What Makes a Nation Wealthy?

De Ramiro por mail. Muy interesante columna en el NYT sobre un tema que personalmente me apasiona. Por qué algunos países se desarrollan y otros permanecen pobres. Yo sigo insistiendo en que en gran medida es una cuestión cultural:

What Makes a Nation Wealthy? Maybe It's the Working Stiff
By TYLER COWEN

Economists typically explain the wealth of a nation by pointing to good policies and the quality of a country's institutions. But why do these differences exist in the first place?

In "A Farewell to Alms: A Brief Economic History of the World" (forthcoming, Princeton University Press), Gregory Clark, an economics professor at the University of California, Davis, identifies the quality of labor as the fundamental factor behind economic growth. Poor labor quality discourages capital from flowing into a country, which means that poverty persists. Good institutions never have a chance to develop.

Professor Clark's pessimistic view is that most forms of policy advice or financial aid do not solve the problem of economic development. Unless the quality of labor rises, those would-be remedies are addressing symptoms, not causes.

Professor Clark's analysis counters Jared M. Diamond, who in his "Guns, Germs and Steel" (W. W. Norton & Company, 1999) located the ultimate sources of European advantage in geography, like safety from tropical diseases, and a greater number of available animals that could be domesticated.

A simple example from Professor Clark shows the importance of labor in economic development. As early as the 19th century, textile factories in the West and in India had essentially the same machinery, and it was not hard to transport the final product. Yet the difference in cultures could be seen on the factory floor. Although Indian labor costs were many times lower, Indian labor was far less efficient at many basic tasks.

For instance, when it came to "doffing" (periodically removing spindles of yarn from machines), American workers were often six or more times as productive as their Indian counterparts, according to measures from the early to mid-20th century. Importing Western managers did not in general narrow these gaps. As a result, India failed to attract comparable capital investment.

Professor Clark's argument implies that the current outsourcing trend is a small blip in a larger historical pattern of diverging productivity and living standards across nations. Wealthy countries face the most serious competitive challenges from other wealthy regions, or from nations on the cusp of development, and not from places with the lowest wages. Shortages of quality labor, for instance, are already holding back India in international competition.

An independent estimate by two economics professors at the University of Wisconsin, Madison, Rodolfo E. Manuelli and Ananth Seshadri, ("Human Capital and the Wealth of Nations," suggests that if variations in the quality of labor across nations are taken into account, other productivity factors need differ by only 27 percent to explain differences in per capita income.

Professor Clark argues that as late as the 18th century, most Europeans had not exceeded the standard of living in hunter-gatherer societies. Until recent times, the early advantages of Europe did not allow it to escape what economists call the Malthusian trap, in which rising populations periodically offset temporary gains in living standards.

The turning point came when England, and some other parts of Europe, managed a small but persistently positive rate of growth, starting around the 17th century. Pro-business values spread through English society. The Industrial Revolution was not so much a revolution as a continual building of small improvements, and indeed its history shows the difficulty of achieving regular growth. The explosion of technology came only in the late 19th century, well after many incremental gains.

The world's poorest countries, which now have about one-fiftieth the per capita incomes of the wealthiest countries, have not kept pace. According to Professor Clark, the relative advantage of a highly disciplined and properly acculturated work force is greater for the more complex production processes of the modern world. Low morale and lax discipline will curtail simple factory production but the problem is far worse as production and management become more complex. The poorer countries remain stuck at the bottom as growing populations mean fewer resources for everyone else.

Paradoxically, advances in sanitation and medical care, by saving lives, have driven down well-being for the average person. The population is rising in most of sub-Saharan Africa, but living standards have fallen below hunter-gatherer times and 40 percent below the average British living standard just before the Industrial Revolution. The upshot is this: The problem with foreign aid is not so much corruption but rather that the aid brings some real benefits and enables higher populations.

Professor Clark questions whether the poorest parts of the world will ever develop. Japan has climbed out of poverty, and now China is improving rapidly, but Dr. Clark views these successes as built upon hundreds of years of earlier cultural foundations. Formal education is no panacea, since well-functioning institutions are needed for it to be effective.

A more optimistic take might cite the power of cultural globalization. It is hard to reshape workplace norms in poor countries, but in the modern world religious and cultural ideas spread with a hitherto unprecedented speed. Perhaps television and missionaries will prove more important for economic development than privatization plans or exchange rate adjustments.

Professor Clark's idea-rich book may just prove to be the next blockbuster in economics. He offers us a daring story of the economic foundations of good institutions and the climb out of recurring poverty. We may not have cracked the mystery of human progress, but "A Farewell to Alms" brings us closer than before.

Tyler Cowen is a professor of economics at George Mason University and co-writes a blog at www.marginalrevolution.com. He can be reached at tcowen@gmu.edu.