Using economic theory explain why some countries are richer than others

The wealth of a country can be measured by many different ways. People may judge it by the countries natural resources or by the countries welfare in an economical plan. To be simple the basic economy of a given country decides its slot in the positioning of poor or rich. There are three major categories of countries – first world, developing and third world countries. First world countries are with stable prospering economies and generally in a good state. Good examples for that China, Japan, The USA, The UK, Germany etc. In the category of developing states are included most of the countries in the world. Generally they are trying to take the example of first world countries and better themselves in their image. Examples for third world countries are most of the states in Central Africa. There is a huge gap in between first and third world countries in aspects of economics, life standard and even resources. Even though the already developed countries and the still developing countries are quite similar the difference in the economic pans is still enormous.
There is a generally accepted theory that the most developed economy in the world acts as a main force pulling other smaller countries or states economies alongside or behind it. For the two centuries the main economic leaders were The UK and The USA respectively. The USA still continues to hold this position. When their economies bloomed many other countries benefited from them. The demand of products in markets of those countries is very important for the economic development of smaller countries because of the many exports of resources. Example for that is the act that many of the smaller states experienced difficulties during the times of US recession. This occurs generally when there is a drop in spending. Bursting of economic bubble and supply shock often follows this event. Because of that in the last years Asian, including smaller one like Singapore and South Korea, invade the global market. Up until recently they shielded their economies but making their import traffics unreasonably high. Using the funds created from this they start to import goods that they cannot make for themselves efficiently. But then a problem emerges. When big countries start to develop fast they start to block the development of other smaller neighboring states or countries with similar exports. This way even bigger economic gap is created between ‘richer’ and ‘poor’ countries. Another example of an underdeveloped country is Cuba. It is great geographically situated and has an enormous deal of natural resources and manufacturability. But because of America’s embargo it cannot utilize its full potential. It could have been good for Cuba’s economy to export well to The USA, if it wasn’t staggered in such a way but its neighbor. One of the ways to measure the economic state of a country is the comparison of it Gross domestic product or GDP. This is the measurement of the produced output in a country. When the GDP of a country is more than the values of the exports the country gets handicapped in a way and this reduces the development of its economy. This makes the prices drop in the given country which is an additional blow to its growth. For smaller countries to use economies of scale it is needed that they specialize in a given good for exportation, because larger economic powers trade less with other countries. Example of that are India and China. Because of their enormous size they continued to grow no matter that happened around them.
Another very important factor for the economic development of countries is the competition between them. This helps for the introduction of different kinds of innovations in the market. This also contributed to the gap between rich and poor countries because if they have more resources to spend on bettering their technologies and straightening the production process and even the funding of people who come up with those ideas. Basically a richer country can afford to benefit from those given aspects. Generally it is easier for them to find and fund a man with an idea and to sell it on the global market. On the other hand this whole activity proves to be way more difficult for the so called ‘poor’ countries. A bad addition to that is the movement of creative people to larger, more prosperous countries, where they can realize their potential with ease. This greatly stuns the economies of underdeveloped states. As everybody knows the higher the level of technology is, the potential of GDP also grows exponentially. For example the better the tech for a given product is, the country increases the quality or the manufacturing speed for it.
Another way of measuring if a country is ‘rich or ‘poor’ the comparison of Gross National Product or also called GNP. This basically is a measure of a country’s economic performance, what citizen produce inside the country. Generally growth seem to be supported by two conditions – willingness of participation in world economies and the miss of internal strife. An interesting example for GNP is Switzerland. Even though it is one of the countries with the highest living standards, it has one of the smallest growths of GNP per capita. On the other hand the so called ‘poor’ countries have more rapid growth of GNP, not only because they are given opportunities and even financial help from others. Also because it is quite common for those countries to expand their population quite faster. Of course an exception to this is China where there is a cap – one child per family. A crucial reason for the setback of ‘poor’ countries is war. Lets take for an example Nigeria. It was seriously slowed in its development by an Civil war, despite that it is rich in oil. It is historically proven that countries with rich natural resources and without stable government are not able to fully utilize their assets. The wealth of a country is not entirely based on its naturally available resources, but also on its culture and historic development. Often throughout history rich countries are known to exploit poor countries. The less fortunate states mostly ended up as colonies. So basically everything was taken away from them with no structural investments. This leads up to dependency of poorer countries to richer countries. But of course there are exceptions to that like The USA, Canada, Australia etc. The difference here is that resources were not taken away from them but rather those countries were invested in and grew independent in today’s world.
So in the end being a ‘rich’ or a ‘poor country is decided by many different factors. For example weather a country has been oppressed by another country is very important, because if it has there is a tendency that in nowadays it is still dependent on it in different ways. A stable and honest government is also very important for the process of development of a country. Many of the richer countries heavily invest in industrial processes medical advances, scientific discoveries etc. that hugely increase productivity. On the other there is another very important factor for describing a country. Countries like Saudi Arabia or Venezuela possess billions of barrels of petroleum. But when you compare their living standards to any other rich country you will discover that they are impoverished by countries that possess little to no oil. True wealth can only be found in a free-market capitalist democracy where every participant in the society has the means to pursue upwards and prosper