The End of Poverty summary

So, the Industrial Revolution made lots of Western countries rich, but there are still tons of poor developing nations.

How come?

We all know the phrase, “it takes money to make money” and it’s true for both people and countries: to become richer one first needs to accumulate capital. After all, building wealth requires a healthy stream of capital investment, which, if used wisely, will create more wealth for further investment.

However, wealth only builds if economic growth exceeds inflation and increases in population. Inflation is the decreasing value of a currency. So, if a country produces a surplus, but is suffering from an inflating currency, it’s likely that little or no additional wealth will actually be created.

People are always talking about magic solutions that would put poverty to rest once and for all. But the truth is that a one-size-fits-all solution is unlikely to exist. That’s because every country is dealing with poverty for its own individual and complex reasons. That means the only true solution is to carefully unpack every issue.

Just take Bolivia, a prime example of the long-term struggle to develop a solution to economic strife. In the 1980s the country was dealing with hyperinflation in the region of over 24,000 percent! As a result, over just a few years, the exchange rate between pesos and dollars had multiplied by millions.

Most people today know China as a global superpower – one of the fastest growing economies in the world. But that wasn’t always true.

In fact, until the 1970s, China was a more or less poor and rural country, isolated from the rest of the world. During this time, a huge percentage of the population lived in poverty and the communist government built diplomatic walls around its economy to defend it against outside markets and interference.

So, China developed its way out of the poverty trap, but it’s not the only example of such success. India is another instance in which the correct strategies really paid off. Their story is one of opening markets while providing a stellar education to the country’s elite.

But before we get there it helps to know some history.

To the confusion of many, Africa has been trapped in poverty for ages. Developmental aid has been routinely injected into the continent, but seems to vanish south of the Sahara with nothing to show for it.

How come?

Alright, now you know how developmental aid can fight poverty, but that’s not all that’s necessary. It’s also key to transform international politics. Here’s how:

First of all, poor countries need to have their debts canceled. That’s because these crippling debts simply can’t be repaid.

The key message in this book:

The inequitable distribution of global wealth has trapped much of the developing world in poverty. But the good news is that Western nations could end the impoverishment of millions worldwide with a modest amount of developmental aid, invested correctly.