Why poor countries are poor

The poorer country should catch up quickly because in a country, which has very little in the way of infrastructure or education, new investment have the biggest reward. (The law of diminishing returns)

In a world of diminishing returns, the poorest countries gain the most from  new technology, infrastructure, and education.


Government in rich countries usually perform basic bureaucratic tasks---- good law enforcement, protection of private property---quickly and cheaply,whereas governments in poor countries draw out the process in hopes of pocketing some extra cash themselves.

Government banditry, widespread waste and oppressive regulations all are elements of the reasons why poor countries are poor.

If a society cannot provide the right kind of incentives to behave productively, no amount of technical infrastructure can save it from poverty.


Example: Nepal has more efficient irrigation system with high tech dam and canal, but it doesn't make the country better; instead, the efficiency drops.

Reasons:
(1)Things are not designed, built and maintained by the native, who have incentives to keep it.
(2)Farmers don't cooperate. In the past, farmers living near the dam help maintain the quality of dam while farmers living near the canal help maintain the quality of canal, but with the new tech, dam is more durable, so the former trade breaks up.

The reasons why poor countries are poor
(1)Corruption
(2)Lack of incentive or perverse incentive
(3)Twisted rules and bad institutions.