April 15, 2003

Notes: Corruption

From William Easterly and Ross Levine (1997), "Africa's Growth Tragedy: Policies and Ethnic Divisions," Quarterly Journal of Economics 112, pp. 1203-1250:

The history of Ghana provides an illustrative example of... ethnic conflict over economic rents.... Ghana's main export crop is cocoa, production of which is concentrated in the region of the Ashanti group who make up 13 percent of the population. The Ashanti Empire was odminant in precolonial times, to the resentment of other groups such as the... Akan.... Beginning with the runup to independence in the 1950s, cocoa... a bone of interethnic contention... Kwame Nkrumah... split off from the traditional Ashanti-based independence party. He pushed a bill through the colonial legislature in 1954 to freeze the producer price of cocoa... Ashanti-based opposition party to Nkrumah... failed. Nkrumah continued to tax cocoa heavily--through the Cocoa Marketing Board and through the growing overvaluation of the official exchange rate.

Posted by DeLong at April 15, 2003 04:37 PM | TrackBack

Comments

http://fareedzakaria.com/articles/newsweek/042103.html

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When Michael Camdessus, former head of the IMF, is asked why Botswana, a diamond-rich African country, has done well, while most diamond states have not, his answer is, "Three words: three honest men." Botswana has had three honest and competent presidents.

Posted by: kenny on April 15, 2003 06:51 PM

Fareed Zakaria makes a number of points that had also occurred to me:

http://reti.blogspot.com/2003_04_06_reti_archive.html#92445832
and
http://reti.blogspot.com/2003_04_13_reti_archive.html#92613803

The fact that both of us should have thought of many of the same difficulties, and even possible solutions, at about the same time is striking, especially as I hadn't read him and he definitely can't have known I exist, much less have read what I wrote. This tells me that there's something currently in the air ...

Camdessus may indeed be right about Botswana, but something tells me that there's more to the story than "three honest men." Nothing corrupts like power, so there's no guarantee that an honest man will stay honest once he's in office. Besides, getting three honest rulers in succession in Africa is quite a feat indeed - most African states haven't been able to put a single one into power throughout their histories as independent nations.

I think a much more telling statistic can be found here:

http://www.cia.gov/cia/publications/factbook/geos/bc.html
or
http://www.lib.unimelb.edu.au/culturaldiversity/botswana.htm

It seems that the overwhelming majority (79% to 94%) of Botswana's people share the same ethnic origin. This is something of a rarity in African states, and goes a long way to explaining why honest rulers have STAYED honest in this case: there's more of a sense of nation to which one can feel some sort of loyalty.

Posted by: Abiola Lapite on April 15, 2003 08:29 PM

It may be worth mentioning (as I'm sure someone with a name like "Abiola" knows), that Cocoa is also grown in the Yoruba regions of Nigeria. The other Adam Smith wrote some amusing stuff about the implications for Cocoa during that Biafra business.

Posted by: P.M.Lawrence on April 15, 2003 09:10 PM

Yes, cocoa USED to be grown in the western region, but one of the baneful legacies of the oil shocks of the 1970s and early 1980s was the virtual elimination of the agricultural sector in the Nigerian economy - Dutch Disease (overvalued currency rendering exports uncompetitive), and the overwhelming allure of oil money as compared to agriculture.

Posted by: Abiola Lapite on April 15, 2003 11:16 PM

Slightly off-topic, http://www.unhcr.ch/cgi-bin/texis/vtx/home/+DwwBmRLeg9mwwwwrwwwwwwwhFqnN0bItFqnDni5AFqnN0bIDzmxwwwwwww/opendoc.html

The work done by this person in Africa reminded me of another Italian, Dr. Carlo Urbani of WHO, who recently died of SARS.

Posted by: Mooraq on April 16, 2003 05:58 AM

Many...don't have access...article, but......summary rather.... disjointed quotes ...easier.. understand..particularly if the reader...agree with...More work for you, less for us.

Posted by: alan on April 16, 2003 10:29 AM

Many...don't have access...article, but......summary rather.... disjointed quotes ...easier.. understand..particularly if the reader...agree with...More work for you, less for us.

Posted by: alan on April 16, 2003 10:31 AM

Alan, Alan, Alan

Thanks. I have no idea what the article is about, and the summary....summary is beyond my ken. What gives?

Posted by: lise on April 16, 2003 11:24 AM

Dear Brad,

African development essays are too important for such an "awful" summary. We can gain no idea of what the thesis is other than a couple of comfy apart and aloof academics finding this or that wrong with Ghana with no context. what is the point. Bah....

Also, since Botswana is often and rightfully praised for openness and development, why not stress how dire the HIV/AIDS epidemic is in Botswana? Imagine a wonderful country in which 1 of 3 adults between 15 and 50 are HIV/AIDS sufferers. Imagine. Are we too afraid to mention it? Why? Why?

Posted by: anne on April 16, 2003 11:36 AM

1,592,000 total population of Botswana.
775,000 population of adults 15 to 49.

280,000 adults HIV/AIDS positive.
35.80% adult rate of infection.
53.6% of infected adults are women 15 to 49.
32.55 - 36.07% range of women 15 to 24
infected.
10,000 children 0 to 14.

24,000 AIDS deaths in 1999.
66,000 AIDS orphans cumulatively to 1999.

UNAIDS

Posted by: anne on April 16, 2003 11:52 AM

http://www.nytimes.com/2003/04/11/international/africa/11LAGO.html

April 11, 2003

Oil, Oil Everywhere, Except at the Gas Pumps
By SOMINI SENGUPTA

LAGOS, Nigeria — In the hottest month of the year, just days from the bare-knuckle brawl known here as elections, Africa's most populous city, the commercial hub of the world's sixth-largest oil producer, faces a gasoline shortage.

Even when the pumps run properly, this city of 13 million people seems on the verge of boiling over. But the long lines for gas bleeding into traffic lanes have achieved the unimaginable: the city's infamous "go slows," which routinely turn office commutes into two-hour diesel-choked ordeals, have grown even worse. It is the same all over the country, and the lines are as unpredictable as they are annoying. Some days, when a tanker comes into town, the gas lines are short and sweet; some days, there are no lines, because there is no gas. On others, bus drivers, cabbies and otherwise luckless Nigerians who cannot afford to pay someone else to do it find themselves waiting for hours, sometimes for up to two sweaty, bug-bitten days and nights, to buy gas.

"It's the Nigerian situation," lamented Femi Shokunbi, 32, an insurance underwriter who had slipped out of the office one afternoon to wait in his Toyota Corolla in an immobile line under an unforgiving midday sun. "Lots of excuses have been given. But we are not sure." ...

Posted by: bill on April 16, 2003 12:32 PM

Theodore Dalrymple has some observations from his years in Africa at:

http://www.city-journal.org/html/13_2_oh_to_be.html

---------quote----------

Throughout West Africa, millions of African peasants under British rule set up small plantations for crops such as palm oil and cocoa. (Since cocoa trees mature only after five years, this is another instance of the African peasant’s ability both to think ahead and delay gratification by investment, despite great poverty.) Then the British colonial governments had the idea, benignly intended, of protecting the peasant growers from the fluctuations of the marketplace. They set up a stabilization fund, under the direction of a marketing board. In good years, the marketing board would withhold from the peasants some of the money their crops produced; in bad years, it would use the money earned in the good years to increase their incomes. With stable incomes, they could plan ahead.

Of course, for the system to work, the marketing boards would have to have monopoly purchasing powers. And it takes little imagination to see how such marketing boards would tempt an aspiring despot with grandiose ideas such as Dr. Nkrumah: he could use them in effect to tax Ghana’s producers in order to fund his insane projects and to subsidize the urban population that was the source of his power, as well as to amass a personal fortune. A continent away, in Tanzania, Nyerere used precisely the same means to expropriate the peasant coffee growers: in the end causing them to pull up their coffee bushes and plant a little corn instead, which at least they could eat, to the great and further impoverishment of the country.

The idea behind the marketing boards was a paternalist colonial one: that peasant farmers were too simple to cope with fluctuating prices and that the colonial philosopher-kings had therefore to protect them from such fluctuations—this despite the fact that it was the simple peasants who grew the commodities in the first place.

After several years in Africa, I concluded that the colonial enterprise had been fundamentally wrong and mistaken, even when, as was often the case in its final stages, it was benevolently intended. The good it did was ephemeral; the harm, lasting. The powerful can change the powerless, it is true; but not in any way they choose. The unpredictability of humans is the revenge of the powerless. What emerges politically from the colonial enterprise is often something worse, or at least more vicious because better equipped, than what existed before. Good intentions are certainly no guarantee of good results.
-------endquote------

Posted by: Patrick R. Sullivan on April 16, 2003 02:17 PM

This is a wrong comparison of cocoa growing approaches in Africa. This leaves out some of the range of possibilities. Cocoa growing actually got started under a different lot of paternalists - the great Quaker cocoa families, Cadbury, Fry and Rowntree, who wanted to crowd out the slave trade, and in part succeeded.

So paternalism didn't crowd out peasant wisdom; the only peasant wisdom in this context had accrued under an era of private enterprise paternalism. Neither of the two poles presented above were the historical ones.

(Oh, for Abiola - I was last in Nigeria in 1970.)

Posted by: P.M.Lawrence on April 16, 2003 04:38 PM

Patrick, thats a very fime last para in that quote from Theodore Dalrymple. But I wonder if you've thought to apply it to Iraq?

Posted by: derrida derider on April 17, 2003 04:30 AM

derrida derider, sure I've said many times that the Middle East problem is leftover business from WWI.

Posted by: Patrick R. Sullivan on April 17, 2003 11:37 AM

In case anyone is still following this particular debate (though I doubt it), I've found a link to an online copy of the Easterly-Levine paper here, on William Easterly's home page:

http://www.cgdev.org/wp/cgd_wp026.pdf

As it turns out, the main thrust of the paper is actually rather different than one might expect, given Brad's summary. The main point is that - wait for it - ethnic diversity is negatively correlated with economic growth! This ties in neatly with my observation about Botswana, so it MUST be true ...

On a more serious note, what is interesting about the paper is that it backs up what is a commonplace insight amongst Africans with some actual data.

Posted by: Abiola Lapite on April 19, 2003 02:37 AM
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