Mancur Olson on the Key to Economic Development.

This article addresses central issues related to population policy and economic development. Poverty and prosperity are normally marked by boundaries. These boundaries are also the borders of countries. The familiar exchange-rate comparisons of per capita incomes often overstate international differences in standards of living, but even the best available purchasing-power-parity statistics give the richest countries per capita incomes 10 and 20 times as great as the poorest countries. The statistics also suggest that migrants from poor to rich countries normally obtain great increases in wage rates, and the persistence of the migration confirms that these increases are not statistical illusions. It was shown in this paper that the coincidences of the demarcations of poverty and prosperity with national borders, and the experiences of migrants crossing these borders, offer insights for both economists and demographers, and indeed for anyone who is anxious to alleviate poverty and hasten the progress of the less developed countries. A fresh perspective on the population problem can be achieved and even begin to uncover the key to economic development, by asking how well migration and the great differences in per capita incomes across countries are explained by diminishing returns.