Economics & Finance / Economic Theory / Development Economics
The Real Reason Small Factories Stay Poor (It's Not Efficiency)
Economists spent decades believing hard work and technical efficiency are the keys to wealth. But a groundbreaking 2015 study of 135 soccer ball factories in Sialkot, Pakistan, by economists David Atkin, Azam Chaudhry, Shamila Chaudhry, Amit Khandelwal, and Eric Verhoogen, reveals a brutal truth: the biggest factories charge 5x more profit per ball than the smallest, not because they're more efficient, but because they control access to buyers. The data shows a plane ticket to a trade fair in Germany is 24 times more correlated with high profits than any factory-floor skill. This video shatters the myth of the meritocratic free market and explains why the real game is about pricing power, not production.
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