The Power of ProductivityWealth, Poverty, and the Threat to Global Stability

The Power of ProductivityWealth, Poverty, and the Threat to Global Stability

William W. Lewis

Print publication date: 2013

ISBN: 9780226476766

Publisher: University of Chicago Press

Abstract

The disparity between rich and poor countries is the most serious, intractable problem facing the world today. The chronic poverty of many nations affects more than the citizens and economies of those nations; it threatens global stability as the pressures of immigration become unsustainable and rogue nations seek power and influence through extreme political and terrorist acts. To address this tenacious poverty, a vast array of international institutions has pumped billions of dollars into these nations in recent decades, yet despite this infusion of capital and attention, roughly five billion of the world's six billion people continue to live in poor countries. What isn't working? And how can we fix it? This book provides answers to these questions. The book draws on extensive microeconomic studies of thirteen nations over twelve years—conducted by the Institute itself—to counter virtually all prevailing wisdom about how best to ameliorate economic disparity. The research, which included studying everything from state-of-the-art auto makers to black-market street vendors and mom-and-pop stores, conclusively demonstrates that, contrary to popular belief, providing more capital to poor nations is not the best way to help them; nor is improving levels of education, exchange-rate flexibility, or government solvency enough. Rather, the key to improving economic conditions in poor countries, the book argues, is increasing productivity through intense, fair competition and protecting consumer rights. As the book explains, this sweeping solution affects the economies of poor nations at all levels.