The gap between rich and poor countries has grown exponentially since the days of Adam Smith. In the 1770s, rich countries were twice as well-off as poor countries. These days, GDP per capita is 35 times higher in rich countries than in poor. In this video, economist B. Ravikumar explains how he and other economists are looking at these cross-country income differences.
If barriers to trade are removed, capital goods flow more freely across countries; this benefits all parties because they all can use their resources more efficiently. The removal of trade barriers could close the income gap between rich and poor countries by 50 percent, according to research conducted by economist B. Ravikumar and his colleagues.
To learn more:
Read the working paper at https://research.stlouisfed.org/wp/more/2014-012.