Why Nations Fail http://blogs.reuters.com/why-nations-fail Thu, 15 Mar 2012 20:47:34 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 The time for talks in Syria has passed http://blogs.reuters.com/why-nations-fail/2012/03/15/the-time-for-talks-in-syria-has-passed/ http://blogs.reuters.com/why-nations-fail/2012/03/15/the-time-for-talks-in-syria-has-passed/#comments Thu, 15 Mar 2012 20:47:34 +0000 http://blogs.reuters.com/why-nations-fail/?p=54
Kofi Annan’s mission is unlikely to lead to a meaningful resolution to the crisis in Syria (see here). This is not only because the conflict has in all likelihood reached the point of no return, but also because the Syrian regime would have probably never acquiesced to a peaceful transition in the first place. It is useful to understand why Bashar al-Assad’s regime decided to fight it out, with only the flimsiest attempt to reform and placate opponents.

In the past year protest movements have rocked the Middle East’s authoritarian regimes. There have been three types of outcomes. In Tunisia and Egypt they have succeeded in deposing the autocrats without great loss of life. Zine El Abidine Ben Ali and Hosni Mubarak were pushed from power without a civil war. This was greatly facilitated in Egypt with the defection of the military, a bulwark of the repressive edifice that Mubarak had built. In consequence, the future path of democracy is still uncertain in Egypt as many key parts of the coalition that Mubarak had built are still wielding power openly, and this is at the root of the frequent flare-ups of protests and clashes between the security forces and the protesters.

In another sub-set of these countries, typified by Saudi Arabia and Bahrain, the existing regimes managed to buy off the protestors via massive pay raises, expansions of government services and small political reforms. The situation has been very different in Libya and Syria. In both cases, the regimes decided to fight the protests with overwhelming force. In Libya the outside assistance enabled the rebels to conclusively defeat and depose Colonel Muammar Gaddafi. In Syria the outcome of the conflict, which began in March 2011, is still uncertain, and the death toll is rising constantly.

This path has been mostly shaped, and the possibility of reform shut out, by the underlying logic of the regime Bashar’s father, Hafez al-Assad, created in 1970. On the face of it this was a one-party state under the control of the Ba’ath Party, which came to power in Syria via a military coup in 1963. Though the Ba’ath Party, which also brought us Saddam Hussein in Iraq, espoused a nationalist Pan-Arab ideology with heavy tinges of socialism, the reality in Syria is that it became a vehicle for a particular Syrian community, the Alawis. The Alawis, who make up around 10% of the Syrian population concentrated in the northwest, adhere to a particular interpretation of Islam. On assuming power in 1963 the Ba’athists, already dominated by Alawis, inherited a state molded by centuries of imperialism under the Ottoman Empire and a rather shorter span of French colonialism between 1920 and 1946. This state sat atop a set of extractive economic institutions, designed to enable the extraction of resources by a small minority from the rest of society. During the Ottoman and French times, this minority comprised the colonial powers as well as its allies in Syria. Under the Ba’athist rule, it comprised mainly the Alawis.

These extractive economic institutions have several consequences. One of the most important is poverty. No society which organizes the economy to benefit just 10% of the population will generate prosperity. To grow and become prosperous the most critical thing a society must do is to harness its talent and human potential, which is widely disbursed in the population. Though post-independence Syrian regimes have invested in education, heavily laced with propaganda, only those with the right connections stand to benefit from a government appointment or having the chance to open a business.

A second set of implications is political. Extractive economic institutions do not exist in a vacuum. They need to be supported by extractive political institutions, concentrating power in the hands of the same narrow elite controlling the economy and stripping away any constraints on the use of this political power. The logic is simple: how else would the elite persuade the rest of society to go along with this extraction? It is thus no coincidence that Syria ended up with a repressive dictatorship in which the same elites controlled all levers of power. Despite all that repression, extractive political institutions are not fully stable. An obvious source of instability is that when institutions are extractive, those at the top do very well from the extraction. This means that other people would like to replace them and benefit from the extraction themselves. This is one way to think about the transition from Ottoman to French, and then to Ba’athist and Alawi rule. Any of these groups could have changed the organization of society away from extraction, but they saw it in their interests not to. All that extraction creates deep-rooted grievances and resentment in society as people wish to change the institutions which block their chances and aspirations.

The regime in Syria has faced discontent before March 2011, and it has always reacted in the same way, by using repression to preserve its extractive institutions. In 1982 the Sunni Muslim community in Hama revolted against Hafez al-Assad, who sent in the army to crush it. Possibly 40,000 people died. Other revolts were staged by the Muslim Brothers in the 1970s and early 1980s, by the Druze in 2000 and the Kurds in 2004.

Why haven’t any of these challenges led to meaningful reform? Why didn’t the elites in Syria attempt a managed transition like the one initiated by the Egyptian military? Part of the answer is that the regime in Syria, like that in Libya, was even more extractive and more repressive than the ones in Egypt and Tunisia, thus those controlling power had more to lose from reform. Given their existing repressive operatives, they also deemed it feasible to use force to ride out the protests. But perhaps more important is what those extractive institutions have done to Syrian society. Though the politicians around Mubarak, the businessmen closely connected to him and his sons, and the military were all part of the ruling elite in Egypt, this was no monolithic group, and had not suppressed all of the Egyptian civil society. So when the protests arrived there were organizations, including the Muslim Brotherhood, that could play a leading role; and parts of the elite, most notably the military, could see a way out in a managed transition that would shed Mubarak and some of the old guard, but largely protect their interests. Because the ruling elite in Syria is more monolithic and more likely to be swept aside when its tight grip is loosened, there was always less room for such a managed transition. And once the choice was made for using overwhelming force, any small possibility of a negotiated settlement that existed disappeared, and the cleavages in Syrian society became even deeper.

This perspective thus suggests that a peaceful solution is not in the cards. The Assad regime is very unlikely to go voluntarily. If so, then the pretense that international negotiations can achieve such a voluntary departure is just that — a pretense.

But the genie is out of the bottle. The regime cannot survive given the mobilization of society. There is no clear timetable when it will be toppled. Next year this time, it may still be in power, but if so, its ability to control many areas will have been much diminished; we are now probably in the final act of the Assad regime.

The real challenge facing Syria lies in the next act: the Syrian people — not the international community — will be the ones to build and safeguard the new institutions. And they have to watch out that the transition away from this noxious regime doesn’t repeat the vicious circle that replaced the French extractive rule by the even more extractive Ba’athist and Alawi regime. A tall order!

PHOTO: A view of a damaged house after heavy shelling by government forces in Sermeen near the northern city of Idlib, February 28, 2012. REUTERS/Zohra Bensemra

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Caste and coercion in Nepal http://blogs.reuters.com/why-nations-fail/2012/03/15/caste-and-coercion-in-nepal/ http://blogs.reuters.com/why-nations-fail/2012/03/15/caste-and-coercion-in-nepal/#comments Thu, 15 Mar 2012 18:53:52 +0000 http://blogs.reuters.com/why-nations-fail/?p=50 Slavery in Nepal was abolished only in 1921. Corvée, forced labor, was made illegal in 1952, but survived. It was only in 2000 that various sorts of coerced and bonded labor finally disappeared.

As late as the early 1990s in the Western parts of Terai, the lowland forest area of Nepal which borders India, many rural people were forced to work 30 to 35 days a year in unpaid labor services. The most important institution in this region was that of Kamaiya labor. Kamaiya was a particular type of servile labor relation where superficially workers and landlords freely entered into contractual relations during the festival of Maghesakranti (first day of the Magha month of the Nepali calendar), which starts on January 14. In practice, the majority of the workers were in debt to various masters, and debts are passed between generations with landlords buying and selling Kamaiya, a situation akin to chattel slavery. In 1992 a government report estimated that there were still about 20,000 Kamaiya households, possibly 116,000 adults and children. The report found that on the average, a Kamaiya worked about 13 hours a day and a male adult worker might receive a daily income of only around 11 Rupees, about 14 US cents. Using the legal minimum wage of 60 rupees for eight-hour work per day, such a worker ought to be getting 102 Rupees for the 13-hour work, about US$1.29, not exactly a fortune but better than 14 cents. Other research by the International Labour Organization using data from Banke district suggests much longer work hours, with a working day for men of as much as 17 hours a day during the heyday of the Kamaiya system.

Time Use for Bonded Male Laborer; Source: Bhadra, Chandra (2006) “Gender Dynamics in Bonded Labour in Nepal,” International Labour Organization.

All these bonded laborers had something else in common, they were all either Dalits (‘untouchables’) or Janajatis which is a collective term for people speaking Tibetan-Burmese languages such as Magars, Gurungs, Tamangs and Sherpas.  Right up to the present day Nepal has been dominated by high caste elites, known as the Parbatiyas, made up of the Brahmin and Chettri castes. Brahmins and Chettris comprise only 28% of the population according to the 2001 census, but they are massively overrepresented in politics (e.g., as ministers, members of parliament and leaders of political parties), the legal profession, the civil service, and professional fields. Dalits and Janajatis, though they make up 45% of the population, have historically had more or less no representation in any of the areas. The caste system is a rigid form of occupational segregation, handed down from parents to children and severely blocks the opportunities and life chances of those at the bottom of the hierarchy. A society with a caste system wastes a vast amount of its economic potential. Right up to the present day much of the economy of Nepal has been based on labor coercion, repression and exclusion – that is, on highly extractive economic institutions.

And you guessed it: Nepal is a very very poor country, with per capita income only about 40th of the US.

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Who’s afraid of economic development? http://blogs.reuters.com/why-nations-fail/2012/03/15/whos-afraid-of-economic-development/ http://blogs.reuters.com/why-nations-fail/2012/03/15/whos-afraid-of-economic-development/#comments Thu, 15 Mar 2012 18:49:24 +0000 http://blogs.reuters.com/why-nations-fail/?p=46 Surely even the most kleptocratic dictator would be in favor of economic development. Economic development means greater income, greater taxes and more stuff to grab, so what’s not to like about it? But actually, it often doesn’t work that way.

In the early 1980s in Takasera, a village in Rukum District in western Nepal, a group of locals decided to begin a development project and bought a Swiss-made water mill which would power machinery such as a press to make oil and a saw mill. The community sent a group of men to Kathmandu who learned how to dismantle the machinery and then put it back together again. The machinery was brought back and successfully put into operation. In 1984, a government official wrote saying that in autonomously undertaking this project the community had “usurped the role of the king” and the mill would have to be shut down. When the locals refused, the police was sent to destroy the mill. The mill was only saved because the villagers were able to ambush and disarm the police.

So why was the Nepalese government opposed to the mill? The answer is that the monarchy and the elite surrounding it, who controlled the government, were afraid of becoming political losers. Economic progress brings social and political change, eroding the political power of elites and rulers, who in response often prefer to sacrifice economic development for political stability.

The mill in Takasera was not the first time in Nepalese history that Nepal’s rulers had tried to block development. Historically, the Nepalese political elite have clearly preferred political stability and the political status quo to development and this had inhibited them from taking the actions which were needed to promote development. In the 19th century a position of hereditary prime minister, known as the Rana, became the real power in the country and Chandra Shamsher, the Rana between 1901 and 1929, told the British King George V that the British faced the opposition of Indian nationalism because they had made the mistake of educating Indians. He closed down as many as 30 schools in Nepal, not wanting to face a similar opposition in Nepal. He went further and deliberately tried to keep his country isolated, for example by refusing to build a road linking the Kathmandu valley to India in the 1920s. The son of Mohan Shamsher, the last Rana who ruled from 1948 to 1951, infamously argued,

“we cannot possibly take steps which in any way may be subversive of our autocratic authority.”

and this included economic development. So economic development was out.

We’ll see in the next blog that opposition to new technologies is the tip of a much larger extractive iceberg.

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Is the one percent the same everywhere? http://blogs.reuters.com/why-nations-fail/2012/03/15/is-the-one-percent-the-same-everywhere/ http://blogs.reuters.com/why-nations-fail/2012/03/15/is-the-one-percent-the-same-everywhere/#comments Thu, 15 Mar 2012 18:39:03 +0000 http://blogs.reuters.com/why-nations-fail/?p=42 Allan Meltzer’s article raises a lot of interesting issues. The main argument is that top one percent has increased its share of national income pretty much everywhere, and this underscores that the causes of this trend should be sought in global trends. It is true that there have been important global trends — in particular, skill-biased technological change and growing international trade — increasing the demand for skills. See for example Claudia Goldin and Larry Katz’s magnum opus on this, or this discussion of their book, or this article on technology and inequality. None of this is (very) controversial.

But Meltzer claims more than this — that these trends account for the increase in share of the top one percent in the US. This is much more controversial. First, the book on the share of the top one percent, has been written by Anthony Atkinson, Thomas Piketty and Emmanuel Saez’s careful and painstaking work, see here. They show that the US — to some degree together with the UK — stands apart from others in terms of the extent of the increase in the share of the top one percent in national income. The next chart, which uses their data, summarizes this pattern and shows that the top one percent’s share increased little or not at all in several European countries (but caution: one has to be careful about how capital income, which is not available in every country; so it is definitely useful to read their paper carefully).

Data from Anthony Atkinson, Thomas Piketty and Emmanuel Saez (source).

Second, cross-country differences are even more jarring when one looks at the bottom of the income distribution. Here is the US picture:

There seems to be no equivalent of the 40-year stagnation of median wages in Europe.

Third, it is not clear how the changes in the demand for skills explain the pay explosion for the very very rich. Have technological change and trade with China really increased the demand for the skills uniquely possessed by bond traders and Enron executives all that much?

In summary, there are significant cross-country differences in the trends in inequality, and it is far from obvious that all of these changes are explained by global trends. There is therefore a prima facie case that other factors — and yes, domestic and political ones — have also played a major role in increase in top inequality in the US. This theme is discussed in this interview, and we’ll return to it in another blog soon.

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The unending warfare in Africa http://blogs.reuters.com/why-nations-fail/2012/03/15/the-unending-warfare-in-africa/ http://blogs.reuters.com/why-nations-fail/2012/03/15/the-unending-warfare-in-africa/#comments Thu, 15 Mar 2012 18:28:11 +0000 http://blogs.reuters.com/why-nations-fail/?p=40 Sierra Leone is not the only African nation that has been ravaged by civil war. They have been all too common, and any explanation for African poverty that does not come to grips with these all-too-frequent civil wars is bound to be incomplete. Though the number and death tolls of African civil wars have been declining, they are still ongoing in many parts of the subcontinent, including in various parts of the Niger Delta, the Democratic Republic of the Congo, Uganda, Sudan, South Sudan, and of course Somalia.

A recent book by William Reno, Warfare in Independent Africa (see here), is a must-read for anybody wishing to understand the never-ending cycle of civil wars in Africa. Among the many useful theses in the book the most notable concerns the transformation of the nature of civil wars in Africa — or more appropriately in sub-Saharan Africa. Reno identifies earlier movements as anti-colonial and majority rule rebels, who fought colonial powers throughout the subcontinent and minority rule governments (e.g., in South Africa, Namibia, and Zimbabwe). Consistent with the vicious circle of extractive institutions and the pattern in Sierra Leone we saw in an earlier blog (see here), the successful rebels simply took control of the extractive institutions themselves. Thus it was natural that another round of rebellions, led by what Reno calls reform rebels, aimed at replacing these regimes would follow.  Typical examples include Yoweri Museveni in Uganda and Meles Zenawi in Ethiopia. But the vicious circle was not to be broken so easily, and these rebels, when successful, did not change institutions underpinning poverty and the widespread inequities in the subcontinent.

But over the last two decades most civil wars have been fought by what Reno calls warlord rebels (and on which a key reference is Reno’s own book Warlord Politics and African States; see here), and parochial rebels. These rebels have little ideological commitment. Sometimes, like Charles Taylor in Liberia or Foday Sankoh in Sierra Leone, they are fighting to line their pockets. Sometimes, like Joseph Kony whose Lord’s Resistance Army has been killing indiscriminately in Uganda, the Democratic Republic of the Congo, and Sudan, it is not clear at all what they’re fighting for. Like both sides in Sierra Leone’s conflict, many of these warlord and parochial rebels use child soldiers (because they do not have the ideological basis to attract a regular force) and are responsible for many of the recent atrocities. Reno deserves a lot of credit for putting the spotlight on these rebels and helping us understand their breed.

The deep explanation for the emergence and persistence of such rebellions is still unclear, however. Reno writes (p. 246):

“One of the core messages of this book is that warlords and parochial rebels do not fit easily into a simple scheme of state collapse and ungoverned spaces. The argument in the preceding pages is that the regimes in Africa that base their authority most thoroughly on the manipulation of access to patronage opportunities, have been very effective in disrupting the organizing strategies of ideologues, and have made deployment of rebel commissars considerably more difficult than under colonial or apartheid regimes.”

But ultimately this argument is not totally convincing. Take Sierra Leone, where the civil war erupted under Joseph Momoh who followed Siaka Stevens as president. It is difficult to imagine how Momoh could have had greater ability to disrupt the organizing strategies of ideologues than did the apartheid regime in South Africa; Momoh did as little as Stevens to build state institutions and could not control any part of the country against ragtag rebels. A more plausible explanation for the emergence of warlord and parochial rebels would again be the vicious circle of extractive institutions. The corrosive effect of years of extractive rule is both to create a large army of highly discontented young men and an environment in which state institutions are so weak that they can easily be taken over by rivals, thus motivating ruthless opportunists such as Taylor and Sankoh. If so, in contrast to Reno’s claims, the emergence of this new type of rebels would have a lot to do with state collapse — both as cause and consequence.

Another fascinating question that Reno poses is also central for understanding the nature of civil wars in Africa and the future of the subcontinent. While civil wars have been exceedingly common, national wars have been rare. Rebels have contented themselves with seizing national institutions, with no appetite for expanding their control beyond national borders, even though these borders are artificial, only drawn haphazardly by colonial powers, and generally only weakly defended. What explains this peculiar and historically unique pattern? Reno links it to the all-too-quick willingness of international organizations, including the Organization of African Unity, to recognize rebels such as Charles Taylor who took control of (some) national institutions, and to their hostile attitudes to any change in borders — perhaps because of an implicit domino theory maintaining that once some borders come down, all of them are at risk. Yet Reno offers no concrete evidence supporting this intriguing theory. At the end, an alternative and simpler explanation remains equally if not more plausible: warlord and parochial rebels can leverage the weakness of African states to wage deadly civil wars and sometimes even take the capital city; and the same state weakness makes organizing an international war, and holding on to territory once conquered, much more difficult.

At the end, Reno poses two vital questions, one on the origins of the new types of rebels roaming many parts of sub-Saharan Africa, the other on the peculiar sacrosanct nature of international borders coexisting with frequent civil wars. Even if his answers are not fully convincing, this book should be widely read and should have a durable impact on future studies for the new questions it raises and the new hypotheses about one of the most important problems facing the world’s poorest region.

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Schooling in Egypt vs. Schooling in Uzbekistan http://blogs.reuters.com/why-nations-fail/2012/03/15/schooling-in-egypt-vs-schooling-in-uzbekistan/ http://blogs.reuters.com/why-nations-fail/2012/03/15/schooling-in-egypt-vs-schooling-in-uzbekistan/#comments Thu, 15 Mar 2012 18:14:06 +0000 http://blogs.reuters.com/why-nations-fail/?p=37 An Egyptian friend reacted to our blog on schooling in Uzbekistan (see here) saying that schools under Mubarak weren’t all that different.

When he was 10, five hours a day for months were spent not in the classroom, but preparing a dance show for Suzanne Mubarak’s annual visit. This was not an isolated event. There would be such a visit almost every year, and a large chunk of the school year would be spent on this. Not as bad as picking cotton, though probably contributing not that much more to useful knowledge. (For more on Suzanne, see here.)

Not that things were that much better when they were in the classroom. Key assignments included writing letters to President Mubarak thanking him for all his tireless work for Egypt; designing a logo for Mubarak’s campaign in elections (no matter that the elections were already fixed); drawing scenes of loyal Egyptians gathering in the streets out of their love for Mubarak. You get the picture.

You might think things may have changed after Mubarak’s fall. And yes they have. Now key assignments include writing letters to the Supreme Council of Armed Forces, thanking them for their tireless work for Egypt. Bonus points are given to those students who emphasize that this tireless work includes defending Egypt against foreign-financed revolutionaries and their puppet masters masquerading as NGOs.

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Fear and loathing in Sierra Leone http://blogs.reuters.com/why-nations-fail/2012/03/15/fear-and-loathing-in-sierra-leone/ http://blogs.reuters.com/why-nations-fail/2012/03/15/fear-and-loathing-in-sierra-leone/#comments Thu, 15 Mar 2012 18:09:58 +0000 http://blogs.reuters.com/why-nations-fail/?p=35 By 1991, Sierra Leone was a failed nation, mired in poverty, with an economy almost continuously shrinking for almost three decades. And then failure turned into total collapse…

On March 23 a group of armed men under the leadership of Foday Sankoh crossed the border from Liberia into Sierra Leone and attacked the southern frontier town of Kailahun. Sankoh, formerly a corporal in the Sierra Leonean army, had been imprisoned after taking part in an abortive coup against Siaka Stevens’s government in 1971 and had ended up in a training camp for African revolutionaries ran by the Libyan dictator Colonel Qaddafi. There he met Charles Taylor, who was plotting to overthrow the government in Liberia. When Taylor invaded Liberia on Christmas Eve 1989, Sankoh was with him, and it was with a group of Taylor’s men that Sankoh invaded Sierra Leone. They called themselves the RUF, the Revolutionary United Front, and they announced that they were there to overthrow the corrupt and tyrannical government of the APC.

The RUF even had a manifesto called “Footpaths to Democracy” (see here) which started with a quote from the black intellectual Franz Fanon: “Each generation must, out of relative obscurity, discover its mission, fulfill it or betray it.” The section “What Are We Fighting For?” begins:

“We continue to fight because we are tired of being perpetual victims of state sponsored poverty and human degradation visited on us by years of autocratic rule and militarism. But, we shall exercise restraint and continue to wait patiently at the rendezvous of peace—where we shall all be winners. We are committed to peace, by any means necessary, but what we are not committed to is becoming victims of peace. We know our cause to be just and God/Allah will never abandon us in our struggle to reconstruct a new Sierra Leone.”

Though Sankoh and other RUF leaders may have started with political grievances, and the grievances of the people suffering under the APC’s extractive institutions may have encouraged them to join the movement early on, the situation quickly changed and spun out of control. The “mission” of the RUF plunged the country into a rampage that left 80,000 people dead and many more maimed and traumatized.  Soon, few voluntarily joined the RUF. Instead they turned to forcible recruitment, particularly of children. Indeed, all sides did this including the army. A harrowing but moving testimony of his days as a child soldier in the army was written by Ishmael Beah (http://www.alongwaygone.com; on the controversy surrounding this book, follow this link).

In 1997 the RUF enjoyed a brief spell as part of the national government after a faction of the military, led by Major Johnny Paul Koroma overthrew the government. Needless to say, their behavior was similar to what had been seen during the rule of APC.

None of this should have been surprising. When a country has the type of extractive institutions that Sierra Leone inherited from the British and then intensified by its post-colonial leaders, fights over power, over who gets to benefit from the extraction, are common. By their nature extractive institutions breed conflict, which often turns into civil war and, as in Sierra Leone, leads not only to carnage but also to the collapse of the state.

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The problem with Sierra Leone’s chiefs http://blogs.reuters.com/why-nations-fail/2012/03/01/the-problem-with-sierra-leones-chiefs/ http://blogs.reuters.com/why-nations-fail/2012/03/01/the-problem-with-sierra-leones-chiefs/#comments Thu, 01 Mar 2012 20:13:24 +0000 http://blogs.reuters.com/why-nations-fail/?p=30 The economic institutions that keep Sierra Leone poor are not just national. Most people in Sierra Leone still live in villages, and their lives are governed by chiefs. Chiefs raise taxes, hire the local police, dispense justice and control the most important resource in rural Sierra Leone today – land. The chiefs are the “custodians of the land” which in effect means that they decide who gets what. Here are two imposing Paramount Chiefs photographed in the 1980s, Madam Yatta K. Saffawab II and M.K. Mustapha Ngebeb IV (from “Portriats of Paramount Chiefs of Sierra Leone”, by Vera Viditz-Ward and Roslyn A Walker, Smithsonian, 1990).

Only economic institutions that guarantee some degree of property rights, so that people know that they will be able to reap the benefits of their investments and efforts, will generate prosperity. But there are no property rights to land in rural Sierra Leone — at least not in the sense that we understand it in the United States. Nobody has a written title, though some dynasties and families do have traditional user rights to use certain pieces of land. Most out of luck are “strangers” meaning anyone not born in a particular chiefdom (like say the two of us in Cambridge, Massachusetts). A stranger has to “beg” (the word the Sierra Leoneans use) for land and even if he or she gets it they cannot plant any perennial crops, like bananas, cocoa, coffee or oil palm because this would be tantamount to trying to establish de facto property rights on the land. Jim once asked a chief in Kono district what would happen if a stranger tried to grow coffee or oil palm. “We’d come and cut it down” he said. During the same visit as the chief was showing off his plantations of cocoa, Jim asked (rather naively in retrospect) “for example, how did you get the right to use this land?” “That man used to farm it and he gave it to me” said the chief, pointing out a man on the other side of the road. “What would have happened if he hadn’t given it to you he asked” (again rather naively) to which he got the rather puzzled question back “why wouldn’t he give it to me, I’m the chief?”.

Lack of property rights and arbitrary allocation of land, without regards to who will be more productive in using it, are not the only extractive institutions in rural Sierra Leone. The perennial extractive economic institution, labor coercion, is also widespread. Chiefs also use their power to coerce youths to work for them on their plantations and in building roads and other local public goods.

So what comes out from decades of repression and lack of economic opportunities at the local level, and blatant thievery at the national level? We’ll see in our next blog.


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The cow eats where it is tethered http://blogs.reuters.com/why-nations-fail/2012/03/01/the-cow-eats-where-it-is-tethered/ http://blogs.reuters.com/why-nations-fail/2012/03/01/the-cow-eats-where-it-is-tethered/#comments Thu, 01 Mar 2012 20:08:16 +0000 http://blogs.reuters.com/why-nations-fail/?p=26 We saw the fancy school and the nice new houses in Sierra Leone’s president Ernest Bai Koroma village, Yoni, in our last blog. Koroma is in good company among Sierra Leone’s presidents.

The school in Yoni will educate the children of the elite of the All People’s Congress Party (APC), which ran the country from 1967 until 1992 and then returned to power in 2007. The first APC president, Siaka Stevens, used to like to quote the aphorism, “the cow eats where it is tethered”. And eat he did. He created a whole gamut of extractive institutions enriching himself and his APC cronies, and impoverishing Sierra Leone, which experienced almost nonstop economic decline after independence in 1961.

Like many other post-colonial leaders in sub-Saharan Africa, Stevens used the agricultural marketing boards that the British had created to expropriate farmers by setting a fraction of the world price for the main export commodities, such as palm kernels, cocoa and coffee. Not that the British were saints, actually they were already doing the same thing, except not quite so excessively. Stevens looted the country’s diamond wealth, and handed out monopolies, such as that on the import of rice, the main staple food, to his friends.

Stevens did not only suck the economic potential out of Sierra Leone by his thievery. He in fact actively destroyed infrastructure. The next picture shows Jim at the derelict Hastings railway station.

But actually there is no railway station there anymore. The railway going all the way from the capital, Freetown to Mendeland, which until 1967 used to transport coffee, cocoa and diamonds, was pulled out by Stevens and destroyed.

At this point, you might think Siaka Stevens was just mad. But actually there was quite a bit of method to his madness. This was all part of his strategy to hold on to power. After all, unless you have control of what we refer to as extractive political institutions, which concentrate power in your hands without any accountability and which suppress all opposition, how can you run the sort of extractive economic institutions that Stevens was so keen on gorging on? And to control these extractive political institutions, Stevens had to destroy all opposition. Mendeland was the power base of the rival Sierra Leone People’s Party (SLPP). So Stevens decided, whatever was good for Mendeland was bad for his political control, and just destroyed the rail line and together with it much of the trade with Mendeland. Stevens probably also like the aphorism “you can’t make an omelet without breaking some eggs”.

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The easiest way to live well in a poor country? http://blogs.reuters.com/why-nations-fail/2012/03/01/the-easiest-way-to-live-well-in-a-poor-country/ http://blogs.reuters.com/why-nations-fail/2012/03/01/the-easiest-way-to-live-well-in-a-poor-country/#comments Thu, 01 Mar 2012 20:04:56 +0000 http://blogs.reuters.com/why-nations-fail/?p=21 Where do you think this fancy school is located?

Not in the United States. Not on a Greek island, financed by tourism revenues and EU funds. It is in Sierra Leone, one of the poorest countries in the world with about 1/50 of the income per capita of the US, where only 41% of the adult population can read and write. But it is not in Freetown, the capital city, nor is in Bo, the next biggest city and capital of the south. Indeed, it is not in any of the major urban centers. It is a small village, Yoni in Bombali district. It was recently built there by China Aid. Why would anyone want to build a wonderful school in the middle of what Africans call “the bush”?

Here is a hint: Yoni is the home village of Sierra Leone’s president, Ernest Bai Koroma. The next photo shows a bit more of Yoni. Everyone has a new house.

Those readers living in affluent western countries may not be impressed by these houses but by the standards of rural Africa they are palaces. Could the fact that such fancy schools and houses are being built in the president’s village, while most villages have no school and most villagers live in a decrepit houses be related to why Sierra Leone is so poor?

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