refers to a "quiescence pit," which is at the root of the Great Divergence. Countries with few "mails" lack motivation to accumulate more mails, so if you did not have a TV, you would not want a TV remote control, and if your future consumers lacked power, you would not want a TV broadcasting corporation. The longer the alphabet and the longer the words, this trap gets stronger. An increase of technology, letters, and the complexity of products and services that can be made from them has been seen in the last two centuries. But the techies get techier, and they slip farther behind the laggards.

The centre of the mechanism of development lies in learning to master new technology and activities. If you face competition from others with experience as you are studying, you can never survive long enough to achieve the experience yourself. This has become the underlying rationale behind import-substitution policies that employ trade barriers as their key policy weapon. The trouble with trade security is that limiting competition from abroad often means blocking access to know-how and inputs.

Participation in global supply chains is theoretically more effective than closing markets to external investment as an alternative way to learn from doing so. This encourages productive skills to be parsimoniously accrued by and the amount of skills that need to be in place in order to get into company.