Hi guys, it's DT again. Welcome back to Global Business for Environment. Hope you've had a great day. We're going to talk today about a very interesting and important question that probably most of you have asked at one time or another in your life. And that question really constitutes all of this third module in our course. That question is, very simply stated, why are some countries wealthier than others? Why are some countries poorer than others? What we're really asking is about economic development. We're trying to understand the factors that might be related to an increase or a decrease in economic wealth on a country level. Now, before we get too far, think about that for a minute. If I knew the answer to that question, would I be standing here just simply teaching that to you? This is another ans, another question without a simple answer. And in fact, no one really knows the true answer to this question. The reason that that's the case is that it's a lot easier said than done. It's harder to implement all of the factors that might be related to economic development and the creation of wealth than it is to talk about it or to, to list a set of factors. And things change over time. So don't get too excited. We're not going to answer all of or solve all of the world's problems in one setting. What we will do is go through in kind of an orderly fashion. Set of factors that might be related or might be important to the development of economies over time. And that, that's an important thing to consider. We're not only asking why are some countries richer than others? We're also asking, can a country that's less well off over time increase its position? Do we have examples of that? And I think you might be surprised by what we can see from history and the data. So before we get too far, let's now take a moment to think about if we're going to answer the question, what makes a country richer than another why don't we first talk about how we measure that. And most of you, if you've had a class in economics or studied this at all, have probably heard the phrase gross domestic product, GDP. And as you know, that means the total amount of products and services created by an economy in a given period. You add up everything made, everything sold in a given place, in a given time. You get the gross domestic product or the GDP. If you divide that by population, you get GDP per capita. And so I've got here on the screen a list of the nations in the world ranked by their GDP per capita. Now, this particular site that I'm looking at is from the World Bank. And let me have you look at it here for a few minutes, and I'll scroll down. You see that the wealthiest country in the world is a country, a small, a very small nation in Luxembourg in, in Europe called Luxembourg. There are many countries in the world, depending on how you count them over 180. And some of these nations you may be familiar with. Some of them you may never have heard of in your whole life. As we go down the, the diversity continues and the number gets a lot lower. For example it goes all the way down, if I scroll down to the bottom, to several nations in Africa that have a GDP per capita of less than $1,000 per year. And that, we're looking not at inflation adjusted numbers. We're looking simply at the current value of the US Dollar. So a GDP per capita less than $1,000 dollars means that the country is producing, in terms of goods and services, a total of less than $1,000 US dollars per person every individual per year. These countries are struggling quite a bit economically, and their citizens pay the price. This is not this is not something that we would celebrate or be excited about. This is a very frustrating and saddening thing which is why we ask this question. How can a country increase its economic wealth? Let me scroll back very quickly up to the top and compare the very low numbers we saw to this top number Luxembourg, which has this very high GDP per capita of over $100,000 per year. And you see several other nations, Norway Qatar, Bermuda, Switzerland Macau. They're the top, all around $80,000 US Dollars or more per year. Think about these countries for a few minutes. Or a few seconds. What is it that these countries have in common? Are they all in the same region of the world? Do they all have the same history? I think if you look at it without knowing much more about these nations than their names, you'd probably find that all of these countries have relatively or quite small populations. I believe that if you looked at Norway has a population of less than ten million people. These are not very large countries or large economies supporting very large populations. So it's very important to include the per capita when we look at this, but we're not looking at very large nations. When you go down a few more countries, you see Denmark, Sweden. And so, we're seeing several countries in the Scandinavian region, in Northern Europe. Not sure if that means anything, but it's something that you might notice. As we scroll down, the largest economy in this top 10 or 15 nations is the United States of America. And it has a GDP per capita about half the size of Luxembourg's at almost $52,000 per year. So the United States has over 300 million people. That's a significant development of wealth the United States has experienced over its history. A very impressive achievement. Another large economy on this list is Japan. Very near to the United States with its GDP per capita. So a lot of different things you can, you can pull out here. So as you look at this and I just mentioned the United States and its history, think about that for a minute. What would be the reasons or the factors that would, would, we could use to explain why these countries are wealthier than the ones at the bottom of the list? And as we go down we see, as I mentioned before, that most of these nations are concentrated in Africa. Which is a very a very important thing for our world to consider and try to figure out. How can those economies improve? And then we see, by the way, a lot of middle income countries that aren't down in the hundreds, but aren't in the in the top tier. Some people may not be aware for example, that Mexico has a using current GDP numbers, current dollars of about $10,000 per year. Argentina and Brazil, other major economies in Latin America, have similar GPs in current US dollars. So there's a lot of diversity, and this list is constantly changing. Let me show you another one. Let's look at South Korea, which has a GDP per capita of about $23,000 per year. That's three times the GDP per capita of, of Mexico, Argentina, and Brazil. And we'll look in a minute and see if that's always been the case. Before we do that though, let me, let me make you aware that there are other ways of measuring other sources of of data on GDP per capita. What I was just showing you comes from the World Bank, but you can also look to other sources. Here are several that are provided from US government or international entities like the IMF. And you see different numbers. I believe that this source these sources are all looking at countries and dollars that are converted to purchasing power parity. Which takes into account the purchasing power or standard of living ability of each economy. And so you see a little bit different result. You see somewhat different numbers. For example, Luxembourg on one ranking has 78,000 and on another has 89,000. Where the list that we looked at first, it had a GDP per capita of over 100,000. So a little it of differences, but overall, we're pretty much seeing the same result. Some countries, when you take into account purchasing power parity have an even higher GDP per capita. So South Korea is still there at $33,000 per year. But when we scroll down, we see Argentina with 18,000, which is higher than we saw on the other list. And Mexico at 15,000 per year. And that will be significant as we go forward. Just wanted to, to show you that. This is not the only way, by the way, to look at the success of an economy. I freely recognize that. For example, some economists and other social scientists say that we ought to be looking at other factors overall well-being of society. Here's a, a, an interesting ranking called the Happy Planet Index. Which ranks nations based on their the overall well-being, and lifestyle, and standard of living. Including life expectancy and the environment. And you see a lot of countries for example in Latin America on this list rank very highly in terms of their overall happiness. So not the only way to look at it GP, GDP per capita, we freely recognize that. But, but given difficulties in measuring things over time, GDP per capita or similar rankings is generally the most widely accepted way to look at things. So here's a question. How have these countries performed over time? I asked the question what factors lead to the economic success of a nation or an economy. And we haven't really considered the, the factor of the dynamic growth of these nations and where they've been positioned over time. Let's look at a, a list of nations in 1950 and their GDPs per capita. At the top of the list is the United States with at the time not inflation adjusted about $10,000 per year in GDP per capita. We see some of the European nations that we saw before like Sweden and Denmark high on this list. We see Argentina as one of the wealthiest nations in the world in 1950, in the top 12. Norway was still there, but was but about half the had about half the GDP per capita of the United States at about 5,000 per year compared to about 10,000 per year in the United States at that time. So quite a bit of diversity over time. Now, lets look at Mexico. In Mexico in, in 1950, Mexico had a GDP per capita of about $2,000 per year, which was 20% approximately the GDP per capita of the United States at that time. Where is it today? Do you remember? When we looked over here, I believe if you recall, approximately Mexico's was approximately 10,000 per year and the United States was approximately 50,000 per year. You can scroll down and see that, depending on the year and the source. But it's still about 20% of the GDP per capita, according to this list. Now, let's keep scrolling down and find a very, very interesting thing. South Korea is an economy that in 1950 had a GDP per capita less than 10% the size of the United States. And I guess that's about a fourth of, or a third of the, excuse me, about a third of the GDP per capita of Mexico. So in 1950, that's where things stood. Let's go back to today. On this original World Bank data source we looked at we saw the United States at 52,000. We see South Korea at 22, which is about half the GDP per capita of the United States. And if you recall, Mexico is at about 10,000. So what's the point? In a 60-year time period, South Korea has gone from being, let's say half the GDP of Mexico, GDP per capita, to now being more than double the GDP per capita of Mexico. Now, that's just one example, we could compare lots of pairs of countries. But that's the kind of thing we want to understand. What is it that's led to the very impressive growth in South Korea's GDP per capita? If we could capture that in a bottle, if we could discover that magic, we'd help a lot of people and the world would be a lot better off. That's what we want to try to understand in this module.