Why NaLions Fail

Based on
Why NaLions Fail: The Origins of Power, ProsperiLy and PoverLy
by Daron Acemoglu and James A. Robinson
Daron Acemoglu
MlT
SepLember 23, 2011
1
Introduction
The Lay of the Land
GDP per capita, 2008, USD
No Data
< $2,000
$2,000 - $7,500
$7,500 - $20,000
$20,000 - $50,000
2
lnLroducLion
The Lay of Lhe Land (conLinued}
Western Offshoots
Western Europe
Africa
Latin
America
Asia
6
7
8
9
1
0
l
o
g

g
d
p

p
e
r

c
a
p
i
t
a
1000 1200 1400 1600 1800 2000
year
Figure: The evoluLion of average CDP per capiLa in WesLern OfshooLs, WesLern
Lurope, LaLin America, Asia and Africa, 1000-2000.
2
The Beginning
The Beginning-LaLin America
Juan Daz de Sols colonizes Ro de la PlaLa in 1516, `River of Silver`
and Pedro de Mendoza founds Buenos Aires in 1534.
BuL Sols and de Mendoza unable Lo enslave and puL Lo work Lhe
hunLer gaLherer lndians of Lhe area, Charruas and Lhe Querand.
SLarving Spaniards soon lefL Lhe area.
ln 1531, Juan de Ayolas found Lhe sedenLary and more densely seLLled
Cuaran up Lhe Parana river, in Paraguay. The Spaniards could
successfully Lake over Lhe Cuaran hierarchy, enslave Lhem and puL
Lhem Lo work Lo produce food for Lhem.
A very similar paLLern Lo Lhe colonizaLion of Lhe AzLecs and Lhe lncas.
3
Introduction
The BeginningSpanish Colonial Map
Potosi
Asuncion
Buenos Aires
Brazil
Argentina
Peru
Bolivia
Colombia
Venezuela
Chile
Paraguay
Ecuador
Guyana
Uruguay
Suriname
Chile
French Guiana
Modern boundaries
Inca Empire
Mita boundary
Inca road network
Colonial cities
Cusco
Cajamarca
4
The Beginning
The Beginning-UniLed SLaLes
ColonizaLion aLLempLs of Virginia Company in JamesLown in early
11Lh cenLury, aLLempLing Lo re-creaLe an auLhoriLarian, exLracLive
regime:
Nc non c: wcnon |o|| :un owoy :cn |c cc|cny c |c
nJ|on, upcn po|n c Jco|.
Anycnc w|c :c| o go:Jcn, pu|||c c: p:|voc, c: o v|ncyo:J, c:
w|c co| co: c cc:n |o|| |c pun||cJ w|| Jco|.
Nc ncn|c: c |c cc|cny w||| c|| c: g|vc ony ccnncJ|y c
|| ccun:y c o copo|n, no:|nc:, noc: c: o||c: c :onpc:
cu c |c cc|cny, c: || cwn p:|voc uc, upcn po|n c Jco|.
]:cn |c |ow pocJ |y 5|: T|cno Goc onJ 5|: T|cno
Do|c.
BuL Lhe Company was unsuccessful-iL could noL force Lhe Lnglish
seLLlers inLo gang labor and low wages.
4
The Beginning
The Beginning-UniLed SLaLes (conLinued}
The Company swiLched Lo Lhe `headrighL sysLem` giving all seLLlers 50
acres of land and Lhen shorLly LhereafLer also poliLical righLs, in Lhe
form of iL Ceneral Assembly.
Similar evenLs unfolded in Chesapeake Bay, Maryland and Carolina.
The chain of evenLs LhaL ulLimaLely leading Lo Lhe DeclaraLion of
lndependence and Lhe U.S. ConsLiLuLion.
5
Introduction
The BeginningThe Americas in General
Brazil
Peru
Argentina
Bolivia
Chile
Colombia
Venezuela
Paraguay
Ecuador
Guyana
Uruguay
Suriname
French Guiana
Canada
United States
Mexico
Nicaragua
Honduras
Guatemala
Panama
HaitiDominican Republic
Population density (people/km2)
No Data
0 - 0.75
0.75 - 2.5
2.5 - 10
10 - 400
3
The Beginning
Making Sense of Lhe Divergence
While boLh culLure (religion, aLLiLudes, values} and geography
(climaLe, Lopography, disease environmenLs eLc.} are imporLanL for
Lhe abiliLy of humans Lo form well funcLioning socieLies, Lhey are noL
Lhe main source of Lhis divergence.
Much of LaLin America likely richer Lhan NorLh America as laLe as
mid-18Lh cenLury.
Divergence due Lo Lhe abiliLy of Lhe UniLed SLaLes, jusL like BriLain, Lo
Lake advanLage of new economic opporLuniLies.
The ignorance hypoLhesis also unable Lo explain Lhe logic of social
arrangemenLs leading Lo relaLive poverLy-CorLes, Pizarro and Ayolas
did noL seL up forced labor and repressive regimes because Lhey were
ignoranL abouL Lheir implicaLions.
lnsLead, cenLral role of insLiLuLions broadly dened.
Key questions: hisLorical rooLs of insLiLuLional diferences and Lhe
logic of insLiLuLions LhaL do noL unleash growLh.
6
Main ConcepLs lnclusive and LxLracLive lnsLiLuLions
Towards a Theory of lnsLiLuLions
Extractive economic institutions: Lack of law and order. lnsecure
properLy righLs, enLry barriers and regulaLions prevenLing funcLioning
of markeLs and creaLing a nonlevel playing eld.
Extractive o|itica| institutions-in Lhe limiL absoluLism:
PoliLical insLiLuLions concenLraLing power in Lhe hands of a few,
wiLhouL consLrainLs, checks and balances or rule of law.
lnc|usive economic institutions: Secure properLy righLs, law and
order, markeLs and sLaLe supporL (public services and regulaLion} for
markeLs, open Lo relaLively free enLry of new businesses, uphold
conLracLs, access Lo educaLion and opporLuniLy for Lhe greaL majoriLy
of ciLizens.
lnc|usive o|itica| institutions: PoliLical insLiLuLions allowing broad
parLicipaLion-p|u:o||n-and placing consLrainLs and checks on
poliLicians, rule of law (closely relaLed Lo pluralism}.
BuL also some degree of pc|||co| ccn:o||zo|cn for Lhe sLaLes Lo be able
Lo efecLively enforce law and order.
1
Main ConcepLs lnclusive and LxLracLive lnsLiLuLions
Synergies
Lconomic lnsLiLuLions
lnclusive LxLracLive
PoliLical lnclusive |
lnsLiLuLions LxLracLive
8
Main ConcepLs lnclusive and LxLracLive lnsLiLuLions
CrowLh under lnclusive lnsLiLuLions
lnclusive economic and poliLical insLiLuLions (or inclusive insLiLuLions
for shorL} creaLe powerful forces Lowards economic growLh by:
encouraging invesLmenL (because of well-enforced properLy righLs}
harnessing Lhe power of markeLs (beLLer allocaLion of resources, enLry
of more efcienL rms, abiliLy Lo nance for sLarLing businesses eLc.}
generaLing broad-based parLicipaLion (educaLion, again free enLry, and
broad-based properLy righLs}.
Key aspecL of growLh under inclusive insLiLuLions: invesLmenL in new
Lechnology and creative destruction.
Ccn:o| quc|cn: why are exLracLive insLiLuLions so prevalenL
LhroughouL hisLory and even Loday?
9
Main ConcepLs Logic of LxLracLive lnsLiLuLions
The Logic of LxLracLive lnsLiLuLions
Main Lhesis is LhaL growLh is much more likely under inclusive
insLiLuLions Lhan exLracLive insLiLuLions.
CrowLh, and inclusive insLiLuLions LhaL will supporL iL, will creaLe boLh
winners and losers. Thus Lhere is a logic supporLing exLracLive
insLiLuLions and sLagnaLion:
economic |osers: Lhose who will lose Lheir incomes, for example Lheir
monopolies, because of changes in insLiLuLions or inLroducLion of new
Lechnologies
o|itica| |osers: Lhose who will lose Lheir poliLically privileged posiLion,
Lheir unconsLrained monopoly of power, because of growLh and iLs
supporLing insLiLuLions-fear of creative destruction.
boLh are imporLanL in pracLice, buL parLicularly poliLical losers are a
major barrier againsL Lhe emergence of inclusive insLiLuLions and
economic growLh.
10
lnsLiLuLional Change Small Diferences and CriLical JuncLures
Towards a Theory of lnsLiLuLional Change
Conict pervasive in socieLy.
Leading Lo dierentia| institutiona| drift small buL noLable
diferences in insLiLuLions across naLions
5ma|| dierences tbat matter.
insLiLuLions

drifL
insLiLuLions
1
insLiLuLional
divergence
criLical juncLure
BuL ouLcomes during Lhese criLical juncLures noL hisLorically
deLermined, parLly contingent (- sLochasLic}.
NaLurally, Lhe changes LhaL happen as a resulL of Lhis inLeracLion Lhen
become Lhe background-small or noL so small-insLiLuLional
diferences upon which new criLical juncLures acL.
11
lnsLiLuLional Change Small Diferences and CriLical JuncLures
TransiLion Lo lnclusive lnsLiLuLions
LxLracLive insLiLuLions have been Lhe norm in world hisLory.
Where do inclusive insLiLuLions come from?
Larlier moves Lowards inclusive insLiLuLions resulLing from conicL and
insLiLuLional drifL- Roman Republic, Venice, buL ulLimaLely reversed.
Crucial Lurning poinL: Lhe G|orious Revo|ution in Lngland in 1688.
The Clorious RevoluLion broughL much more inclusive, pluralisLic
poliLical insLiLuLions which Lhen led Lo a LransiLion Lowards much more
inclusive economic insLiLuLions.
This creaLed Lhe condiLions which led Lo Lhe lndustria| Revo|ution.
CrowLh in Lhe 19Lh cenLury and disseminaLion of indusLry were
condiLioned by inLeracLions beLween iniLial insLiLuLional diferences
and Lhe criLical juncLures creaLed by poliLical evenLs and Lhe lndusLrial
RevoluLion iLself.
12
lnsLiLuLional Change Small Diferences and CriLical JuncLures
The Lmergence of lnclusive lnsLiLuLions in Lurope
Driven by Lhe inLeracLion of iniLial insLiLuLions and criLical juncLures:
lnitia| institutiona| drift: BriLain was Lhe beneciary of a long hisLory
of gradual insLiLuLional change from Lhe Magna CarLa of 1215 onwards,
Lhrough Lhe creaLion of a monopoly of violence by Henry Vll afLer
1485, nascenL sLaLe under Henry Vlll, Civil War of Lhe 1640s.
Critica| juncture: DevelopmenL of Lhe ALlanLic economy afLer 1492
led Lo Lhe emergence of a broad and powerful coaliLion in socieLy in
favor of reforming poliLical insLiLuLions and removing absoluLism
(Accncg|u, Jc|ncn onJ Pc||ncn (200S) The Rise of Lurope:
ALlanLic Trade, lnsLiLuLional Change and Lconomic CrowLh}.
Owing Lo Lhe conLexL creaLed by Lhe iniLial insLiLuLional drifL, Lhis
coaliLion Lriumphed in 1688.
5ma|| dierence: lniLial insLiLuLions in Spain somewhaL diferenL,
especially in allowing Lhe crown Lo monopolize colonizaLion and
ALlanLic Lrade criLical juncLures leading Lo greaLer wealLh and
poliLical power of Lhe monarchy.
13
lnsLiLuLional Change Small Diferences and CriLical JuncLures
lnsLiLuLional Divergence aL CriLical JuncLures: Black DeaLh
and Feudalism
The divergence of WesLern and LasLern Lurope afLer Lhe Black
DeaLh-in Lhe WesL Lhe power of landlords declines and feudalism
wiLhers away, in Lhe LasL Lhe power of landlords inLensies leading Lo
Lhe Second Serfdom in Lhe 16Lh cenLury.
This insLiLuLional divergence driven by a large demographic shock
inLeracLing wiLh iniLial insLiLuLional diferences (organizaLion of
peasanL communiLies, disLribuLion of landholdings}.
Key mechanism: increases in wages following populaLion decline (e.g.,
Phelps Brown and Hopkins, 1956}.
14
lnsLiLuLional Change Small Diferences and CriLical JuncLures
Meanwhile in Mexico: lmplicaLions of Coercion
The efecLs of lower populaLion very diferenL when Lhere is coercion.
AnoLher insLance of insLiLuLional divergence.
Population and Average Real Daily Wages for Unskilled Repartimiento (Labor
Draft) Workers
Source: Own Calculations based on Borah and Cook (1958) and Gibson (1964).
.
0
6
.
0
8
.
1
.
1
2
.
1
4
.
1
6
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e
a
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W
a
g
e

(
i
n

f
a
n
e
g
a
s

o
f

m
a
i
z
e
)
0
5
0
0
0
0
0
1
0
0
0
0
0
0
1
5
0
0
0
0
0
P
o
p
u
l
a
t
i
o
n
1500 1550 1600 1650
Year
Population Real Wages for Repartimiento Workers
15
lnsLiLuLional Change Small Diferences and CriLical JuncLures
Meanwhile in Mexico (conLinued}
Population and Average Real Daily Wages for Unskilled Textile Obraje Workers
Source: Own Calculations based on Borah and Cook (1958), Gibson (1964) and Viqueira and Urquiola (1990)
.
0
2
.
0
4
.
0
6
.
0
8
.
1
R
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W
a
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e

(
i
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f
a
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e
g
a
s

o
f

m
a
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)
0
5
0
0
0
0
0
1
0
0
0
0
0
0
1
5
0
0
0
0
0
P
o
p
u
l
a
t
i
o
n
1500 1550 1600 1650
Year
Population Real Wages in Textile Obrajes
16
PersisLence and Change Dynamics of lnsLiLuLions
lnsLiLuLional PersisLence
Why do exLracLive insLiLuLions persisL? Vicious circ|es
poliLical
insL`s

disL. of
resources

collecLive
acLion

=
=
de jure
poliLical
power

de facLo
poliLical
power

=
=
econ.
insL`s

pol.
insL`s
1
=

econ.
perf

disL. of
resources
1
BuL also possibiliLy for change.
11
Why NaLions Fail Today lndusLrializaLion
RevisiLing Larly LaLin American Lxperience
Larly LaLin American insLiLuLions example of c:oc|vc cccncn|c onJ
pc|||co| |n|u|cn.
ln line wiLh Lhe logic of Lhese exLracLive insLiLuLions, early on
producLiviLy in LaLin America and Lhe Caribbean is high, Lhough
unequal iL is commiLLed.
The break comes wiLh anoLher criLical juncLure: lndustria|
Revo|ution.
DiferenL responses in Lhe NorLh and Lhe SouLh.
Why? New opporLuniLies, parLicularly conducive Lo fear of creaLive
desLrucLion.
ln Lhe UniLed SLaLes and BriLain, indusLrializaLion spearheaded by new
individuals and groups-noL Lhe exisLing eliLes. This Lype of creaLive
desLrucLion difculL or impossible under exLracLive poliLical insLiLuLions.
18
Why NaLions Fail Today lndusLrializaLion
Divergence in Lurope
The LaLin American response Lo Lhe lndusLrial RevoluLion noL so
diferenL from Lhose of oLher exLracLive poliLical insLiLuLions, such as
AusLria-Hungary, Russia, China or Lhe OLLoman Lmpire.
lndusLrializaLion and railways blocked in AusLria-Hungary and Russia,
because emperors and eliLes afraid of poliLical change.
Francis l and MeLLernich`s approach:
Wc Jc nc Jc|:c o o|| |o |c g:co noc |o|| |cccnc
wc|| c onJ |nJcpcnJcn ... Hcw ccu|J wc c|c:w|c :u|c cvc:
|cn?
Nicholas l and Kankrin`s approach in Russia:
Po||woy Jc nc o|woy :cu| :cn nou:o| nccc|y, |u o:c
nc:c on c|cc c o:|c|o| nccJ c: |uu:y. T|cy cnccu:ogc
unnccco:y :ovc| :cn p|occ c p|occ, w||c| | cn|:c|y yp|co|
c cu: |nc.
19
Introduction
Railways in Europe
Russia
France
Spain
Italy
Poland
Germany
Romania
United Kingdom
Austria
Hungary
Bosnia
Croatia
Czech Republic
Serbia & Montenegro
Railroads, 1870
Modern Boundaries
8
Why NaLions Fail Today lndusLrializaLion
Why Didn`L Lhe OLLoman Lmpire CaLch-Up?
ln 1445 in Lhe Cerman ciLy of Mainz, Johannes CuLenberg invenLed
Lhe prinLing press based on movable Lype. Spread rapidly LhroughouL
WesLern Lurope.
ln 1485, Lhe OLLoman SulLan Bayezid ll issued an edicL Lo Lhe efecL
LhaL Muslims were expressly forbidden from prinLing in Arabic.
SulLan Selim l in 1515 sLrengLhened Lhis edicL.
Only in 1121, Lhe rsL prinLing press is allowed in Lhe OLLoman lands.
Then SulLan Ahmed lll issued a decree granLing
`
lbrahim MuLeferrika
permission Lo seL up a press, buL under close supervision and
censorship. MuLeferrika prinLed few books in Lhe end, only sevenLeen
beLween 1129, when Lhe press began Lo operaLe, and 1143 when he
sLopped.
20
Why NaLions Fail Today lndusLrializaLion
Divergence in Asia
CriLical juncLure from Luropean and American inLervenLion in Asia
boLh for China and Japan.
AnoLher case of small diferences leading Lo signicanL divergence aL a
criLical juncLure.
AbsoluLism conLinued in China in Lhe face of BriLish LhreaL during Lhe
opium wars.
A poliLical revoluLion leading Lo Lhe end of absoluLism in Japan in Lhe
face of American LhreaL.
Small diference: Tokugawa rulers had much less conLrol over enLire
socieLy Lhan Chinese emperor and imperial eliLe.
21
Why NaLions Fail Today PersisLence
PersisLence of Power and LliLes: Lhe US SouLh
Why and how do exLracLive insLiLuLions persisL?
ln Lhe anLebellum period, Lhe SouLh run by planLaLion owners, and
Lhe sysLem of slavery and labor-inLensive coLLon producLion.
RelaLively poor (abouL 10% of Lhe naLional level of CDP per-capiLa}.
LiLLle manufacLuring indusLry, much lower urbanizaLion and densiLy of
canals and railroads Lhan Lhe NorLh.
Civil War: major change in economic and poliLical insLiLuLions, Lhe
aboliLion of slavery and Lhe enfranchisemenL of Lhe freed slaves.
One mighL have anLicipaLed a dramaLic change in economic
insLiLuLions.
BuL whaL emerged was a labor-inLensive, low wage, low educaLion and
repressive economy-jusL like Lhe anLebellum SouLh.
22
Why NaLions Fail Today PersisLence
PersisLence of Lhe SouLhern Lquilibrium
DespiLe losing Lhe Civil War, LradiLional landed eliLes could susLain
Lheir poliLical conLrol of Lhe SouLh, parLicularly afLer ReconsLrucLion
ended in 1811 and Lhe Union army was wiLhdrawn.
Blocking of economic reforms LhaL mighL have undermined Lheir
power, such as Lhe disLribuLion of 50 acres and a mule Lo each freed
slave.
Were able Lo use Lheir local poliLical power Lo disenfranchise blacks
and re-exerL conLrol over Lhe labor force.
Use of Black Codes, Vagrancy Laws, Ku Klux Klan and Jim Crow.
WhaL persisLs? Specic economic and poliLical insLiLuLions changed,
buL Lhe underlying disLribuLion of poliLical power did noL and neiLher
did Lhe inLeresLs of Lhe eliLe. They were able Lo use diferenL
insLiLuLions Lo achieve Lhe same goal. The incenLive environmenL for
Lhe mass of Lhe populaLion did persisL.
23
Why NaLions Fail Today PersisLence
PersisLence of Lhe SouLhern Lquilibrium (conLinued}
24
Why NaLions Fail Today PersisLence
PersisLence of Power and LliLes: Theory
Accncg|u onJ Pc||ncn (2008) PersisLence of Power, LliLes and
lnsLiLuLions.
T|c Jcn|no|cn c on c:gon|zcJ n|nc:|y... cvc: |c
unc:gon|zcJ noc:|y | |ncv|o||c. T|c pcwc: c ony n|nc:|y |
|::c||||c o ogo|n coc| |ng|c |nJ|v|Juo| |n |c noc:|y, w|c
onJ o|cnc |cc:c |c co||y c |c c:gon|zcJ n|nc:|y. A |c
onc |nc, |c n|nc:|y | c:gon|zcJ c: |c vc:y :cocn |o | |
o n|nc:|y. Mcco
Once again, relaLed Lo Lhe disLincLion beLween Jc u:c and Jc occ
power, buL now de facLo power is Lhe agenL for persisLence raLher
Lhan change.
25
Why NaLions Fail Today PersisLence
Legacy of Colonial Times Today
Regression disconLinuiLy efecLs of M|o from Dc|| (2010) PersisLenL
LfecLs of Peru`s Mining MiLa:
5
6
7
l
o
g

e
q
u
i
v
.

c
o
n
s
u
m
p
t
i
o
n
-100 -50 0 50 100
Di s t a n c e t o m i t a b o u n d a ry (k m )
A. Equi val ent Consumpti on (2001)
26
Why NaLions Fail Today PersisLence
Labor Coercion in UzbekisLan
On SepLember 6 2006, schools in UzbekisLan were empLied of 2.1
million children. A moLher of Lwo explains:
A |c |cg|nn|ng c coc| c|cc| yco:, opp:c|noc|y o |c
|cg|nn|ng c 5cpcn|c:, |c c|oc |n c|cc| o:c upcnJcJ, onJ
|ncoJ c c|oc c|||J:cn o:c cn c |c cccn |o:vc.
Nc|cJy o| c: |c ccncn c po:cn. T|cy Jcn' |ovc
wcc|cnJ |c||Joy ]Ju:|ng |c |o:vc|ng cocn. o c|||J | c:
ony :cocn |c o |cnc, || coc|c: c: c|o cu:oc: ccnc cvc:
onJ Jcncuncc |c po:cn. T|cy o|gn o p|on c coc| c|||J,
:cn 20 c 60 |g pc: Joy JcpcnJ|ng cn |c c|||J' ogc.
Why? UzbekisLan under Lhe corrupL regime of lsmail Karimov.
CoLLon farmers are forced Lo sell aL very low prices. Lack of incenLives
and running down of machinery. Use of forced labor as a subsLiLuLe
for incenLives for farmers.
21
Why is Africa Poor?
Why is Africa Poor?
The legacy of pre-colonial insLiLuLions:
Lack of sLaLe cenLralizaLion in parLs of Africa up Lo Lhe 11Lh cenLury,
e.g., parLs of Lhe Congo.
AbsoluLisL regimes remaining unchallenged in oLher parLs, e.g.,
LLhiopia.
Pre-colonial slavery and labor coercion insLiLuLions.
28
Why is Africa Poor?
The LfecLs of Lhe Slave Trade
Luropean inLervenLion led Lo a highly disLorLed paLh of insLiLuLions in
much of Africa.
Slave Lrade having a big demographic efecL.
Warmaking and raiding Lo capLure slaves:
T|c g:co quon|y c gun onJ pcwJc: w||c| |c
Eu:cpcon |ovc |:cug| |ovc coucJ c::|||c wo: |cwccn |c
K|ng onJ P:|ncc onJ Co|cccc: c |cc |onJ, w|c noJc |c|:
p:|cnc: c wo: |ovc; |cc |ovc wc:c |nncJ|oc|y |cug| up
|y Eu:cpcon o coJ||y |nc:co|ng p:|cc, w||c| |n | u:n,
on|noc ogo|n onJ og|n |cc pccp|c c :cncw |c|: |c||||c,
onJ |c|: |cpc c ||g onJ coy p:c no|c |cn c:gc o||
|o|cu:, u|ng o|| c: c p:cc c ooc| coc| c|c: c: :cv|v|ng
c|J J|puc. (F:cn |c Duc| Cc|cn|o| D|:ccc:).
Collapse of sLaLe insLiLuLions in many parLs due Lo erosion of Lhe
auLhoriLy of Lhe sLaLe and persisLenL inghLing.
29
Why is Africa Poor?
PosL-Slave Trade Lquilibrium
Luropean colonialism creaLing a diferenL range of disLorLed incenLives
afLer Lhe end of Lhe slave Lrade.
LegiLimaLe Lrade based on domesLic slavery are placing Lhe slave
Lrade.
Making of a dual economy in SouLh Africa Lo creaLe a reservoir of
cheap labor.
For example, agriculLural boom in Lhe second parL of Lhe 19Lh cenLury
in SouLh Africa clamped down by
Luropean seLLlers wishing Lo avoid Lhe compeLiLion of African farmers
and aLLempLing Lo creaLe a cheap labor force for Lhe gold and diamond
mines,
30
Introduction
The Slave Trade in Africa
Sudan
Algeria
Libya
Mali
Chad
Niger
Egypt
Congo, DRC
Angola
Ethiopia
Nigeria
South Africa
Tanzania
Namibia
Zambia
Mauritania
Kenya
Botswana
Somalia
Mozambique
Morocco
Congo
Madagascar
Cameroon
Gabon
Zimbabwe
Ghana
Guinea
Uganda
Senegal
Cote d'Ivory
Central African Republic
Tunisia
Burkina Faso
Benin
Western Sahara
Eritrea
Malawi
Liberia
Togo
Sierra Leone
Lesotho
Burundi
Rwanda
Djibouti
Swaziland
Equatorial Guinea
The Gambia
Comoros
Mayotte
Sao Tome & Principe
Seychelles
Glorioso Is.
Juan De Nova I.
Gaza Strip
Slave exports as % of pop. in 1400
0%
1% - 50%
50% - 100%
100% - 300%
Missing data
7
Introduction
Land Allocation in South Africa
!
!
!
!
!
!
!
!
!
Ciskei
Harare
Transkei
Gaborone
Cape Town
Fingoland
Kimberley
Griqualand
Johannesburg
South Africa
Namibia
Angola
Botswana
Zambia
Mozambique
Zimbabwe
Malawi
Lesotho
Swaziland
Atlantic Ocean
Land Acts, 1913 and 1936
Land Appointments, 1970
Modern boundaries
6
Why is Africa Poor?
PosL-Slave Trade Lquilibrium (conLinued}
Verwoerd, Lhe archiLecL of Lhe AparLheid, explaining Lhis in 1954:
T|c Bonu nu |c gu|JcJ c c:vc || cwn ccnnun|y |n
o|| :cpcc. T|c:c | nc p|occ c: ||n |n |c Eu:cpcon
ccnnun|y o|cvc |c |cvc| c cc:o|n c:n c |o|cu: ... Fc: |o
:cocn | | c nc ovo|| c ||n c :ccc|vc o :o|n|ng w||c| |o o
| o|n o|c:||cn |n |c Eu:cpcon ccnnun|y w|||c |c connc
onJ w||| nc |c o|c:|cJ |c:c.
TradiLional chiefs who were seeing Lheir power weaken as a resulL of
Lhese economic changes.
31
Why is Africa Poor?
PosL-lndependence PersisLence
The sysLem creaLed by Luropeans, and Lhe one Lo some degree
persisLing from pre-colonial Limes, has been mainLained and
re-creaLed, buL in a furLher disLorLed manner in posL-independence
Africa.
BesL illusLraLed Lhrough Lhe hisLory of Sierra Leone before and afLer
independence.
32
Why is Africa Poor?
Sierra Leone Before lndependence
Sierra Leone, in Lhe 18Lh cenLury originally seL up as a home for
repaLriaLed and freed slaves.
ln 1806, iL becomes a BriLish colony, buL Lhe inLerior sLill made up of
many small African kingdoms.
The inLerior becomes a BriLish ProLecLoraLe in 1896 on Lhe basis of
LreaLies wiLh Lhese African Kings. The Kings are given Lhe new LiLle
of `ParamounL Chief`.
The BriLish rule Lhe inLerior `indirecLly` Lhrough Lhe ParamounL
Chiefs. ln pracLice, Lhe Chiefs are given fairly unlimiLed powers and
freed from Lhe need Lo obLain popular supporL and legiLimacy.
Moreover, chiefLaincy becomes a form of herediLary arisLocracy, only
members of original `ruling houses` allowed Lo become chiefs.
ln oLher parLs of Africa, Lhe BriLish creaLe such chiefLaincies and ruling
houses even when none exisLed before.
33
Why is Africa Poor?
Sierra Leone Before lndependence (conLinued}
The BriLish also seL up Lhe Sierra Leone Produce MarkeLing Board,
similar Lo oLher markeLing boards in Africa.
in Lheory Lo smooLh Lhe incomes of rural producers, in pracLice Lo
expropriaLe Lhem by paying much less Lhan Lhe markeL price.
When diamonds are discovered in Kono, Lhe BriLish granL a
monopoly, LogeLher wiLh Lhe righL Lo seL up a privaLe army, Lo Lhe De
Beers company.
This conLrasLs Lo how access Lo newly discovered gold in AusLralia in
Lhe 19Lh cenLury was given Lo anybody willing Lo pay a license fee Lo
search and dig for gold. (The same sLraLegy would have been feasible
in Sierra Leone since diamonds were `alluvial`}.
34
Why is Africa Poor?
Sierra Leone AfLer lndependence
AfLer independence, Sierra Leone People`s ParLy (SLPP} comes Lo
power, wiLh supporL from Lhe SouLh and Lhe LasL, parLicularly
Mendeland.
Narrowly defeaLed by Siaka SLevens`s All Peoples Congress (APC} in
1961, which had mosL of iLs supporL in Lhe NorLh.
SLevens`s rule becomes much more corrupL Lhan LhaL of SLPP.
SLevens declared himself presidenL in 1911, and seL up a repressive,
ofLen violenL one-parLy rule, or in essence his dicLaLorship.
35
Why is Africa Poor?
Sierra Leone AfLer lndependence (conLinued}
Remarkably, SLevens uses essenLially all of Lhe same colonial economic
and poliLical insLiLuLions.
He relied on ParamounL Chiefs Lo rule Lhe inLerior, he naLionalized Lhe
diamond monopoly, he used Lhe markeLing board, even more
inLensively Lhan before, expropriaLe farmers.
SLevens also pulled up Lhe railway line Lo Mendeland even Lhough Lhis
had become major source of exporL revenues, as Lhe primary
LransporLaLion from Lhe SouLh bringing cofee, cocoa and diamonds.
SLevens LhoughL LhaL he had Lo impoverish and weaken Lhe supporL
base of Lhe SLPP in order Lo consolidaLe his power.
36
Breaking Lhe Mold
Breaking Lhe Mold
HisLory is noL desLiny.
LfecLive reforms Lowards inclusive insLiLuLions possible.
BuL iL ofLen necessiLaLes a minor or major poliLical revoluLion.
Two examples:
1
Lnd of SouLhern equilibrium in Lhe UniLed SLaLes
2
BoLswana
31
Breaking Lhe Mold
PoliLical RevoluLion in Lhe SouLh
38
Breaking Lhe Mold
An Unlikely Success SLory
Upon independence in 1966, BoLswana was one of Lhe pooresL
counLries in Lhe world, iL had a LoLal of 12 kilomeLers of paved roads,
22 ciLizens who had graduaLed from universiLy and 100 from
secondary school.
lL was also almosL compleLely surrounded by Lhe whiLe and hosLile
regimes in SouLh African, Namibia and Rhodesia.
ln Lhe subsequenL 45 years, BoLswana would become a sLable
democracy (Africa`s only}, achieve one of Lhe fasLesL growLh raLes in
Lhe world and reach Lhe highesL income level in sub-Saharan Africa on
a par wiLh places such as as LsLonia, Hungary, or CosLa Rica.
39
Breaking Lhe Mold
An Unlikely Success SLory (conLinued}
How?
ProximaLe answer: inclusive economic insLiLuLions (secure properLy
righLs, sLable macroeconomic policies, invesLmenL in educaLion and
infrasLrucLure} supporLed by inclusive poliLical insLiLuLions (democracy
wiLh checks and balances}.
BuL Lhe real quesLion is: why did Lhese geL adopLed in BoLswana?
Cood leadership by SereLse Khama and QueLL Masire. BuL also
hisLorical facLors making such leadership possible and meaningful.
40
Breaking Lhe Mold
Three African Chiefs
On SepLember 6 1895, Chiefs Khama of Lhe NgwaLo, BaLhoen of Lhe
NgwakeLse and Sebele of Lhe Kwena arrived in BriLain on a
mission-Lo save Lheir and ve oLher Tswana sLaLes, making up
Bechuanaland (BoLswana}, from Cecil Rhodes.
ln 1885, BriLain had declared Bechuanaland a ProLecLoraLe Lo block
furLher expansions by Lhe Boers and possible expansions by Cermans
who had annexed SouLhwesL Africa, buL had no inLeresL in acLively
colonizing iL.
When Cecil Rhodes`s BriLish SouLh Africa Company sLarLed
expanding norLh ouL of SouLh Africa, Lhe Chiefs decided Lo ask for
greaLer BriLish conLrol and proLecLion from Rhodes.
They meL colonial secreLary Joseph Chamberlain and wenL on a
speaking Lour Lo shore up supporL. WiLh Lhe background of Lhe
disasLrous Jameson Raid, Chamberlain agreed.
Since Lhe BriLish sLill had no inLeresL in Lhe area, Lhey did noL seL up
Lhe usual indirecL rule.
41
Breaking Lhe Mold
ConLingency during a CriLical JuncLure
BoLswana would avoid boLh Lhe esLablishmenL of whiLe rule as in
SouLh Africa or Rhodesia, and BriLish indirecL rule Lransforming
indigenous insLiLuLions.
This was parLicularly forLunaLe since Lhe indigenous poliLical
insLiLuLions of Lhe Tswana were more parLicipaLory Lhan
mosL-cerLainly more so Lhan whaL would emerge under Rhodes or
BriLish indirecL rule.
The `kgoLla,` a formal greaL assembly, was used boLh for dispuLe
resoluLion by broad parLicipaLion and as a check on Chiefs` acLions.
ChiefLaincy, in greaL conLrasL Lo Lhe insLiLuLion of ParamounL Chiefs
seL up by Lhe BriLish in oLher African naLions, was noL herediLary, buL
in pracLice open Lo Lhose demonsLraLing LalenL, abiliLy and leadership.
These insLiLuLions persisLed unLil independence.
Clearly Lhese insLiLuLions were far from inclusive. BuL jusL like Magna
CarLa and elecLed ParliamenLs in Lngland, Lhey creaLed Lhe basis for a
possible furLher developmenL of inclusive insLiLuLions.
42