5/17

“Capital will be attracted to a jurisdiction… where the welfare derived from the bundle of local amenities, income-earning opportunities and taxes is the highest (Wolf 264).” Such a state, as Wolf describes, would focus its efforts remedying specific market failures only, taking a hands-off approach to anything they can. States that already exist in the manner are, as Wolf recognizes, generally the wealthy developed nations that immigrants want to move to and natives see no need to leave.

Yet, if capital is globally migratory, and the already wealthy are satisfied overall, what does this mean for developing nations? Wolf recognizes that “the mechanism of the state is at least as defective as that of the market (Wolf 67).” Good governments and good markets are “symbiotic”: investors look to the stability of governments in the decision to invest in a country and governments rely on minimally favorable market conditions to run smoothly. A credible government is difficult, if not impossible, to establish alongside a fledgling market that lends itself to corruption. So wealthy investors continue to take their capital elsewhere, to more stable and beneficial countries, and struggling nations become more and more desperate.

Though Wolf says that a good way to discourage such constraints of corruption is to open the market up to global competition (Wolf 73), it seems almost inevitable that a major regime collapse is the only means to purge many corrupt nations. Even if opened, they would discourage capital investment so vehemently through their corruptive actions that competition could actually arise for governmental power…IE, civil war could easily ensue.

As this course goes on, as much as I would like to think of the developing world as open to creating the life that I enjoy, I continue to find more and more obstacles that they must face in doing so. The universal gap between the richest and poorest nations has implications much more widespread than merely “wealth.” The disadvantages the developing nations must overcome in catching up (or even getting within view) seem nearly impossible to wholly address. In many ways, it seems as if it may be inevitable get worse before it gets better. Bringing the developing world up to speed will require a great deal of cooperation, tolerance and faith… making sure that the developed world does not lose to greatly in the process will require just the opposite.