Are some countries determined to be poor? Are their trajectories set in stone? Are rich countries destined to always prosper?
Definitely not. But for the past 150-200 years or so, roughly the same countries have remained poor in terms of GDP. In fact, if we were to divide the world into rich and poor countries using a GDP above 20 000 USD as an indicator, only a few countries would belong in that rich elite group. Among these countries are the United States of America, Canada, Australia, and parts of western Europe, including Finland. Only a few additions have been made to the list after the beginning of the 20th century.
How these countries made it has been a subject of research for as long as we know. Various theories have been posed about why poor countries stay poor and rich countries are rich, including:
The geography theory, backed up names such as Charles-Louis Montesquie, Jeffrey Sachs and Jared Diamond. The reasoning goes that people in the tropics are inherently lazy and lack innovativeness (Montesquie), countries in the tropics are disease-prone and soils are not productive (Sachs), or countries in certain regions had the unfavorable fate of having less productive plant and animal species available for domestication (Diamond).
The culture theory, backed up by Max Weber. According to this theory the spirit of capitalism and the rise of the modern, industrial society is the result to a protestant ethic, a quality lacking from Africa, for instance – a place where old traditions and poor working morals prevail. (Hello all racists out there!)
The ignorance theory, backed up by Lionel Robbins. This theory builds on a notion that poor countries remain poor because they do not do enough to correct market failures. They do not take measures that allow the thriving of a market economy, that is the situation where all individuals and companies can freely produce, buy and sell the products and services they need.
But what if all these theories are wrong?