Those properties lead to inefficiencies for the workforce. Pollution negatively impacts the health of a population, including mental health. Lower taxes lead to less reliable infrastructure. And there are probably other non-obvious benefits to having a workforce living in a developed country.

Western Europe and the USA have maintained a huge advantage over the world. I wouldn't be so confident about that advantage disappearing. Much like wealthy people today are much more likely to have ancestors who were wealthy, I think people born in developed western nations are going to continue to enjoy competitive advantages over others for many more generations.