Would you rather be rich in a poor country or poor in a rich country?

“Would you rather be rich in a poor country, or poor in a rich country?”

Dani Rodrik asks this provocative question to set up his thesis on whether nation-states are the enemy of global equality.

By taking a top 10 GDP per capita country (Norway) and bottom 10 GDP per capita country (Niger), he demonstrates this isn’t really a question at all: In Niger, the richest five percent of the population have a representative income of $2,918 compared to a representative income of $13,049 for the poorest five percent of Norwegians.

Rodrik argues that the nation-state is central to growth and is not the enemy of global equality. However at the same time, there are good arguments for both “expanding labour mobility, at the margin” and “placing limits that would leave us far short of full mobility”. You’ve got to love economists. Yet even if you advocate for completely open borders, it strikes me you could get behind this as an incremental measure towards a more open global environment.

The point that struck me the most was: “It would be a pyrrhic victory to remove restrictions on labor mobility to the point where it weakens the capacity of nation states to provide the public goods needed for high productivity.”

If you take this as true, then perhaps the most important question in development economics and political economy is where that point is, closely followed by how we can get there. The events of 2015 appear to show that we are a long way from answering this and the risk of going backwards is firmer today than the same time last year.

H/t Chris Blattman (and read the full slide-show, it is excellent).

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