Why are the wealthiest nations so much richer than the poorest nations?  Harvard’s Ricardo Hausmann explains what’s behind global inequality and poverty:

So there are these enormous differences in productivity that make the productive places rich and the unproductive places poor. The poor people are not being exploited. They’re being excluded from the higher productivity activities. It’s not that the capitalists are taking a very large share of what they produce. It’s just that they produce very little in the first place. …

Poor places are characterized by the absence of capitalist firms and by self-employment, employment: these are small peasants and farmers or owners of small shop. In these settings, there are no wages, there’s no employment relationship. There are no pensions. There is no unemployment insurance. The trappings of a capitalist labor market do not exist.

While Marx thought that capitalism, as a form of organizing production, would take over the world, poor countries and regions are characterized by the absence of capitalism, of capitalist forms of production. So the question we should ask ourselves is why did capitalism not succeed in these regions, leaving huge differences in productivity between the places where it succeeded and the places where it did not? The answer we have found is that modern capitalist production requires the simultaneous access to many different inputs.

“Inputs” can mean many different kinds of networks: water, electricity, urban transport, roads, the educational system, banking, Internet. I would also include economic freedom as a pretty important input, the ability to take risks and innovate without government preemptively quashing you or taking all your profits. Not exactly sure the degree to which the other stuff matters with that political economic input.

Read the article “Poor Nations are Poor Because of the Lack of Capitalism, Not Because of It” on aei.org.