Saturday, November 03, 2007

Reason Magazine: The Real Causes of Prosperity

Ronald Bailey writes about the results of a 2 year study by the World Bank:

A Mexican migrant to the U.S. is five times more productive than one who stays home. Why is that?

The answer is not the obvious one: This country has more machinery or tools or natural resources. Instead, according to some remarkable but largely ignored research—by the World Bank, of all places—it is because the average American has access to over $418,000 in intangible wealth, while the stay-at-home Mexican's intangible wealth is just $34,000.

The article is interesting because it calculates the value of an intangible such as the rule of law and assigns a value to it. According to the World Bank 57% of a countries intangible capital is composed of how much that country respects the rule of law. Education is 36%.

Read the whole thing here.

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