Essay: Why do certain countries have so many successful companies
Studying at the university in Kazakhstan I had a subject The concept of the Eurasian Union where we were exploring economics of this Unions members. As is well known, these countries, including Kazakhstan, are poorer than, for instance, some states from Europe. Exactly since that time I started to think about economic inequality for the first time. During my essay I will try to answer the topic question by using the information of Daron Acemoglu and James A. Robinsons book Why nations fail.
To start my essay with the introduction, I chose the quote of American writer Lawrence Peter that said “Economics is the art of satisfying boundless needs through restrictions». In my opinion, the meaning of this quote is that the main task and purpose of the economy is to meet the growing needs of man while using the limited wealth of our planet, at least of the country where we are living. Trying to answer main question I am going to build on exactly this statement.
For revealing the meaning of the statement fully, I want to start with the terms. The term “economics” has two meanings: economics as science and economics as economy. Economics as an economy is a system of management providing society with material and intangible goods. Economic science explores how people in conditions of limited resources meet ever-increasing needs as Lawrence Peter says. In turn the need is the requirement for something to maintain and develop the life of the individual and society in general. Also, the statement refers to resources. Resources are the means necessary to meet the needs of people and available to society in limited quantities. There are resources of time, labor resources, natural resources, financial resources, a variety of tools. Growing human needs must be met, what the economics is doing.
In the media, there are a lot of examples of how the state seeks to solve the problem of limited resources, with ever-increasing needs. For example, the number of mined minerals in Japan is extremely small. In an effort to reduce its dependence on imported raw materials, the country has stepped up its efforts to develop alternative energy sources. Resorting to the energy of the sun and wind. These resources are endless. Thus, we see that in Japan the demand for electricity is growing and without electricity it is impossible any production, life, transport, as well as we see how rationally they solve the problem of limited resources.
However, besides natural resources there are others such as labor. They are also limited. The labor force represents the part of the population of the country with physical and intellectual abilities to work that necessary for participation in social production. In the countries where is a high level of labor resources such as large number of high-qualified professionals, less unemployed, accordingly, the economics there is much more higher.
There is a widespread belief people who are poor deserved to be poor, because they did not want to work and earn money. While doing research on this topic I came across very interesting provisions: “There are several reasons that some countries remain in distress and the adviser to the UN Secretary-General for sustainable development Jeffrey Sachs identified three reasons.
Next, I will list these reasons and try to analyze each one.
The first reason is like: if a country cannot invest in its own economy to start economic growth, it is trapped in poverty. Being dependent on foreign investment, it is difficult to raise your economics when you spend all of GDP to cover the external debt. Compare for example Turkey with 359 5 billion dollars of foreign debt and GDP is equal to 2300 billion dollars on the one hand; and Luxembourg with 2500 billion dollars of foreign debt and only 64 billion dollars of GDP on the other hand. From the information above it can be assumed that Turkey is in a better economic position than Luxembourg. Turkish businessmen have identified the most profitable sphere for doing their business thereby continually raising the country’s economics.
Another cause of economic inequality is poor governance, which is promoted by corruption, tribalism and so on. In my opinion, this is the most important issue, because the future of the entire people and the entire country depends on the governance.
There also can be disadvantage of geographical location and geopolitics. Small amount of useful resources, distance from water transport systems, heavy burden of diseases, cultural barriers, such as gender inequality and discrimination against women. Sometimes it can happen because of relations with neighbors, opponents, allies. In particular, the historical role of colonialism of the African continent, the development of which was hindered during the century, is also important here.
However, not always location of the country will affect its economic situation. And now I would like to return to the above-mentioned book of Aaron Acemoglu and James A. Robinson Why nations fail. In the first chapter the authors cite the example of the city Nogales, which is divided into two parts: the Northern part is the American Nogales, Arizona, and the southern part is the Mexican Nogales, Sonora. The median income for a family in Nogales is 30,000 dollars per year. While that number equivalent to approximately 10,000 dollars in the Mexican city. The authors reason that this is primarily a historical component.
In the 16th century, the colonization of North and South America began. Then the English captain John Smith realized that his system of colonization does not work only in North America. Forcing them to work for the colonists was impossible, and Smith comes up with an alternative plan. According to the plan, everyone who works received some kind of payment for work as food or land.
It is no accident that exactly the United States, not Mexico, which during colonization easily adapted to the system of British colonizers, the USA is now much more successful than not only Mexico but also than all other countries.
The main idea of this book is that Nations fail because of extractive institutions that prevent the involvement of the whole people in the most important political and economic decisions. A court in which only the privileged classes can get their way, thanks to bribes or imperfect legislation, is an example of such an extractive institution.
Another characteristic of extractive countries is the absence or underdevelopment of an elite, a segment of the population that would govern the country and its resources in the right order. The only way to change these institutions is to force elites to create more pluralistic or inclusive institutions. They need to be forced exactly because elites never give up their rights voluntarily.
Here I would like to note that Kazakhstan is a prime example of a country with extractive institutions. Because the leadership of my country is trying to reach the level of countries with highly-developed economics. For example, Kazakhstan has achieved that it is among the 50 most competitive countries in the world, and in 2014 the concept of joining the 30 most developed countries of the world was adopted. The difficulties in achieving this goal lie precisely in the country’s government, which, firstly, has an insufficient number of highly-qualified specialists, and secondly, as history shows we have long been accustomed to be extractive. For example, having oil fields, we do not process our own oil, but sell it abroad and from there buy back already processed oil two or three times more expensive.
All these reasons lead us to the main key, to human resource. In particular, I would separately consider the individual as the reason for the success of the whole country. I remember when we asked the teacher of the discipline “The concept of the Eurasian Union” why one person can be more successful than another? He replied that the reason for failure lied in the simple truth and we had been taught by parents to be so. Like everyone. No different. Work like everyone from 9 to 18. Earn money as everyone. Look at people who have achieved something with suspicion. They say to us “his initial conditions were better”, or “this one studied at KIMEP University, of course, he has more chances”. But we do not think much about the fact that all successful people work very hard. They spend a lot of time on self-development and their own projects.
I like to read books on self-development and biographies of successful people. All of them have one thing in common, they never gave up. Even when there were black streaks in their lives, they did not give up everything, they believed in themselves, they got up from their knees and started all over again. Why do they act like that? I came to some conclusions. First of all, these people love themselves. It sounds weird and someone asks well, does it make sense? The fact that person loves himself, cares about himself, respects himself and appreciates, he thinks more positively. He takes failure more easily. He does not give up, because it is important to him that he feels good in the shower.
Another fact is that these people are fond of continuous development. Successful people are always learning. For a long time, I could not understand why many companies consider it necessary to constantly train their employees. It was simple. In development success. If you are stalled in your development, then you are degraded. After all, the others do not stand still. The world does not stand still. If you do not develop you do not keep up with the time and you take a step back. Constantly learning helps to get new ideas; you begin to think more widely, analyze information more objectively and perceive the world more tactfully.
These people live in the present. Perhaps this is the most difficult point. I’ll try to explain it. I remember as the professor told us that he left his job a year or two ago, where his income was about 350 000 tenge per month. He said he left because he didn’t like what he was doing. He left there despite the fact that it was his main source of income. And the teacher was so happy when he told his boss he was leaving. Because he didn’t develop there. He didn’t enjoy every moment of his life. His work did not bring him joy. As the professor said, for him, enjoying every moment is much more important than 350 000 tenge per month. Not everyone understood his action. Some told him Now it is very difficult to find a job in the country. Think about the future. Think about family. You have to step over yourself and not be selfish.
I strongly disagree with that. I am sure that now the same income will bring his projects that he likes, which are interesting, which develop him. He is happy now. Not for a good income, not for a career, but for himself.
Maybe this example is not very successful. I don’t consider the professor a super successful person. But I want to be like him. To do this I read biographies of successful people. And they are united by one more fact that they live now. They are not afraid to risk losing everything. Because they know that everything is in their hands.