1 The middle income trap. Many countries used their cheap uneducated population as an opportunity for cheap labour, for large companies. This brings lots of capital to the country and people, and the country develops. Building more schools, infrastructure etc. but as a country develops, pay increases for workers, and suddenly their labour is no longer cheap. Their country’s economy is now effectively stuck.
2 Conflict and instability. Investors don’t want to pour money into a country where it might have a coup, leadership change, etc. They don’t want to lose what they invest, since these events usually result in lots of private property being taken or destroyed. This fact leaves a lot of countries in a catch 22. They need investment to stabilize, but need to stabilize to gain investment.
A lot of countries are also unstable because of badly drawn borders. This often leaves a lot of ethnic tensions that continue to boil away indefinitely. Sometimes the borders give a country horrible geography and incentivise them to invade their neighbors.
One example would be that country #1 is downstream of a major river, behind country #2 and #3. Country #2 and 3 use a lot of the water and there is none left for country #1 and their only option is to invade.
The final and probably most common reason is that dictators don’t care about prosperity, and that dictators lead to more dictators. Far more often than not, coups lead to another, worse dictator, focused on holding power than their country’s success.
The reason that south Korea and Taiwan are successful and democratic today are because they rolled the 1/1000 chance on a benevolent dictator that WILLINGLY steered the country into democracy and genuinely improved the economy.
1 The middle income trap. Many countries used their cheap uneducated population as an opportunity for cheap labour, for large companies. This brings lots of capital to the country and people, and the country develops. Building more schools, infrastructure etc. but as a country develops, pay increases for workers, and suddenly their labour is no longer cheap. Their country’s economy is now effectively stuck.
2 Conflict and instability. Investors don’t want to pour money into a country where it might have a coup, leadership change, etc. They don’t want to lose what they invest, since these events usually result in lots of private property being taken or destroyed. This fact leaves a lot of countries in a catch 22. They need investment to stabilize, but need to stabilize to gain investment.
A lot of countries are also unstable because of badly drawn borders. This often leaves a lot of ethnic tensions that continue to boil away indefinitely. Sometimes the borders give a country horrible geography and incentivise them to invade their neighbors.
One example would be that country #1 is downstream of a major river, behind country #2 and #3. Country #2 and 3 use a lot of the water and there is none left for country #1 and their only option is to invade.
The final and probably most common reason is that dictators don’t care about prosperity, and that dictators lead to more dictators. Far more often than not, coups lead to another, worse dictator, focused on holding power than their country’s success.
The reason that south Korea and Taiwan are successful and democratic today are because they rolled the 1/1000 chance on a benevolent dictator that WILLINGLY steered the country into democracy and genuinely improved the economy.