WHY THERE ARE POOR COUNTRIES


There are 196 countries in the world. 25 of them are very rich, defined as having an average wealth per person of over $100,000 a year.

They are: But far more countries are quite poor, and some – which we’re considering here – are very very poor. These are the 20 poorest countries in the world: where the per capital wealth is under a $1,000 a year, or under three dollars a day.

Every country is now more or less on a path to growth, but the poor ones are growing very, very slowly. If Zimbabwe continues at its current growth rate, it will qualify as a ‘rich country’ in 2722 years.

What we want to know in this film is why some countries prosper and others stagnate: – so we can understand what rich countries are doing right – and get a better grip on the challenges and hurdles facing poor countries.

There are basically three factors that determine whether a country will be rich or poor.


The first is: INSTITUTIONS

Institutions are beyond important. Broadly speaking, rich countries have ‘good institutions’ and poor ones have very, very bad ones.

The correlation between poverty and corruption is direct. The richest countries in the world are quite simply invariably also the least corrupt ones. And the most corrupt countries are also the poorest.

When countries are corrupt, they can’t collect enough taxes to get the good institutions they would need to escape the poverty trap. Half of the wealth of the world’s poorest 20 countries goes into offshore accounts.

Lost revenues in these countries totals between $10 and $20 billion dollars a year Meanwhile, without an adequate tax base, poor countries can’t invest in police, education, health, transport.

Now, a more generous way to look at corruption is that it’s really a case of clan-based thinking. Say you’re hiring someone. In the rich countries, you’re meant to do so simply on merit, interviewing lots of candidates then picking the best one irrespective of any personal connection.

But in poor countries under the sway of clan-based thinking, that approach would itself be corrupt: it’s your duty to disregard the so-called best candidate from an anonymous bunch, in order to pick someone from your own team: your uncle, your brother, your second cousin, the guys from the same tribe.

As a result, poor countries don’t allow themselves access to the intelligence and talent of the whole population.


There’s a second thing that keeps countries poor: CULTURE

– what goes on in people’s minds, their outlooks and beliefs…

A striking statistic pops up here in relation to religion. If there’s one generalisation you can make about religion and wealth, it’s that the less people believe, the richer they stand a chance of being. 19 of the richest countries in the world have 70% or more of their populations saying religion is not at all important to them.

The exception here is – unsurprisingly – the United States, which manages to combine great religiosity with huge wealth (more on that in a second).

And conversely, the poorest nations in the world are also extremely believing ones. Here’s how many people think religion and the supernatural is deeply important in the following countries: In the world’s poorest country, simply everyone is a believer. Why is belief quite so bad for wealth creation?

Because in general, religiosity is connected up with the idea that the here and now can’t be improved, so you should focus on the spiritual and look forward to a next world instead. It makes quite a bit of sense when you live here.

In the rich world on the other hand, people are generally great believers in their capacity to alter their destiny through effort and talent. Incidentally, to explain the anomaly of the United States, religion seems not to slow down economic growth here because it is a particular sort of religion: an overwhelmingly Protestant and exceptionally materialistic kind.

The American god doesn’t want you to think of building the new jerusalem in the next world, He wants it here and now in Kansas or Houston.


Here are many factors at work for developing countries being Poor.

  1. Colonial past : There is no cause and effect relationship between colonisation and poverty per se. But the economic policies in colonised counties were formulated in such a way that colonisers and their mother counties benefited more than the colonies. Also, the drain of wealth from Colonised world untill mid 19th century directly led to the poverty in colonies.
  2. Traditional social institutions in developing countries, more often than not, are at loggerheads with the requirements of development. e.g. caste system in India not allowing people to choose the profession they are best at.
  3. Politics of Globalisation : It may sound an outrageous point for those who belong to the Western part of the world but entire process of Globalisation has been manipulated in such a way that the currently poor countries don’t get their economic due through this Globalisation process.. e.g. the prices of raw materials from underdeveloped countries don’t necessarily reflect their market value. Poorer countries can be forced to sell their stuff cheap owing to their need to sell it.
  4. Lack of technical expertise owing to lower levels of R&D in these countries. This leads to lower amount of Intellectual Property being generated in these countries and subsequently their dependence on developed countries for using high end technology.
  5. Population : This is a debatable issue when we see the growth that China has been able to achieve. But for democratic counties bigger populations are difficult to provide services too.. So huge number of people are deprived of basic amenities leaving them out of the economic work force. This is a vicious cycle.

I have tried to point out main factors which have led to poverty in developing countries globally..

Country specific factors are also important. But i believe they are out of the ambit of this question which is more of a general one.


Coming from the perspective of having exposed to many first world societies and having lived abroad for 6 years, I’m offering a different answer here.  Indonesia is underdeveloped, most chronically in human capital, because of:

1. lack of investment in human capital, combined with a
2. culture that neglects individual empowerment.

The two factors are very different.

The lack of investment in human capital is a systemic political problem.  The explanations range as broad as the Resource curse (that causes underestimation of value of human capital), archipelagic geography (increasing cost of any infrastructure), political problems (incompetent and corrupt education ministries), etc.

The general Indonesian culture of conformity is another factor that is completely non-governmental, but which I think is probably more destructive (and which, one is doomed to miss if one never judges one’s own society from the perspective of others).  Unquestioning respect to authority figures like teachers, religious leaders, company leaders, poltiical leaders, power distance between bosses and employees, inequal treatments of people of different social background, general discouragement of voicing one’s own opinion or arguing against the mainstream, are all symptoms of a culture that neglects individual empowerment.  This leads to lack of creativity, lack of risk-taking, lack of viewpoints, lack of advancement.

A simple example to illustrate my point is to look at Quora answers to various questions about Indonesia.  Indonesians tend to express their opinions by blaming some external parties, mostly government or their situations, rather than expressing what’s wrong with the individuals and what you and I should do about it.  When would anyone dare to say “yes, this is partly my fault, and I’m responsible for fixing this”?  It’s a truly ingrained mindset that’s hard to recognize while you’re at it.


I’m writing this anonymously because I think I’d rather do without the ad hominem that might come my way.

I recently decided that having left Indonesia many years ago and finding a better life out here, I am not going back. Here are my reasons (which happens to be the answer to this question), in that I don’t foresee this country catching up with the developed world anytime soon:

  • Political system inadequacy. Indonesians hold their political system and ideology with great pride (NKRI, presidential, etc.) and accuses anyone who dare suggest any alternatives as traitors. The system (and the people) places great emphasis on the personality of the leaders. Once in a while you get great leaders but otherwise the system is really doing disservice to the development of the nation. We’re stuck with laws that are outdated (some dates back to the colonial era), poorly written, sometimes conflicting, etc. and they’re not progressing well. In 2015, the parliament produced a grand total of 13 legislation[1]. As a comparison, in Australia (a country with 1/10 the population), last year alone, 159 bills[2] (new laws or amendmends) were signed into effect. The citizens largely thought of the parliament, the government, and the law enforcement to be corrupt institutions, and mostly accepts that as a fact of life.
  • Mindset of the people. There are a few common way of thinking of the people there, mostly product of poor education and poor environment in their society, that I believe are holding them back:
    • Preference to quick fixes, rather than correct fixes. The political system being the result of this: as long as things seems to be chugging along, nobody bothers to fix it. People are generally not interested in holistic solutions to problems (which may take some effort) if quick fixes can be found.
    • Poor reception to criticism. When you disagree with what a popular politician has to say, you’re quickly labeled as a disgruntled supporter of the opposing side. When you tell someone they’re wrong, instead of trying to improve, they simply assume that you hate them.
    • Victim mentality. The problems of this country are generally blamed to the external parties (the colonialists, the Americans taking our gold, the Chinese taking our jobs, etc.).
    • If you can get away with it, it’s fine [to break the rules, do a poor job]. And therefore, rules get broken, bus lanes gets filled with private cars, people bribe to get out of trouble, students do the bare minimum to graduate, etc.
    • and on, and on, …
  • Slow social progress. In developed countries, there are a few things that we take for granted: equality, non-discrimination, fairness, respect, etc. These are the product of hundreds of years of history and debate. It is quite common however for Indonesian society to reject ideas and values that are regarded as “western values”. The average Indonesian cares more about the latest trendy places to hang out, the latest gossip of the celebrities, about which cool gadget to buy, rather than the economy, housing affordability, etc. I found my conversations in Indonesia of the shallower nature than the ones I had with my friends overseas.
  • Broken contract between the government and it’s people. In multiple cases, I found that being a good citizen is hard. Even when you’re doing nothing wrong, the government makes life hard for you. Ever have to deal with Indonesian paperworks? Most of the procedures and forms I have dealt with are riddled with ambiguity, poor usability, unnecessary details and hassles, slow processing, etc. When it’s hard to do things the right way, it’s not surprising that people just don’t (hence cheating and bribery is rampant, everywhere). It’s good that this is being fixed up by the current government somewhat, but in my opinion many of the fixes are temporary “quick fixes”, as described above.
  • The brain drain is real. I don’t foresee these issues being thoroughly solved during my lifetime. They will eventually get there (and be a developed country), but I’m not holding my breath. I’ve done my part in nudging the country forward (as have many Indonesians out there) and it’s now the time to look after myself. And that means living where I will make a difference and progress in my career. As with many talented Indonesians I know, this can only be done elsewhere.

After reading the answers here, almost all are great answers, and I agree with it. I think reiterating people’s answers is not going to give much, so instead, I’m going to try to look from a different perspective.

First, many answers here are highlighting corruption and the lack of freedom of thinking as some of the biggest reasons that halt progress in Indonesian society. Now while I myself am a believer in liberal thinking and agree that corruption is detrimental to the society, I cannot help myself to let this one big contradiction going unaddressed.

Let’s talk about China, whereas we often say that America is the land of freedom, China is the motherland of conformity. Their society doesn’t encourage innovation, and the level of corruption is about as high as Indonesia. They score 37 in Corruption Perception Index, only one point difference than Indonesia’s 36.

Yet, they still manage to become one of the largest economic powerhouse in the world. I understand that many will argue that China is not really a developed country yet, but that’s not the point.

While maybe not on the same standard on the issue of human rights, China is developing very fast. Their country is getting more and more industrialized each year, and they also build high quality infrastructure around their country (yes, they do build high quality things, despite the perception of crappy Chinese product). So the question is, why China, despite having similar problem as Indonesia, can still develop their country at a much faster pace than Indonesia?

Other than the obvious difference in manpower (Indonesia is actually not that bad in manpower, they’re 4th most populous country in the world) and work ethic, actually there is a not-so-obvious difference between China and Indonesia, that is the national identity or lack thereof.

I cannot help but think that since the fall of Suharto’s era, Indonesia has yet to find their new identity. The government has since been struggling to decide in what direction they want this country to progress, and what values that we should put higher than the rest. Are we a nationalist or an internationalist country?

Do we embrace capitalism or do we want to implement socialistic ideas in our economic system?

Are we a secular country or not? What economic sector that we should give more focus on?

And the most important thing, what aspect of the country that we should feel proud of (many Indonesians tend to have a little inferiority complex when comparing their country with others)? Although the education system teaches the citizens about the importance of national unity, in implementation, we’re never united in these things. And that affects our policies making.

A country with policies that often don’t make any sense is not attractive for investors, both local and foreign. No investments, no projects.

Next, I want to point out a simple fact, that seems unrelated, but may answer some of the points that are being highlighted in some answers here. Most Indonesians don’t speak English. Heck, some of them don’t even speak Bahasa Indonesia (lit. Indonesian language) very well.

Many Indonesians speak ethnic language as their first. And many are very proud of their first language that they don’t bother to learn other language. Now where is the relation?

See, many answers here highlight about the unwillingness of Indonesians to learn from foreigners and also about the high number of talented Indonesians leaving the country.

I think much of the unwillingness to learn from foreigners also stem from this pride of Indonesians in their ethnic or occasionally, national culture. For an example, there is a well-known saying in Indonesia, “Dulu makan pisang, sekarang makan keju”, literally translated to “(You) (used to) eat bananas in the past, now (you) eat cheese”.

And it’s often used to negatively point out locals who behave more “westernized”. You see, many Indonesians have this problem of acknowledging that there are some aspects of foreign culture that are simply superior from theirs. So instead of learning from it, they act defensively, and insult people who do learn from foreign culture.

And now about the talent drain, which is actually not a problem unique to Indonesia. Well, most people think these people leaving are smart, able to learn and think critically, and have a global view of the world.

They then learn English to leave the country so they have a better use of their talent, which is somewhat true. But if we think about it, maybe it’s more like a chicken and egg case.

Most people believe that being smart make them able to learn English. But that doesn’t explain why people with the ability to speak English well, tend to have more global view of the world. And why there are smart people who don’t speak English very well, and tend to be more ignorant about world issues, and more likely to be, well, bigoted. And they, obviously, more likely to be content with the current situation. Maybe it’s a bit of generalization from my side. But that’s what I gather from my experience. And what’s more, at least for me, the ability to understand English well, especially in this Internet age, give me access to knowledge that maybe unimaginable to someone who don’t speak it. Now I believe that because a big portion of Indonesian people don’t speak it, that means they miss on the opportunity to tap from a bigger pool of knowledge that the world has accumulated for ages.

That’s why for example, even though cities in Indonesia, despite its size, still have public services and infrastructure that’s well behind by many years compared to other countries, no one gives any serious complaints about it. Also many workers in Indonesia don’t seem to be aware of their rights, so they are content with minimum wage without any benefits. That may also explain the extreme wealth disparity in Indonesia.

These people are just not aware that there is a better life possible for them, because they simply don’t have access to that global knowledge. If we go by an Indonesian saying again, “Katak dalam tempurung”, literally translated, “A frog in a coconut shell”, their view of the world is only limited to the inside of the coconut shell.

The other things like government that doesn’t care about ideals and ethics, that doesn’t take care of their own people, and also things like low incentive in having higher education, and people disregarding law, have been well addressed by many other answer, so no point repeating the same things.

I just want to add some more things related to education. The scientific culture here in Indonesia is very weak. Simply said, you cannot survive being a scientist here. No one cares about investing in research. The capital owners here in Indonesia are very short-sighted and tend to stick to things that are sure to be profitable. The people are no better, the scientific awareness are low in general.

Businesses are not done by statistics, and few people even know what “scientific” means. Many are very superstitious, and not surprisingly, extremely religious. That might be why many Indonesians are very gullible and they tend to be easily persuaded by authority figures. And also, still related to education, most families in Indonesia have a parenting style that instills a very strict unggah-ungguh (lit. social hierarchy) into their children, while discouraging curiosity and expressiveness.

I think that’s also part of the reason of another point that many answers here address, that is the subordinate mentality that Indonesian workers have. Many feel the need of pleasing their superior is more important than actually working competently.


This is interesting.

Calculating wealth is difficult, moreover Indonesia has 13,400 islands that are developing at rapid pace so many things can go under the radar. However, let us assume that we take GDP of Indonesia alone into account.

Indonesia’s GDP per capita is $3,570.29 (2016), which puts the country among the middle-income country, according to World Bank.

But, wait a minute.

It is already known that in terms of culture, Indonesia is a very diverse country. However, a lot of foreigners still don’t realize that the same thing applies for its economy. Which means we are having huge economic gap not only between the rich and the poor, but also even more between islands and provinces.

From 2015 statistics, the province of DKI Jakarta boasts a GDP per capita (nom) around $14,726.99 that is on-par with the likes of Hungary, Oman, Slovakia, and just slightly below Czech Republic. And growing by 5–8% per year.

Yet the growth alone outpaces all of those high-income countries.

With the total landmass of Jakarta (661 sq km) that is only as big as Singapore (719 sq km), its number shows how much wealth of Indonesia (1,905,000 sq km) is concentrated inside this small region.

 

However, this number is badly skewed. Richest 10 percent own about 77 percent of Indonesia’s wealth and almost all of them live in Jakarta. Which means there are large portions of poor that was concealed by this statistics.

Five years ago, an article was showing a concern around this : Menyoal Income per Kapita, which states that “If your monthly salary is under Rp 25 juta ($3,000 in 2012), meaning you’re under the average (mean) of Jakarta.”

And it was five years ago.

Although this results is pretty much skewed by the top 10% as stated :

Dengan income per kapita sebesar ini, Anda ingin tahu penghasilan rata-rata orang Jakarta? Jika kita menganggap semua orang Jakarta bekerja, penghasilan rata-rata orang yang bekerja atau berusaha di Jakarta adalah Rp101 juta per tahun atau Rp8,42 juta per bulan.

Masalahnya, di kota atau negara mana pun juga, tidak mungkin seluruh penduduknya bekerja karena ada saja penduduk yang masih usia sekolah, para pensiunan, ibu rumah tangga yang mengurus anakanaknya, penyandang cacat, dan pengangguran. Jadi, pada kenyataannya setiap orang yang bekerja akan menanggung kehidupan beberapa orang lain dalam keluarganya yang tidak bekerja.

Kita asumsikan saja satu orang yang bekerja menanggung kehidupan dua orang lainnya. Dengan asumsi ini, satu orang yang bekerja menghidupi dirinya sendiri dan dua orang tanggungannya secara rata-rata. Karena itu, penghasilan rata-rata seorang pekerja atau pengusaha di Jakarta menjadi tiga kali Rp101 juta atau Rp303 juta per tahun atau Rp25,25 juta per bulan.

Jika Anda sebagai warga Jakarta berpenghasilan di bawah angka ini, jangan bersedih dulu. Sebagian besar pekerja di kota ini, dugaan saya sekira 80 persen, berpenghasilan di bawah Rp25,25 juta. Namun, 10 persen yang berpenghasilan terbesar telah menarik nilai rata-rata ke atas. Inilah kelemahan ukuran mean dalam statistik.

The number is pretty impressive coming from a developing nation, right?

Wait until I show you the other side of the coin.

Let’s take a look at East Nusa Tenggara, the province that famous for it’s giant Komodo dragon. According to 2015 statistics, this province possesses GDP per capita merely around $1,147.34. If we take these numbers literally into account, it means GDP per capita of Jakarta people in one month is higher than annual GDP per capita of East Nusa Tenggara people in one year.

This number is lower than the poorest nation of Southeast Asia, Cambodia, that has slightly higher GDP per capita. Which puts East Nusa Tenggara on-par with countries like Cameroon, Zambia, poorer than Ivory Coast, and slightly richer than Zimbabwe.

 

Indonesia has 34 states, when one state lives like Czech Republic and another one lives like Zimbabwe, you get the idea on how big is the economic gap.

Of course this number is highly debatable since I don’t take into account other important stuffs like purchasing power parity, human-development index, life expectancy, educational level, and infrastructure development.

But at least, this gives you some ideas about Indonesia’s economic states from closer view, that is neither just-rich or just-poor but, I can say, both.

Some interesting reads :

  1. 2050 : Indonesia to become 4th-largest economy- Nikkei Asian Review
  2. Indonesia’s four richest men worth as much as poorest 100 million
  3. Indonesia’s new mega-rich spend it big as inequality grows
  4. Singapore, where rich Indonesians kept funds with S$279.2 billion
  5. Indonesian economy becomes a ‘standout’ among emerging markets

 

Iklan

Tinggalkan Balasan

Isikan data di bawah atau klik salah satu ikon untuk log in:

Logo WordPress.com

You are commenting using your WordPress.com account. Logout / Ubah )

Gambar Twitter

You are commenting using your Twitter account. Logout / Ubah )

Foto Facebook

You are commenting using your Facebook account. Logout / Ubah )

Foto Google+

You are commenting using your Google+ account. Logout / Ubah )

Connecting to %s