Economics: Why Are Some Countries Much Wealthier Than Others?

  (Drivebycuriosity) - Economists try to explain why  some countries are wealthy and many others are not. Apparently the majority of the rich countries are in the northern hemisphere. There is a clear wealth divide between the rich North and the poor South.

It is interesting that many of the rich countries - like Switzerland, Finland, Netherlands, Sweden & Austria - don´t have many commodities and their cold climate is not favorable for agriculture. Otherwise many countries with plenty commodities and warm agriculture-friendly climate - like Brazil, Nigeria or Mexico - belong to the poor.

Can it be that the cold climate and a lack of commodities are a long term advantage? Take for example Switzerland. The Swiss have a per capita income of $87,000 and live in one of the most wealthiest countries of the world ( worldbank).

The country doesn´t have oil and other raw materials (commodities) and is mostly covered with mountains which make agriculture very challenging. How did a little country which once was settled by poor mountain peasants rise to the wealthiest of the world.

The Swiss are the descendants of alpine peasants & herders who lived in very harsh conditions and had to struggle with an unfriendly environment. Farming is very challenging on steep mountain slopes which are over many months covered with snow.

In order to survive the Swiss had to work extremely hard and to use their meager resources very diligent. The harsh environment forced them to develop high work ethics and talents for craftsmanship & engineering. The evolutionary pressure coerced them to find new income sources and might have lead to today`s craft & industrial art, famous products like the Swiss Army Knife and the strength of the Swiss service sector. 

Other countries like Finland, Sweden and Netherlands had similar starting positions - lack of commodities and unfriendly climates. The scarcity of natural resources shaped the social evolution in these countries and created a different and very valuable resource: human capital. Today`s wealth of Switzerland, Finland, Netherlands on many other northern countries is based on plenty of human capital - an efficient and productive work force.