The Lowdown: This Summary of The End of Poverty is based on the book written by Jeffrey Sachs and will go into depth as to why some countries succeed and others don’t.
When looking across history, it is important to take the lessons of failure and ensure countries do not fall into the same cycle of errors. Throughout his book, Sachs looks at history to see what worked and what did not, and then mirrored those countries from the past into countries from today.
Throughout the book, we also see a definition of poverty and what it looks like to have economic prosperity. Sachs also goes into how a country can have long and sustained success and which factors are the ones to focus on when evaluating if a country is on the rise or about to fall.
Three of the Main Lessons you’ll learn from The End of Poverty include:
- The four levels of development
- When did the current Economic Prosperity really Start?
- Why do some countries fail to become Prosperous?
Lesson One: The four levels of Development
When looking at the levels of development among countries, they can be categorized into four different levels
1 – Caught in a Perfect Storm
This level is one where they do not have hardly any trade partners across any of their goods, and it means they are practically cut off from the rest of the world. When this occurs, there is very little wealth development, and causes a higher rate of Poverty.
2 – On the Ladder
This is a country which does participate in some trade with other countries, but is in the lower third of trading partners. These countries typically employ labor which overwhelmingly works within a Sweat Shop, in order to produce the goods for their trading partners. The wages within this country are higher than a Perfect Storm country, but not by much.
3 – Export Services
These countries are very involved with their trading partners, and work in a shared partnership where each of them are able to grow. These countries are typically very populated, and there is a diverse middle class.
4 – Rising Affluence
These countries are at the top of the ladder, and not only are leaders within the trade community, but are leading innovators as well. There is a strong upper and middle class, but with a high number of citizens, they also have a larger number of people who live in poverty.
Lesson Two: When did the current Economic Prosperity really Start?
Due to the recent globalization of the world economies, most people think the boom really happened within the last 30 or so years. However, Sachs would argue this new found level of prosperity really started to take hold all the way back in 1820. The reason he pinpoints this particular period in time is the economies across the world had been stagnant for centuries, but starting within this decade, there was clear upward movement among countries and their GDP.
Even though all regions saw some growth, certain continents saw more than others. For example, at the time of the 1820’s, Europeans were only making 90% of what those who lived in Africa were making. By the time the 21st Century came about, Europeans were making 20 times that of a typical person in Africa.
This was due to a lot of reasons, including revolutions in science, geographical advantages and a political structure which allowed for more individual control, rather than people being more controlled by their government.
Lesson Three: Why do some countries fail to become Prosperous?
Sachs believes there are eight different reasons for why a county might not become prosperous. Each one on its own may not lead to the answer, but there is typically some kind of mashing of these eight reasons which can be pinpointed.
The Poverty Trap – citizens, once they are poor, cannot get themselves out of being poor.
Physical Geography – Harder access in and out of a country makes it tough to trade.
Fiscal Trap – Government can’t pay for Infrastructure, which means they can’t generate jobs.
Governance Failures – Poor Leadership can lead to ineffective growth.
Cultural Barriers – When certain segments of the population are oppressed, then the country is limiting its own potential.
Trade Barriers – Certain countries impose trade rules which are harder for smaller countries to abide by.
Lack of Innovation – If there is no innovation, then a society will become stagnant.
Demographic Trap – The wealthier a country is, the fewer children they have, which means there are less people being born into a potential poverty situation.
My Personal Takeaway
Sachs lays out some very interesting arguments concerning poverty, and how different countries are currently handling the issue. Sachs uses one key component, Economic Growth, and attempts to lay it across all problems.
There are some people who do not agree with this method, and talk about how there are a larger number of factors in play besides just economic growth. This book does offer a different perspective, and helps elevate the conversation of how to deal with poverty.
Put into Action
Continue to take the lessons learned from this book and apply it to other books which deal with poverty and how to help countries pull out of it. There may not be a one solution fits all, but by working together with others, the right answer will show itself.
You should consider buying this book if…
You want to see a different perspective on how economic development can influence poverty, and to learn the lessons of how not to approach economics from failed countries from the past.
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