The management and progress of countries lies in their ability to invest all they have
To me, of course! Ineffective management combined with poor institutional structure in nearly all parts of a country's social construct is the most important reason. It directly perishes free market conditions as well as discouraging private enterprises due to lack of competitiveness and the environment of confidence.
I think the future of underdeveloped economies rely on three key things:
- Quality of institutions and administrative efficiency
- Origin of gains (profit or plunder)
- Human capital
In my opinion cultural aspect is one of the crucial factors. I know many examples of countries which were developing rapidly despite having a status of developing countries (e.g. Asian Tigers, Ireland in the past). On the other hand there are opposite examples - countries that despite having a good starting point they not achieved success (e.g. the aviation industry in Argentina - one of the world leaders after the WW2, pharmaceutical industry in Brazil etc.).
Thank you for the interesting question Yousif Yaqoob Shahtha and insightful views Çağlar Karaduman and Piotr Lasak
Both of your responses are linked Çağlar Karaduman Piotr Lasak and may explain the phenomena in question. Douglas North wrote extensively about institutions and lack thereof in developing countries or emerging markets. Khanna and Paleppu also wrote extensively about absent or immature institutions in emerging markets.
When everything is said and done, I think everything boils down to "soft institutions" and incentive structures that exist and drive behaviour in society.
