Not all countries prosper … Why?
There are over 190 countries in the world today. Some prosper, some do not. Why?
Some answers to such a question is the subject of a book by Francis Fukuyama in 2014 titled Political Order and Political Decay.
Some elements of prosperity include the free market ideas of Adam Smith plus an honest and effective government. Apparently democracy is not required for a country to prosper, even though a majority of countries (over 115) are today democracies.
An effective government provides an array of public goods, such as clean air, defense, public safety, public health, a legal system, an education system, roads, ports, water, etc. Such goods should be available to all, and not just to government supporters.
No country can get rich without an effective government – Fukuyama page 41. But government like any private-sector firm can be well or badly managed.
Some actions or omissions of a government that can delay or adversely affect prosperity are as follows:
- the failure of a state to control the territory within its borders;
- the failure of a state to develop an infrastructure that provides public goods like security, education, public health, clean air, etc.;
- the failure of a state to develop a government meritocracy that is capable of protecting the public interest;
- corruption in the form of theft by members of the government;
- corruption in the form the granting of favours in return for votes;
- corruption in the form of hiring for unproductive work in return for votes.
Examples of problems arising out of excessive government spending are found today in Greece and Italy. At page 74 Fukuyama states:
“At the root of the problems of Greece and Italy is the fact that both countries have used public employment as a source of political patronage, leading to bloated and inefficient public services and ballooning budget deficits.”
Prosperity can be adversely affected by poor economic policies.
China’s emergence as an economic power is an example of the adoption of good economic policies. China’s economic policies changed radically in 1979. At that time China opted to reform and open its markets and this resulted in unprecedented prosperity. This policy resulted in the release of many millions of persons from poverty. At this time China had in place a government bureaucracy that served broad public interests. In fact China invented government meritocracy and the civil examination in the third century B.C. (see Fukuyama, page 178).
In his book Fukuyama also describes a process of government decay where the effectiveness of a bureaucracy can be lessened by mistaken policies and by powerful interest groups – see Fukuyama page 464.