The key to success

13 April 2012

 

What’s the difference between countries that prosper and those that flounder? What’s the difference between Mexico and USA? Or North Korea vs South Korea? Or Germany vs Ukraine?

 

Countries are made up of people. If there is no human population then it’s not a country.

 

So it’s the people that are the key. How do you get people to invest time, effort and capital in your country? How do get people to think long term? Long term is not five years. Fifty years is long term.

 

The answer is actually quite simple. For people to invest they need to know that if they work hard they can make money and actually keep it.

 

Institutions are the key. These are the foundations for certainty. Without certainty that I can reap the rewards of my efforts I will not invest any effort. But that isn’t enough. If I can’t be sure I’ll be allowed to keep the fruit of my labour, then I will not invest.

 

That’s the difference between country success and failure. The existence of institutions that protect your right to make money and keep your money.

One Response to “The key to success”

  1. Deon Botha (@karbonkelberg) Says:

    “protect your right” is the key here. Institutions can’t do that. Only an effective system of justice can. The fact is that the system as it stands is dysfunctional – exorbitantly expensive, unpredictable at best and wastes time like there is no end to it.

    This is listed with political and labour risk as the key reasons South Africa is slipping in global competitiveness. Why open a factory in South Africa if you cannot enforce your contracts?

    The notion of “rights” is in itself problematic. If we move towards considering “interests” a new dynamic emerges. There is a key here that can unlock huge amounts of resources.

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