William Easterly's The Elusive Quest for Growth - Chapter 8

The author discusses the importance of knowledge leaks and matching to create traps of wealth. Easterly points out that we have high incentives to gain the knowledge of what works in whatever industry we work in. A great aspect of ideas is that there is no limit to how many people use them. They provide increasing returns as opposed to diminishing returns like machines.
Leaks benefit those who receive the leaked information, but overall society benefits the most. This is a good thing in developed economies, but in poor economies this means that there is no incentive for an individual to learn. This creates a poverty trap.
Easterly says that in such poor countries, he government should create incentives for individuals to innovate. Otherwise the proverbial ball will never get rolling.
Increasing returns to scale can occur when leaks are matched with complements. However decreasing returns will occur if leaks are matched with substitutes.
Easterly noted that because the poor are less educated, the economic fallout involves poor people producing less valuable resources while rich countries produce more valuable resources.
He also points out that particular groups of people continuously battle poverty and some groups, like Jews, are consistently rich. He attributes this to the fact that these people are attracted to each other and join their poor friends without considering the poverty trap they are joining.
The ideas of leaking and matching are important for non-economic students to understand. They aren’t complex, but explain many economic situations.
I also enjoy reading that some groups are simply predisposed to poverty due to their sticking with each other in poor circumstances. Many people like to say that governments are systematically against some races, but these races truly have economic attributes that simply cause poverty.