Poverty and Wealth free essay sample

These countries also have population centered away from the ocean therefore inhibiting the progress to access international markets. 3. What advice do the authors have for the two main international financial institutions (World Bank and IMF)? The authors are saying that these two organizations should focus less on international reform ie. Civil services and taxes. They should instead pool more resources into developing technologies that will benefit a country in a tangible manner. 4.According to the authors, what implications does this research have for wealthy nations? The research implies that wealthy nations should do more to support those countries who have been limited due to their geographic situation. These efforts are not substantial and would prove to be beneficial in the long run as countries become more economically stable. The Geography of Poverty and Wealth Jeffrey D. Sachs, Andrew D. Mellinger, and John L. Gallup Scientific American, March 2001 Why are some countries stupendously rich and others horrendously poor?Social theorists have been captivated by this question since the late 18th century, when Scottish economist Adam Smith addressed the issue in his magisterial work The Wealth of Nations. Smith argued that the best prescription for prosperity is a free-market economy in which the government allows businesses substantial freedom to pursue profits. Over the past two centuries, Smiths hypothesis has been vindicated by the striking success of capitalist economies in North America, western Europe and East Asia and by the dismal failure of socialist planning in eastern Europe and the former Soviet Union.Smith, however, made a second notable hypothesis: that the physical geography of a region can influence its economic performance. He contended that the economies of coastal regions, with their easy access to sea trade, usually outperform the economies of inland areas. Although most economists today follow Smith in linking prosperity with free markets, they have tended to neglect the role of geography. They implicitly assume that all parts of the world have the same prospects for economic growth and long-term development and that differences in performance are the result of differences in institutions.Our findings, based on newly available data and research methods, suggest otherwise. We have found strong evidence that geography plays an important role in shaping the distribution of world income and economic growth. Coastal regions and those near navigable waterways are indeed far richer and more densely settled than interior regions, just as Smith predicted. Moreover, an areas climate can also affect its economic development. Nations in tropical climate zones generally face higher rates of infectious disease and lower agricultural productivity (especially for staple foods) than do nations in temperate zones.Similar burdens apply to the desert zones. The very poorest regions in the world are those saddled with both handicaps: distance from sea trade and a tropical or desert ecology. A skeptical reader with a basic understanding of geography might comment at this point, Fine, but isnt all of this familiar? We have three responses. First, we go far beyond the basics by systematically quantifying the contributions of geography, economic policy and other factors in determining a nations performance.We have combined the research tools used by geographers – including new software that can create detailed maps of global population density – with the techniques and equations of macroeconomics. Second, the basic lessons of geography are worth repeating, because most economists have ignored them. In the past decade the vast majority of papers on economic development have neglected even the most obvious geographical realities. Third, if our findings are true, the policy implications are significant. Aid programs for developing countries will have to be revamped to specifically address the problems imposed by geography.In particular, we have tried to formulate new strategies that would help nations in tropical zones raise their agricultural productivity and reduce the prevalence of diseases such as malaria. The Geographical Divide The best single indicator of prosperity is gross national product (GNP) per capita – the total value of a countrys economic output, divided by its population. A map showing the world distribution of GNP per capita immediately reveals the vast gap between rich and poor nations [see map on page 74].Notice that the great majority of the poorest countries lie in the geographical tropics – the area between the tropic of Cancer and the tropic of Capricorn. In contrast, most of the richest countries lie in the temperate zones. A more precise picture of this geographical divide can be obtained by defining tropical regions by climate rather than b y latitude. The map on page 75 divides the world into five broad climate zones based on a classification scheme developed by German climatologists Wladimir P. Koppen and Rudolph Geiger.The five zones are tropical-subtropical (hereafter referred to as tropical), desert-steppe (desert), temperate-snow (temperate), highland and polar. The zones are defined by measurements of temperature and precipitation. We excluded the polar zone from our analysis because it is largely uninhabited. Among the 28 economies categorized as high income by the World Bank (with populations of at least one million), only Hong Kong, Singapore and part of Taiwan are in the tropical zone, representing a mere 2 percent of the combined population of the high-income regions.Almost all the temperate-zone countries have either high-income economies (as in the cases of North America, western Europe, Korea and Japan) or middle-income economies burdened by socialist policies in the past (as in the cases of eastern Europe, the form er Soviet Union and China). In addition, there is a strong temperate-tropical divide within countries that straddle both types of climates. Most of Brazil, for example, lies within the tropical zone, but the richest part of the nation – the southernmost states – is in the temperate zone.