[MUSIC] So why is it that some countries of the world are so much poorer that others? At least a partial answer may be found in both the quantity and quality of a nation's human resources. For example, many of the poorest countries in the world are also characterized by rapid population growth. The problem here is that even as a poor nation's growth domestic product rises, so too does it's population. So that many developing countries are never able to escape malthusism trap of high birth rates and stagnant incomes. To put this another way, with high birth rates it is extremely hard for poor countries to throw off their chains of poverty. So what strategies do you think that different countries have adopted to address overpopulation? So if you can jot down some ideas, maybe indicate how you would address the issue of population growth if you were the president of your country. [MUSIC] In fact, the question of how to address population growth is highly controversial. And sometimes the proposed solutions by political leaders run contrary to the prevailing culture of a country or its religious norms. For example, some Catholic countries in Latin America have introduced educational campaigns and subsidized birth control. However, they have done so despite Catholic church doctrine. In Asia, the world's most populous country, China has historically been particularly forceful in curbing its population growth. For examples, China's One Child policy set tight quotas on the number of births, and imposed steep economic penalties and mandatory sterilization on those who violated the policy. At the end of the day, while rapid population growth can overwhelm the ability of any poor nation to lift itself out of poverty. The often bigger problems has to do with the quality of the human resources themselves. [MUSIC] As a business executive, you may one day find yourself faced with the decision as to which country, to establish new production facilities in. And you may want to offshore some of your county's production for several reasons, for starters, you may be seeking to find a source of lower cost labor. At the same time, you may be seeking to avoid high tax rates or significant regulatory burdens in your home country, such as environmental or health and safety regulation. Or it may simply be a case where you want to produce in a region of the world where you intend to sell more of your products. At any rate, let's say your company makes sophisticated electronic components that require precision production by highly skilled labor in spotlessly clean facility. You locate that facility in country a or country b. Well, after doing your due diligence, you determine there is a much higher degree of literacy in country a, because of a more well-developed education system. In addition the people of country a tend to live long and have fewer sick days, because of a better system of health care and a modern water and sewage system. At least on the basis of labor quality alone, you are certainly going to chose country a to the benefit of country a's worker, but to the detriment of country b. [MUSIC] But suppose that instead of building sophisticated semiconductors, or electronic components with highly skilled labor. Your company simply makes running shoes and apparel with relatively low skilled labor. Are you still going to choose country a? Think about this for a minute, and think about it more as a process over time, in which different kinds of production find their way to different countries. Jot down some ideas, when you are ready let's move on. [MUSIC] Of course you can still locate your factories in country a, if the wage levels were equal to that of country b on a productivity adjusted basis. However over time, this country a is able to attract more and more high tech production from the developing world. Wages in that country are likely to rise a level, which make country b a more favorable destination, for the production of goods that require much less skill. [MUSIC] Now before leaving this topic of offshoring production, it maybe useful to comment briefly on its ethical dimensions. The big issue here focuses on the exploitation of labor and the use of sweat shops in developing country. This is a problem endemic in the world, and a big reason why corporate ethics courses should, but often are not, required in business school. The key point here is that, it is important to consider, not just economics when making production decisions, but to consider the ethical and moral dimensions of one's choices. That said, let's move on to our next module, and next wheel of growth, specifically natural resources.
