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Order&Violence(PoliticalEconomyofDevelopment)
Week6:Theorigins&politicsoftoday’sweakstatesChrisBlattman
I.Areview
Weeks1and2
• Everydayliferequireseconomictransactionsandpoliticalbargaining
• Thesedealsaredifficulttomakebecausedifferentsideshavedifferentinformationandcan’tcrediblycommittodeals
• Societiescanfindcooperativewaystoreducethesetransactionscosts,butthisishardtosustaininlargegroups
• Solvingthecollectiveactionproblemtoprovidepublicgoodsisalsohard
• Failingtoreducebasictransactionscostsandprovidepublicgoodsleadstoverylowlevelsofeconomicdevelopment
• Thecostofnotsolvingpoliticalbargainsiscompetitionthatoftenturnsviolent
Week3
• Acentralizedpowerwiththeabilitytoenforcecontractsisonewaytoovercometheseproblems—thestate
• Astatecurbssomeformsofviolence,enforcesomecontracts,andprovidesomepublicgoods,loweringtransactioncosts
• Butformostofhistory,thepersonorgroupswhocontrolthisstatehasusedittoenrichthemselvesandtheirkin
• Thusstatesmakesocietiesricherandmorepowerfulintotal,butmostmembersofsocietyliveinsomeformofservitude
• Statesemergeformanyreasons,butaclimateandendowmentsthatcansustainlargedensepopulationsisamajordriverofprehistoricalstates(andsystemsofmanyneighboringstates)
Weeks2,3,4
• Oftenthereareseveralgroupsthatwieldpowerinsociety—military,material,ortheabilitytomobilize
• Wecancallthesegroupselites,andtherecanbeorderonlywhenelitesareabletostrikeabargaintocontrolthestateandsharetherentsamongthemselves
• Toentrenchpowerandrents,theseelitesdeveloprules,norms,andstructurestopreservethesebargains,andmaketheircommitmentsnottobeviolentmorecredible
• Theseinstitutionsarehardtochange,orpathdependent,inpartbecauseeliteswilltrytoprotecttheirinterests
• Anythingchangeinmilitary,material,ormobilizational powerchangesthebalanceofpowerandthreatenspastbargains
Weeks3,4,5
• Groupswhodevelopmilitary,material,ormobilizational powercanbargaintojointheelitecoalitioninpower(sometimesviolently)
• Historicallytheselargercoalitionshavehadsomecompetitiveadvantagesovertheirneighbors– Broad,stablebargainscanleadtomorepublicgoods,cangiveinsiders
incentivestoproducemoreoutput,taxsomeofthisoutput,andmobilizemorepowerfulmilitaries
• Thecoalitionsthatdosoareinagoodpositiontotakeoverweakerneighbors(whichmaybroadenthecoalitionfurther)
• Itisdifficulttoprotectthesegainswithoutexpandingtaxcapacity,professionalizingthebureaucracies,andpenetratingandcontrollingsociety:the“modernstate”
Weeks4,5
• Overtime,variousenvironments,choices,andchanceeventshaveledtodifferentdistributionsofpoweracrosssocieties– Differentsystemsofeconomicproductionleadtoanarroweror
broaderdistributionofresources(materialpower)– Technologicalandculturalinnovationandchangeshiftmilitaryand
mobilizational capacities
• Whencircumstancegrantsthemsuchpowers,broadswathesofsocietycancrediblythreatenexitorvoiceandsodemandconcessionsfromthestateandelitecoalitions
• Durablerules,informalandformal,areneededtomakethesenewbargainscredible,suchasconstitutionalgovernance(theruleoflaw)anddemocratization
Weeks3,4,5
• Societiesthathavedevelopedbroadercoalitions,andstableinstitutionstopreserveorder,havetendedtofosterinvestment,innovationandtrade,andhencepromotecommerceandindustry
• Thisisespeciallytruewhenstrongsocietiesarebalancedbystrongstatesthatcanprovidepublicgoods,solveproblemsofcollectiveactionandnegativeexternalities,raisetaxes,andordersocietyusingasetofknownandimpersonalrules
• Thesocietiesthathavedonethishavesomeadvantagesinsurvivalandincompetitionwithotherstates
Averycrudetypology,withmadeupdata
SocietyWeak Strong
Weak
Strong
US,WesternEurope
Liberia,SierraLeone
Brazil,Mexico
Guatemala,Afghanistan
Russia,China
StateGreece,Italy
Thenextfiveweeks
• Thenextfourweeks:Nowthatwehaveasenseofhowpoliticsisorganizedinmoststates,andpathsofpoliticaldevelopment,wewillstudymoderninterventions:– Structuraladjustment– Armedinterventions– Aid– Statebuilding– Democracypromotion
• Butfirst,thisweek:Afinalhistorylesson– Wehavelargelytalkedabouttherootforcesleadingtostateand
institutionaldevelopment– Butitisdifferenttobeafollowerthanaleaderinstatedevelopment– “Latedeveloping”societieshavebeenbuffetedbychangefromthe
“earlydeveloping”societies,onlysomeofitgood
Ourgoalistounderstandthedysfunctionandcrisisweobserveinsomanycountriesinthelate20th century
• Whydidpost-colonialgovernmentsrejectparliamentarydemocraciesandcentralizepower?
• Whydidtheydevelophighlycontrolled,state-ledsystemsofeconomiccontrolanddevelopment?
• Whywasthereamassiveeconomicandpoliticalcrisisinthe1980s?
• Were“neoliberalreforms”suchasstructuraladjustmentworsethanthedisease?
Week6objectives
• Onereasonsomanystatesandsocietieswereweakbythelate20th centurywasprofounddestabilizationbythefirst400yearsoftrueglobalization– Newtechnologies,theslavetrade,colonialism,etc…
• Colonialpoliciesendowedmanysocieiteswithastrongerstateandpublicgoodsthantheymightotherwisehavehad
• Butcolonialpolicyalsodidlittletostrengthensocietyorbroadenpowerinsociety
• Leavinginhaste,mostsocietiesnotonlyfacedpoliticalinstabilityafterdecolonization,butalsohighlyconcentratedpoliticalandmilitarypower
Week6objectives
• Likealllimitedaccessorders,thesenewregimesattemptedtocontroltheeconomyandextractrents
• Theresultwasmajorfiscalandmonetarycrisesinthe1980s
• Internationalfinancialinstitutionsdesignedandimposedreformsthatlargelyignoredthesepoliticalrealities:macroeconomicstabilizationandstructuraladjustment
• Asaresult,intheshorttermthesepolicieswereoftenpoorlyimplemented,reversed,orhijacked
• Intheend,however,controleconomieshaveprovenlessstableandprofitableforelites,andhardtomaintain,andsotoalargeextentamoderateversionofthe1980sreformagendawasaccomplishedinthelongerterm
II.Howimperialismshaped“latedeveloping”statesandsocieties
Whatisimperialism?
“Extendingthepoweranddominionofanationbydirectterritorialacquisitionsorbygainingindirectcontroloverthepoliticaloreconomiclifeofotherareas”
—Merriam-Websterdictionary
“Weakerpeoplestreatedaspossessionstobeeconomicallyexploited”
— EmilyGreeneBalch,1946Nobellecture
Societieswithsuperiormilitary,mobilizational,andmaterialpowerhavedominatedothersformillennia
MongolEmpire,1276 OttomanEmpire,1600
Japaneseempire,early20thcentury
Europeanimperialism1500-2000isprobablythemostextensiveandglobalexample
https://en.wikipedia.org/wiki/File:European_Empires.svg
Butthereareexamplesofimperialismthatweremoresuccessfulinthattheimperialpowersbuiltlastingnations
France China
Senex Map,1719
Imperialism:Twosidesofthecoin
• Ontheonehand– Buildbureaucraciesandstate
capacity– Endviolentinfighting– Introduceideasandtechnologies– Increasetradeandintegration– Investinpublicgoods
• Ontheother– Violentconquest– Extractresourcesandtribute– Reorganizesystemsofownership
andproduction– Controleconomies– Coerceandsubjugatepeople CecilRhodes
Today:HowglobalizationandWesternimperialismshapedorderandinstitutionsinlatedevelopingstates
1. Tradeandglobalizationdisruptedtraditionalorders
2. ThemixedeffectsofColonialism– Increasedstateorganizationandpublicgoods– Butpromotedhighlycentralizedpower– Overfrequentlyarbitraryandhard-to-governterritories– Anddepartedabruptly
3. ColdWarpoliticsinsulatedrulersfromtheruleoflawandaccountability
4. Introducedpromisingyetproblematicdevelopmentideologies
IwillfocusonimperialisminAfrica(butdrawparallelstoSouthAsiaandLatinAmerica)
HowglobalizationandWesternimperialismshapedorderandinstitutionsinlatedevelopingstates
1. Tradeandglobalizationdisruptedtraditionalorders
2. ThemixedeffectsofColonialism– Increasedstateorganizationandpublicgoods– Butpromotedhighlycentralizedpower– Overfrequentlyarbitraryandhard-to-governterritories– Anddepartedabruptly
3. ColdWarpoliticsinsulatedrulersfromtheruleoflawandaccountability
4. Introducedpromisingyetproblematicdevelopmentideologies
1500-1870:SteadyadvancesinEuropeanagriculture,weaponry,commerceandtransportdriveunprecedentedtrade,commerce,
andthe“firsteraofglobalization”
1870
Globalizationbringsprofoundeconomicchangeandwithitsocialupheavalandweakness
• Strongsocietieswithstrongsystemsofsocialcontrolandadaptedstrategiesforsurvivalfindthemselvesstrugglingtofindnewstrategiesandsystemsofcontrol
• Possibleimplications– Newsourcesofandclaimsto
power– Risinginequalityandsocial
stratification– Politicalupheavalandviolence
• WecanseeparallelstodayinthedisruptionofUSindustry
– Butnowimaginechangesmanytimesmorepowerful
1500-1870:TechnologicalchangeandEuropeanexpansiontransformedanddestabilizedtraditionalsocieties
• Newgoods
• Newlivelihoods
• Newtechnologies
• Newwarmachines
• Newdiseases
• Newgods
• Newinstitutions
• Newworldviews
• Newallies
Oneexample:Privatizationandconcentrationofland
• Landisthebasisofsocialorganization,politicalpower,andeconomicorganizationinagrariansocieties
• Europeansalmostneverencounteredsocietiesthatwereorganizedforthelarge-scaleproductionofthecommoditiesitdemanded
• Large-scalecashcropproductionrequired:– Newsystemsoftenure(privatization)andcontrol(concentration)
• Imperialpowerssoughtoutandempoweredfigures—landlords,taxcollectors,officials,etc.—whocouldguaranteegoodsortaxflows
AnexamplefromIndia:TheZamindari(Lakshmi&Iyer 2005)
• Tomaximizerevenues,Britainidentifiedandempoweredpeopleopportunistically
• Collectedlandrevenuesthroughcultivatorsinsomedistrictsandempoweredlandlords(Zamindari)inothers
• Wheretheyreinforcedanon-landlordsystem,wheatyieldis+23%andinfantmortality-40%today
• Lessons:– Disruptive,transformativenatureoflandand
taxpolicy– Unintended,unpredictablelongterm
consequences
Zamindar ofNattathi
TheAfricanslavetrade
• Oneofthemostprofoundsourcesofupheaval
Africa(likemanypartsoftheworld)hadknownaninternalandArabslavetradeforcenturies
ButthescaleanddepravityoftheAtlanticSlaveTradewoulddwarftheArabtradeafter1500
Arab/easternslavetrade:
• Est.7millionshipped
Atlanticslavetrade:
• Est.9-12millionshipped
• (RoughlyhalfbyPortugal)
(Numberkilledinraidsorbeforeshipmentunknown)
PrimarydestinationwasSouthAmerica&Caribbean,90%toworkonsugarplantations
Nunn, Nathan, and Leonard Wantchekon. 2008. "The Trans-Atlantic Slave Trade and the Evolution of Mistrust in Africa: An Empirical Investigation." Unpublished working paper, Harvard University and NYU.
Regions(i.e.ethnicgroups)mostaffectedbytheslavetrades
Atlantictrade Arabtrade
Diredemographicconsequences:
By1850,Africa’spopulationbelievedtobehalfofwhatitwouldhavebeenhadtheslave
tradesnottakenplace.
Manning,P.(1990).“SlaveryandAfricanLife:Occidental,oriental,andAfricanslavetrades,”p.171.
Theimpactofdepopulationanddestabilization:TheslavetradeanddevelopmentintheHerbst model
Lowpopulationdensity
Moreexpensiveforstatestocontrolterritory
Weakstates
Easeofconquest¤tinstitutionalquality
Currenteconomicperformanc
e
Ecologicalconditions
(soils&rains,disease,axes)
Fewnavigablerivers,wildvariationinclimate
Slavetradehalvespopulation(indensestareas)
Slavingcreatedmassdiorder?
Thegreatertheslavetrade,thelowerisincometoday…
…andthelessdevelopedthe19thcenturystate
Reducingtheriskofbias,theslavetradetookplaceindensest(likelythemostdeveloped)regionsofAfrica
Nunn, Nathan, and Leonard Wantchekon. 2008. "The Trans-Atlantic Slave Trade and the Evolution of Mistrust in Africa: An Empirical Investigation." Unpublished working paper, Harvard University and NYU.
Also,thegreatertheslavetrade,theloweraremodernlevelsoftrust(Nunn&Wantchekon)
“Therearemanytradersinallcornersofthecountry.Theybringruintothecountry.Everydaypeopleareenslavedandkidnapped,evennobles,evenmembersoftheking’sownfamily”— Affonso,KingofKongo,writingtothePortuguesekingin1526(Vansina 1966)
Internalwarfare,
raidingandkidnapping
Politicalinstability&
statecollapse
Easeofconquest&institutional
quality Currenteconomic
performance
Internationaldemandfor
slavesEthnic
fragmentation&mistrust
Lowlevelsoftrustand
cooperationtoday
NathanNunn(+manyhistorians):TheslavetradeunderminedAfricaninstitutions
HowglobalizationandWesternimperialismshapedorderandinstitutionsinlatedevelopingstates
1. Tradeandglobalizationdisruptedtraditionalorders
2. ThemixedeffectsofColonialism– Increasedstateorganizationandpublicinvestment– Butpromotedhighlycentralizedpower– Overfrequentlyarbitraryandhard-to-governterritories– Anddepartedabruptly
3. ColdWarpoliticsinsulatedrulersfromtheruleoflawandaccountability
4. Introducedpromisingyetproblematicdevelopmentideologies
Exploration,trade,conquest,andsettlementareinstigatedwiththeadventofoceangoingvesselsandwouldbedrivenbythe
opportunitytoproduceandtradenewcommodities
1554
Incontrast,EuropehadyettopenetrateandsettleAfrica
1805
Before19th century,EuropetreatedAfricamainlyasasupplyofslaves(andsometradegoods)andawaystationtoFarEast
• Relativelyfewstatestoconquerandrulethrough
• Morelimitedproductionandtradingopportunities
• LesshospitabletoEuropeanpeopleandagriculture– Diseases– Agriculturalsuitability– Preciousmetals
1867
Penetratingthecontinentwouldwaituntilthearrivalofsteamships,rifles,andquinineinthelate19th century
“Ourpolicymayforthepresentchieflyassumeanegativecharacter.SolongaswekeepotherEuropeannationsout,weneednotbeinahurrytogoin.”
- BritishViceConsuloftheOilRiversProtectorate(Nigeria)
Eventhen,colonialismwouldhavemoreofageo-strategicmotivethananeconomicone
ConferenceofBerlin(1884-85)Thecarvingupofthecontinent
Formalcolonialismwouldlastlessthanacentury
HowglobalizationandWesternimperialismshapedorderandinstitutionsinlatedevelopingstates
1. Tradeandglobalizationdisruptedtraditionalorders
2. ThemixedeffectsofColonialisma) Increasedstateorganizationandpublicinvestmentb) Butpromotedhighlycentralizedpowerc) Overfrequentlyarbitraryandhard-to-governterritoriesd) Anddepartedabruptly
3. ColdWarpoliticsinsulatedrulersfromtheruleoflawandaccountability
4. Introducedpromisingyetproblematicdevelopmentideologies
2(a)Colonialadministrationsformalizedbureaucraticstructuresandtaxcapacity(Huillery)
• InFrenchWestAfrica,Franceestablishedabroadsystemoflocaltaxationtodeliverlocalservicesandpublicgoods– 60%ofrevenuesfromheadtax,40%fromtrade&propertytax– Localbudgetscoverallnon-militaryexpenses,includingpublicworks
andhealth/educationexpenses– Centralgovernmentonlyused30%ofthecolony’sbudget,anddistrict
governmentsdisbursedtheother70%– Districtspendingoninfrastructure,healthandeducationindistricts
was25%ofcolonies’budgets
• Likemoststates,thisonewascoerciveandextractive– AfterIndependence,theFrenchhandedthesecoercivebureaucratic
andtaxstructuresdowntolargelydespoticregimes
• Nonetheless,thisbroughtapreviouslyunknownlevelofstatedevelopmentandintegration
Whileaccesstopublicservicesvaried,thecolonialstateincreasedhealthandeducationprovision
Teachersper100,000inhabitants,FrenchWestAfrica1910-1928
Medicalstaffper100,000inhabitants,FrenchWestAfrica1910-1928
Huillery,Elise.“HistoryMatters:TheLong-TermImpactofColonialPublicInvestmentsinFrenchWestAfrica.”AmericanEconomicJournal:AppliedEconomics1,no.2(2009):176–215.
Theseinvestmentsappeartohavepersistenteffectsonlevelsofdevelopmentandaccesstoservicestoday
Comparingneighboringdistrictswithsimilarcharacteristics
Huillery,Elise.“HistoryMatters:TheLong-TermImpactofColonialPublicInvestmentsinFrenchWestAfrica.”AmericanEconomicJournal:AppliedEconomics1,no.2(2009):176–215.
Infrastructurealsohadhuge,persistenteffects:e.g.Railroadconstruction
• BritishRajbuilta67,247kmlongrailroadnetwork
• Dramaticallyreducedthecostsoftrading
• Raisedcontemporaryrealincomesby16%
– UndoubtedlycontinuedtoraiseincomesafterIndependence
• Transportalsoenabledpoliticalcontrol
– BytheRaj– Butlateranational
democraticgovernment
EvolutionofIndia’srailroadnetwork,1860-1930
DavidDonaldson,RailroadsoftheRaj:EstimatingtheImpactofTransportationInfrastructureAmericanEconomicReview, forthcoming.
Thereisnonumbertwo,threeorfour…InCoted’Ivoirethereisonlyanumberone:that’smeandIdon’tsharemydecisions.
- Houphouet-Boigny,WA,8Aug1988
DemocracyisnotforAfrica.TherewasonlyoneAfricanchiefand[so]hereinZairewemustmakeunity.
- Mobutu,WSJ,14Oct1985
2(b):Colonialismanddespotism
ButtraditionalruleinAfricawasnotnecessarilyhereditary,despoticormale
AshantichiefinGhana
Infact,tribalgovernancewasoftenmuchmoreparticipatoryandopen
“Theelectionofchiefsfollowsapattern.Theseniorfemaleofthechieflylineagenominatesfromeligiblemales.Thisseniorfemalethenconsultstheelders,maleandfemale,ofthatline.Thefinalcandidateisthenselected.
Thatnominationisthensenttoacouncilofelders,whorepresentotherlineagesinthetownordistrict.TheEldersthenpresentthenominationtotheassembledpeople.
Iftheydisproveofthenominee,theprocessbeginsagain.Chosen,thenewchiefisenstooledbytheElders,whoadmonishhimwithexpectations.”
http://www.nathanielturner.com/ashantiempire.htm
Nonetheless,colonialauthoritiesfounditconvenienttoorganizepeoplesintoethnic/tribalgroupsandempower
thenearestthingtoaleader
• Oneargumentgivenwasthatthiswasanenlightenedanddeferentialrecognitionofnativecultureandselfrule
• Perhapsmoreimportantly,asingleconsistentstyleofauthoritarianrulewassimpler,cheaper,andeffective
• Thusthecolonialpowerrepeatedtheprocessthatstatesdoineverysociety,whetherathomeorinthecolonies:theyreorderedsocietiestomakethemmorelegibleandeasiertocontrol
Onesizefitsall?
• Pre-colonialsocialrelationsacrossAfricawerediverse
• Rulewasnotnecessarilylineage-basedorauthoritarian.– e.g.checksandbalances,
oftenbyeldersandheadsofkingroups
• Solution:Ifchieftainsdonotexist,createthem.
MahmoodMamdani on“Decentralizeddespotism”:Ethnicrulereinforcedethnicinstitutionsofccontrol
EthnicruleCurrenteconomic
performance
Needforacheapand‘politically
correct’meanstocolonize
“Decentralizeddespotism”
Centralizeddespotism
• Ethnicrule• Creationofa“NativeAuthority”
• Appointed• Inventedchiefswheretheydidnotexist
• Abilitytotax,forcelabor
• Fortifiedfromexternalthreats
• Accountableonlytocolonialauthoritiesabove
• Newnationalgovernmentstookoncolonialrole
• Appointedlocalleaders
• Commandstate
Alesina,Alberto,WilliamEasterly,andJanina Matuszeski.2006"ArtificialStates."NBERWorkingPaperNo.12328.
4(c)Arbitrary,artificialstates
80%ofnon-coastalAfricanbordersfollowlatitudinalandlongitudinallines
Territorial-statesnotnation-states?Dejurenotdefactostatehood
• Drawinglinesonmapscheaperthanwar,defense,andcontroloftheperiphery
• Politicalbordersdonotcoincidewiththedivisionofnationalitiesdesiredbythepeopleontheground– Gaveterritoriestoonegroupignoringtheclaimsofothergroups.– Drewboundarieslinessplitting“nations”(ethnic/linguisticgroups)into
differentcountries,frustratingnationalambitionsofsomegroups– Combinedintoasinglecountrygroupsthatwantedindependence.
• Colonialpowersonlytriedtorulein‘core’areas– Beyondthecore,weaksystemsofformalrule– Makehaveexplicitlyorimplicitlyplacethe“core”group
What’stheimpactof“Artificialborders”?(thoughbecareful:correlationdoesn’timplycausation)
Artificial borders
Conflict prone
Current economic
performance
Weak states, low population density, poor climates, low technology…
De jure not de facto control of
territory
No incentives for accountability &
services
+ International
order (borders are inviolable)
Alesina,Alberto,WilliamEasterly,andJanina Matuszeski.2006"ArtificialStates."NBERWorkingPaperNo.12328.
Finally,recallJeffreyHerbst:Somearbitrarybordersareworsethanothers
4(d)Abruptdepartures
LikeasuccubusAfricaweighsonEurope'srest.Oneofthenumerousmalaises(butperhapstheheaviest)whichnowburdentheoldcontinent.EachEuropeanpowerhashereitsobstacle…
—LeRire (18.iv.1896)
ColonieswerecommonlyviewedasaburdeninEurope
RatherthanrepressdomesticIndependencemovements,theBritishandFrenchmadeahastyexit
• In1950s,envisionedaslowtransitiontoself-ruleoverdecades– Begantoinstallparliamentarysystems
• Butcouldnotholdbacktideofindependence– Costsandrisksbegantoexceedbenefits– BritainandFrancedidnothavethestrengthtoholdtheempireand
rebuildafterWWII
• Advantages?– Avoideddevelopmentofbroad-based,militantnationalistmovements– Allowedthemtomaintaingoodrelationsandavoiddisorder
• Independence– British: casebycase,mainlybetween1957and1963– French:allatoncein1960(exceptGuineaandTogo)– PortugalandSouthernAfrica:chosetofightitout
Rapiddecolonization=EconomicandPoliticalimmaturity?
• Hadnotpermittedorenabledthedevelopmentofenoughhumancapitaltomanbureaucracies
• Onlyclosetotheendofthecolonialperioddidtheybegintostaffthebureaucracieswithlocals
• Colonialpowersmadeonlylimitedpublicinvestments
• Fewnationaltraditions,symbolsorconsciousness
• Parliamentarysystemshadlittlehistoryorpopularlegitimacy
• “Powerwaspersonalizedbecauseitwasneverproperlyinstitutionalized”(vandeWalle)
Likewise,theendofSpanishcolonialismintheAmericaswasabrupt
SpanishofficialssurrenderMadridtoNapoleon.Antoine-JeanGros,1810
Rapidandrelativelyunexpecteddecolonizationdestabilizedthepoliticalequilibrium
• Nationsfoughttoestablishinternationalborders
• Elitescompetedtocapturethenewrepublics,oftenviolently– Conservativesfoughttopreserve
theircoloniallimited-accessprivileges
– Liberalssoughttocommercialize,freemarketssomewhat,andextendsomeequality
• Weaksocietiesexcludedfrompower– Nominaldemocracieswithlimited
votingrights,nosecretballot
HowglobalizationandWesternimperialismshapedorderandinstitutionsinlatedevelopingstates
1. Tradeandglobalizationdisruptedtraditionalorders
2. ThemixedeffectsofColonialism– Increasedstateorganizationandpublicgoods– Butpromotedhighlycentralizedpower– Overfrequentlyarbitraryandhard-to-governterritories– Anddepartedabruptly
3. ColdWarpoliticsinsulatedrulersfromtheruleoflawandaccountability
4. Introducedpromisingyetproblematicdevelopmentideologies
HowtheColdWarshapedtheinternationalsystem:Freezinganunstablepoliticalequilibrium
• Smalltransgressionsthreatenedfragilepeace
• USandUSSRwantasystemthatcontainsconflictsintheperiphery– Fearisthatsmallwarsescalatetonuclearwar
• Developedrules,normsandinstitutionsthatwouldpreservepeace1. Non-interference
• Populationsthevictimsoftheirleader’scrueltyandincompetence
2. Territorialintegrity• Freesstatefromneedtocontrolperiphery
WesternpowersmoreinterestedinwinningColdWarthansustainablestatebuilding
(Theymaybethugs,butthey’reourthugs)
“Territorialstates”insulateAfricanleadersfromstate-buildingandpublicaccountability
RecallAlesina,Easterly&Matuszeski
Artificial borders
Fragmentation, conflict prone
Current economic
performance
De jure (but not de facto) control of territory
No incentives to provide
accountability & services
+ International
order (borders are inviolable)
HowglobalizationandWesternimperialismshapedorderandinstitutionsinlatedevelopingstates
1. Tradeandglobalizationdisruptedtraditionalorders
2. ThemixedeffectsofColonialism– Increasedstateorganizationandpublicgoods– Butpromotedhighlycentralizedpower– Overfrequentlyarbitraryandhard-to-governterritories– Anddepartedabruptly
3. ColdWarpoliticsinsulatedrulersfromtheruleoflawandaccountability
4. Introducedpromisingyetproblematicdevelopmentideologies
IdeologyisoneoftheWest’sgreatexports
Someexamples:
1. Liberalismanddemocratization– WewilltalkaboutthespreadofdemocraticnormsinWeek9
2. Freemarketeconomics– Wewilltalkaboutthe“neoliberal”agendalaterwhenwediscuss
structuraladjustment
3. 1950s,60s:Thedevelopmentalstate– Thebeliefthatplanned,centralizedinvestmentandeconomic
managementcoordinatedbythestatecanproducecatch-up
Thefinalwaveofdecolonizationcoincideswiththegreatestcrisisofconfidenceincapitalismanddemocracy,andtheglobalzenith
ofstate-leddevelopment
NobodyinEuropebelievesintheAmericanwayoflife--thatis,inprivateenterprise;orratherthosewho
believeinitareadefeatedparty--apartywhichseemstohavenomorefuture.
—BritishhistorianA.J.P.Taylor,1945
BeliefintheabilityofthemarkettocoordinateeconomicactivityisseverelyshakenbytheGreat
Depression
Meanwhile,plannedeconomiesandstate-leddevelopmentwonthewarfortheU.S.anddroverapid
Sovietmodernizationandcatch-up
IntheWest,thesearchfora“thirdway”
• Openedamiddlegroundbetweenfascist-styleregimentationandsocialist-stylenationalplanning.
• SocialdemocracyandthewelfarestateofferedEuropeandtheUSawaytosalvagethemarketeconomyandcapitalistorder
MostofourdevelopmentsofarhashadtobecarriedoutbytheGovernmentitself.Thereisnootherwayout…
We’lltransformtheGoldCoastintoaparadiseintenyears…
- KwameNkrumah,PresidentofGhana(1962)
Inmanydevelopingcountries,thisthirdwaytooktheformofadevelopmentalstate
III.Thepoliticsofmany“latedeveloping”states:survivalandcontrol
TheexampleofSub-SaharanAfrica
Ourgoalistounderstandthedysfunctionandcrisisweobserveinsomanycountriesinthelate20th century
• Whydidpost-colonialgovernmentsrejectparliamentarydemocraciesandcentralizepower?
• Whydidtheydevelophighlycontrolled,state-ledsystemsofeconomiccontrolanddevelopment?
• Whywasthereamassiveeconomicandpoliticalcrisisinthe1980s?
• Were“neoliberalreforms”suchasstructuraladjustmentworsethanthedisease?
Itisdifficulttoknowtheimpactofimperialism,sincethecounterfactualsareunclear.Butweakersocietiesand(insomecases)
strongerandmorecentralizedstatesisareasonableconclusion.
SocietyWeak Strong
Weak
Strong
State
Relativelystatelesssocieties
Pre-existingpolities
Itwasverydifficultforparliamentarydemocracytotakerootintheselimitedaccessorders
• TheBritishandFrenchmadesomeattempttobestowparliamentarydemocracyontheirwayout:– Parliamentarysystemsoutnumberedpresidentialsystems4to1atthe
timeofindependence– Severalcolonieshad2-3roundsofNationalAssemblyelectionsbefore
Independence,grantingsomefamiliaritywiththeinstitutions
• Butwithinadecade,allbut3Africannationswouldswitchtocentralizedpresidentialsystems– Botswana,Mauritius,SouthAfrica
• Statistideologiesanddisillusionmentwithcapitalismanddemocracyundoubtedlyplayedarole
• Butbasedoneverythingwehavelearnedaboutpolitics,shouldwebesurprisedaboutthecentralizationofpower?
Politicalcontrolrequiredeconomiccontrol
• Afreeeconomicorderthreatenseliterents
• Newstatesinthelate20thcenturydevelopedcontroleconomies:– Toachievedevelopmentgoals– Outofpoliticalexpediency
• It’sacommonmistaketoseecorruptionassimplypersonalenrichmentorthecentralizationofpowerassimplyego
• Control,distortion,corruption,andpatronagewerethepoliticalgluethatheldthesepolitiestogether– Patron-clienttiesareameansofcontrolinayoung,multi-ethnic,poorly
integratedterritory– Patronageisasubstituteforrepression,nation-building,andservice
delivery
Limitedaccessorderssoughttolimitaccess:Theysoughttocontroltheentireeconomyto:reducethreatstopower,distributerentstoelitecoalition,andpacifyurbanunrest
• Manipulatedmarkets– Erectedbarrierstoforeignfirms– Encouragedmonopolists– Nationalizationofbanks,resourceextraction,transport,etc.– Restrictedaccesstoforeignexchange
• Distortedprices– Subsidizedurbanfoodandfuel– Loweredpricestoruralproducers
• Usedstateresourcesaspatronage– Statebanks“lent”moneytoinsiders– Explosivegrowthofpublicsectorjobs
Thiscontrol,inefficiency,corruptionandpatronagewasagrowingfiscalstrain
• Socialspendingwasgrowingfasterthantaxplusaid
• Foodandpricesubsidiesweredrainingresources
• Theftandcorruptiondivertedfunds
• Statefirmswerelosingmoneyatincreasingrates
• Statebanksweregrowinginsolventfromunpaidloans
• Ruralproducerswerebecomingstifledbymarketingboards,andreducedoutput
• Foreigncurrencywasbeingsoldonblackmarketandgovernmenthadhardtimegettinghandsonit
OneresultwasgrowingandpersistentfiscaldeficitsExamples:Kenya,ZaireandTanzania
Fiscaldeficitsasa%ofGDPinAfrica
Persistentdeficitsmeanmountinglevelsofdebt(andgrowingdebtpayments)
Debt
Deficits (including interest payments)
Repayments of principal (minimal)
-.50
.51
1.5
2
Aver
age
GD
P pe
r cap
ita g
row
th
1960 1970 1980 1990 2000 2010
Year
Average African growth rates (unweighted) calculated using Penn World Tables data for all sub-Saharan African countries with populations greater than 1 million.
Fiscaldeficitsandagrowingdebtismanageablesolongastheeconomyisgrowing,butundereconomiccontrolgrowthground
toahaltthroughthe1970s
SSA average growth rate
Skyrocketinginflationratesillustratethelosingofeconomiccontrolasgovernmentsprintmoreandmoremoneytopaybills
InflationratesinAfrica
Now,introducevolatilityintothesystem:Commoditypricespikesinthelate1970s
020
040
060
0
Rea
l exp
ort p
rice
inde
x (2
000=
100)
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
Kenya Cote d'Ivoire Nigeria
Spikesareaboonifyouseethemasatemporarywindfall,butproblematicifyoudon’tknowtheyaretemporary
IMF’sactualversusforecastedcommodityprices:Copper
Result:AcrisisofdebtDozensofcountriesarefrozenoutofinternationalcreditmarkets
intheearly1980s
Debtservicepaymentsas%ofGDP
-.50
.51
1.5
2
Aver
age
GD
P pe
r cap
ita g
row
th
1960 1970 1980 1990 2000 2010
Year
Average African growth rates (unweighted) calculated using Penn World Tables data for all sub-Saharan African countries with populations greater than 1 million.
Ascountriesfaceeconomiccollapse,therestoftheworldconsidershowtorespondtostabilizethese
countriesandhelpreturnthemtogrowth
First SAP (Senegal)
SSA average growth rate
WeseeparallelsinLatinAmerica
19th century• Persistentmarketregulationand
monopolyprotection
• Dependenceonasmallnumberofexportproducts
• Hugepriceandsupplyshocks– Tobacco,coffee,rubber,guano
• Growinglevelsofdebt
• Defaultby1830s
20th century• Influencedbythesamepost-
WWIIintellectualandpoliticalenvironment
• Focusonindustrializationviaimportsubstitution
• Requiredextensivecontrolregimestomaintain
• Unequal,autocratic,repressiveregimespersistintolate20thcentury
V.Theinternationalresponse:Macroeconomicstabilizationand
StructuraladjustmentOurfirstlookatWesternintervention
Twointernationalfinancialinstitutionswereretooledtorespond,offeringcreditinreturnforreforms
WorldBankInternationalMonetaryFund
Eachplayedadifferentrole
“Macrostabilization”• Getdeficitsandinflationunder
control
• Stopprintingmoneytopayforthings
• Cutbacksinspending– Socialexpenditures– Publicsectorjob
• IMF:Shorttermloans
“Structuraladjustment”• Deepereconomicreform
programswithfundingfromtheWest
• Removepricecontrols
• Privatizestate-ownedbanksandcompanies
• Buildmarketinstitutions
• WorldBank:Longtermloans
Stabilizationandstructuraladjustmentwereinpartaresponsetopatrimonialpoliciesthatcrippledeconomies
Patrimonialpolicies:
Marketingboardsandpricecontrols
Seignioragespending
Pricesupportsandpork
Highpublicemployment
Overvaluedcurrency
Tradeprotection
Importbias
Nationalizationofindustry
Proposedreforms:
→ Priceandagriculturalmarketderegulation
→ Strictinflationtargets
→ Reduceexpenditures
→ Publicsectorretrenchment
→ Devaluation
→ Tradeliberalization
→ Exportbias
→ Privatizationofbanks,transport,mining,etc.
Membersoftheseinstitutionsoftenhadanideologicalagendaatoddswithlocalstatesandsocieties,especially
inAfrica
Theyappearmoreinterestedinfoistingonustheirownperceptionsandgoals.WhenitcomestoAfrica,theoutsidershavealwaysbehavedasiftheyknowbetterthanAfricanswhatisgoodforAfrica.
- Prof.AdebayoAdedeji
vandeWalle:Thesereformswereactuallyquiteslow,unevenlyimplemented,andoftenreversed
NicolasvandeWalle (2001).AfricanEconomiesandthePoliticsofPermanentCrisis,1979-1999.Cambridge,CambridgeUniversityPress.
Whywerethesereformspoorlyimplementedinthe1980s?
• Thisscaleofpublicsectorreformwasanalmostimpossibletask
• TheIFIsdidnotnecessarilyhavetherightanswer– Underestimatedtheroleforthestate– Tooktoomanylessonsfromalreadydevelopedcountries– Economistsdon’tknowhowtomanagebureaucraciesorreforms
• Manygovernmentsdifferedideologically– ASocialistinfluencepersistedinmanycountries– Fewgovernmentsownedtheplans
• PaternalismofIFIslookedsuspiciouslylikecolonialism
• Foreignaidhelpedtosustainpoorlymanagedbureaucraticstructuresandlessenedtheneedtoreformthem
• Perhapsmostofall:Openingupeconomythreatenedlimitedaccessorders
ReformisfundamentallypoliticalItthreatenedcontrolregimesandpowerstructures
• Reformcreateswinnersandlosers– Reductionofpoliticalcontrolà Fewerresourcesforpatrimonialism– Publicsectorretrenchmentà lostjobs– Removalofsubsidiesà hurtsurbanpoor– Endcurrencydistortionsà inefficientfirmsgobust
• Politicallyverydifficulttoeffectthesechanges– Couldalsodestabilizeafragilepoliticalequilibrium
• Rulingelitereactionstoprotecttheirinterests:– Cooperateintransferringthecostsandriskstothepoor– Blockorslowreformsthatthreatenthepatrimonialsystem– Createthefaçadeofarational-legalbureaucracyabovethissystem– Findpoliticaladvantageinreform:Privatizetocronies,centralizeand
reassertPresidentialcontrol,…
There’sareasonthatinthe1990sFergusoncalledtheWorldBanktheAnti-PoliticsMachine
• Failedtounderstandthepoliticallogicoftheeconomicsystems– Andabsenceofincentivesforreform
• Saweconomicsystemsasinefficientandirrational,andviewedfixingthemasatechnicalproblemnotapoliticalone
• Signsofnaiveté:– Viewstheproblemas“corruption”and
aproblemofpersonalgreed– Ignoreseffectsofreformofrelative
powerofgroupsinsocietyandriskofconflict
Nonetheless,areweallstructurallyadjustednow?
JohnWilliamson’scoretenetsofthe“WashingtonConsensus”
1. Balancebudget
2. Avoidbroadfood&fuelsubsidiesinfavoroftargetedprogramstopoor
3. Broadentaxbaseandhavemoderatemarginaltaxrates
4. Letthemarketdeterminetheinterestrate
5. Minimizeexchangeratedistortions
6. Havelowtomoderatetariffsandavoidquotas
7. Beopentoforeigninvestment
8. Avoidstateenterprises,especiallybanksandmanufacturers
9. Openindustriesuptocompetition
10. Enforcepropertyrights