Differences in how efficiently industries convert inputs into outputs account for most of the gap between rich and poor nations, more than differences in capital, education, or natural resources. Measuring productivity industry by industry reveals causes that economy-wide aggregates hide.
Instead of studying nations through macroeconomic aggregates, examine specific sectors (retail, autos, construction, food processing) and compare how the same operation is performed in different countries. Sector-level case comparison exposes the concrete operational and regulatory reasons one country lags another.
Productivity rises most where firms face intense, fair competition that forces them to adopt better operations or die, and stalls where incumbents are protected. Barriers to competition, not labor or capital markets, are the primary constraint on productivity growth in poor countries.
Low productivity usually traces to government policies (subsidies, tariffs, informality enforcement gaps, regulatory favoritism) that shield specific producers from competition. These distortions persist because they serve organized producer interests at the diffuse expense of consumers.
Judge economic policy by its effect on consumers rather than on producers or workers, since consumer interest aligns with maximum productivity while producer interest often favors protection. Framing people as consumers rather than producers reverses which policies look beneficial.
In Brazil, large numbers of informal, tax-evading small retailers survive because they avoid taxes rather than because they are efficient, and this undercuts modern high-productivity stores that must pay. The result is an economy locked into low-productivity formats by uneven enforcement rather than consumer preference.