During the past 300 years, the world has seen a significant divergence in economic development. Before 1700, the world economy felt into a Malthusian era where there were little changes in economic performance. The period from 1700+ to the end of 19th century marked an era called Industrial Revolution with the invention of new manufacturing process and machines. This period is a major turning point in human history, and this momentum leads to the Great Divergence era where major economies take off and shape the world’s economy as it is nowadays. But why do poor countries remain poor while others have took off? This analysis gives a brief discussion of some of the potential factors.

1. Generating the Wealth of Nations – Assignment 3
1. Introduction
During the past 300 years, the world has seen a significant divergence in economic
development. Before 1700, the world economy felt into a Malthusian era where there were
little changes in economic performance. The period from 1700+ to the end of 19th century
marked an era called Industrial Revolution with the invention of new manufacturing process
and machines. This period is a major turning point in human history, and this momentum
leads to the Great Divergence era where major economies take off and shape the world’s
economy as it is nowadays.
Big picture of the world’s economic history [1] [2]
One key question was raised by observing this great divergence: why do poor countries
remain poor?
Each country is unique with its own multi-causality answer. However I believe these can be
grouped into some key determinant factors as listed below:
 Historical factors: explain what is unique about the country under consideration.
Whether the country had war (external or civil), colonization or slavery can have a
significant impact on its economic performance.
 Institution: the way the entire social group operates in its autonomous mode. It’s the
rules of the game everyone needs to follow regardless of political or demographic

2. conditions. Good institution doesn’t always guarantee success but bad institution will
definitely damage economic performance.
 Contact with success: the way a country connects with successful economies with
best practices and eventually improves itself as a result of peer pressure.
 The role of technology: more than any time in history, technology is now one of the
major determinant factors in economic performance. The problem is: poor countries
can’t simple apply technologies from rich countries because the context is completely
different. In this area, we can see an interdisciplinary between geography, institution
and demographic of the population in order to develop or apply suitable technologies.
In the next section, I will explain these factors with further details.
2. Why poor countries remain poor?
At first, let’s take a look at economic performance of some developing countries compare to
the US during the past 60 years.
There is a common pattern here: economic performance of Vietnam, Burma and Nigeria are
very slow compared to the US although they are in different regions of the world.
Nigeria, known as "the Giant of Africa" with more than 170 million inhabitants, is the most
populous country in Africa and the seventh most populous country in the world [3]. Vietnam
is located in the South East Asian with 90.3 million inhabitants in 2012, which is the 13th
most populous country. Burma is also in the South East Asia with 60 million inhabitants.
A closer look on these countries’ economic development:
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
USA Vietnam Burma Nigeria
GDPpc Development during 1950-2010GDPpc Development during 1950-2010GDPpc Development during 1950-2010GDPpc Development during 1950-2010

3. Economic performance is improved much since 2000, but it is bad during the latter half of
20th
century. All of these countries have rich natural resources (oil, precious stone, etc),
suitable landscape for agricultural and industrial, yet these countries remain poor with a
large portion of the population living under $1 per day. The following factors are important in
order to briefly explain the question: why these countries remain poor?
2.1. Historical factors: all these countries suffered from war in the past 60 years. Vietnam
had several wars with France, US, Cambodia Khmer Rouge, China and civil war [4].
Burma had civil war since the attainment of independence in 1948 [5]. The same
situation happened for Nigeria, there are external war with the United Kingdom and
civil war for a long period of time in the last century [6]. These wars caused severe
impact to economic development to these countries.
2.2. Institution: since the declaration of independent in 1945, Vietnam is leaded by the
Communist party and followed Socialism economic development model from the
Soviet Union. This has caused a big impact for economic performance for the
country until Doi Moi (Renovation) program in 1986. Burma has been under direct
control by the military since March 1962. Until 1988, the country was ruled as a one-
party system, with the General and other military officers resigning and ruling
through the Burma Socialist Programme Party (BSPP).[59] During this period,
Burma became one of the world's most impoverished countries [7]. Nigeria is under
control of several military rules from 1966-1999. Some of the governments became
viewed as corrupt and incompetent by virtually all sectors of Nigerian society.
With such bad institution, all of these economies can’t take advantage of rich natural
resources and large power of the population to their competitive advantage. This is a
key area for improvement in order to catch up with the rest of the world.
2.3. Contact with success: Vietnam, Burma are closed to the world for a significant part
of the last century. In fact Vietnam joined the World Trade Organization in January
11, 2007 [8] and Burma was still isolated until 2012 [9]. Nigeria is in a better position
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
Vietnam Burma Nigeria
GDPpc Development during 1950-2010GDPpc Development during 1950-2010GDPpc Development during 1950-2010GDPpc Development during 1950-2010

4. since their membership with the OPEC for oil exporting to the world in 1970, but
international trade only take off after their join in the WTO in January 1995.
These data explain a key aspect that these poor countries are isolated with the
world for a long time. This is very harmful in term of economic development [10].
2.4. Technology: this plays a key role in economic performance nowadays. All of these
countries have very low ranking in intellectual property rights. Nigeria is ranked at
103rd
, Vietnam is at 109th
in the world, and Burma is not yet on the list [11]. Such low
index show that incentive in technology investment would be also low, since there is
little guarantee for protecting the investment. The Innovation and Technology
section of Human Development Index [12] shows that Vietnam is at no.127, Burma
at no.149 and Nigeria at no.153, This can explain part of the reason why economic
development in these countries are not effective although they have rich natural
resource and a large population.
3. Summary
As we have seen in the example of Burma, Nigeria and Vietnam, good geography factors
such as natural resources, coast line, etc didn’t guarantee a success for economic
development. The key determinant factors are historical events such as war, colonization,
slavery, institution, contact with success or open to world trade and technology. The history
can’t be changed but luckily almost all of countries in the world are at peace now. The
remaining factors are soft that can be improved by the government of a country or with help
from world trade in order to improve economic performance and well-being of the population.
Bibliography
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df
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[11
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[12
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