The role of elites in development (Danish Edition)

Kenya’s founding president, Jomo Kenyatta, often reminded Kenyan elites of their roles as living examples of material “development” to the peasantry. Contra Oginga Odinga — who wanted to empower the masses through land redistribution, Kenyatta believed that an elite-driven developmental agenda was the quickest way to end the scourges of poverty, illiteracy, and disease in Kenya (yes, he had very selfish reasons for holding this belief. But that is beside the point).

Turns out he was onto something.

This is from a paper by Jensen et al. on the dairy industry in Denmark:

We explore the role of elites for development and in particular for the spread of cooperative creameries in Denmark in the 1880s, which was a major factor behind that country’s rapid economic catch-up. We demonstrate empirically that the location of early proto-modern dairies, so-called hollænderier, introduced onto traditional landed estates as part of the Holstein System of agriculture by landowning elites from the Duchies of Schleswig and Holstein in the eighteenth century, can explain the location of cooperative creameries in 1890, more than a century later, after controlling for other relevant determinants. We interpret this as evidence that areas close to estates which adopted the Holstein System witnessed a gradual spread of modern ideas from the estates to the peasantry. Moreover, we identify a causal relationship by utilizing the nature of the spread of the Holstein System around Denmark, and the distance to the first estate to introduce it, Sofiendal. These results are supported by evidence from a wealth of contemporary sources and are robust to a variety of alternative specifications.

We thus demonstrate econometrically that the pattern of adoption of cooperative creameries in Denmark followed the introduction of proto-modern dairies by agricultural elites on estate farms. In the Duchies of Schleswig and Holstein, ruled by the King of Denmark in personal union until 1864 when they were lost to Prussia, an intensified crop rotation system with an important dairy component was developed on the large manorial estates known as Koppelwirtschaft in German, or kobbelbrug in Danish. It became the dominant field system in the Duchies in the 1700s, and included unprecedentedly large herds of milch cows and the invention of an innovative new centralized system of butter production, the hollænderi, with unparalleled standards of hygiene and equipment (Porskrog Rasmussen 2010a). These innovations – collectively known as the above mentioned ‘Holstein System’ when the crop-rotation was combined with the dairy unit – came relatively late to Denmark, but when they did they gradually transformed Danish agriculture.

Denmark’s current status as an ‘agricultural superpower’ , dominated by massive firms such as Arla (a dairy cooperative) and Danish Crown (a food, especially meat, processing firm previously also a cooperative until 2010), is usually traced back to the aforementioned developments in the 1880s. As we will discuss in more detail below, at this point a new technology, the steam-powered automatic cream separator made it possible to use milk which had been transported over long distances to be processed in a central production facility, and the voluntary associations of Danish peasants, the cooperatives, sprang up to take advantage of this possibility. Thus, modern Denmark emerged based on a democratic, cooperative countryside, providing something of a role model to other agricultural countries around the world.

The whole paper is worth reading, as it provides a rather interesting rebuttal (if I may call it that) to the core ideas about the long-run effects of inequalities in initial endowments in Engerman and Sokoloff (on Latin America) as well as Banerjee and Iyer (on India):

By contrast, we stress that agricultural elites may spread knowledge, which then subsequently aids development in the agricultural sector. In other words, our work suggests that agricultural elites may also be knowledge elites, who facilitate later development. Recent work by Squicciarini and Voigtländer (2016) demonstrates that knowledge elites played a significant role in the industrialization of France by e.g. running businesses themselves or exchanging knowledge with entrepreneurs. Our work emphasizes the importance of knowledge spill-overs and agricultural enlightenment (Mokyr 2009, ch. 9), and shares some similarities with Hornung’s (2014) work on high-skilled immigration of Huguenots into Prussia. He shows that this led to higher productivity in the textile sector and interprets this as evidence of an effect of diffusion of technology. We focus on agricultural elites and their impact on the part of the agricultural sector that led to an economy-wide take-off.

The key difference in Denmark, of course, was that the social conditions permitted easy diffusion of ideas and practices from the knowledge elites to the masses, despite the inequalities in initial endowments. The situation might be different, for ex when race, ethnicity, or caste gets in the way.

Xi’s power grab in China is a big deal

Regularized and predictable change of leadership is perhaps the most important indicator of political development. It doesn’t matter if such changes occur through popular elections (as in electoral democracies), boardroom meetings (in party dictatorships), or through inheritance (as in monarchies). Predictability provides stability and allows for the cultivation of elite consensus over a system of rule. It also provides the background conditions necessary for the rule of law to emerge. A situation in which rules change with rulers is hostile to constitutionalism.

jinpingThis is precisely why life presidencies are sub-optimal. Long tenures eventually convince even the most democratic of leaders that they are above the law. They freeze specific groups of elites out of power. And remove incentives for those in power to be accountable and to innovate.

For a while China seemed to have turned this corner, having imposed term limits on its state presidents. But President Xi Jinping has thrown that consensus out the window with the announcement that he plans to scrap term limits and presumably stay on as president indefinitely. 

This is a big deal. Xi has revealed to us that he is no different than Yoweri Museveni.

Who would have guessed that in the 21st century we would be back to a situation in which the world’s biggest economy has life presidents, and occasionally goes through unpredictable transfers of power? Certainly, the coup risk in China is likely to go up under a life presidency. And the demonstration effect to other autocracies will be huge. Remember that even Vladimir Putin had to engage in questionable institutional jujitsu by allowing his wingman to be president in order not to flout the Russian constitution.

global_tenuremean.pngXi’s China is a reminder of that political development is not uni-directional. It is also a caution against trust that elites’ material interests are a bulwark against would-be personalist dictators. China’s economy is booming (albeit at a slower rate of growth), and continues to mint dollar billionaires. Yet the country’s political and economic elites appear helpless in the face of a single man who is bent on amassing unchecked power (the same happens in democracies with “strong western institutions”, too).

Globally, the annual average of the number of years in office for heads of governments has been on decline since the mid-1980s (see graph). Perhaps we were due for a correction, like happened in the mid-1920s. May be this time we will be lucky enough to avoid the messes that followed in the subsequent two decades (the fact that China appears to be a revisionist world power is not a great sign).

Finally, it is remarkable that even after being around for thousands of years China hasn’t figured a system of stable, regularized transfer of power that lasts for centuries. May be it is the curse of being a big country. Or may be this is just how politics works. It really does put in perspective the achievements of a number of African countries that appear to have consolidated term limits within a few decades of existence.

Labor is (relatively) very expensive in Africa: the case of teachers

This is from Justin Sandefur over at CGD:

Teachers in poor countries earn far more, in relative terms, than teachers in the OECD—and several recent studies suggest their pay isn’t linked to skills or performance. But we also have growing evidence that high-quality teachers generate huge economic returns. The question is how to ensure high pay attracts high quality.

…. This may come as a bit of a surprise to many rich-country readers. There’s no doubt that teachers in, say, India earn much less than teachers in Ireland, but relative to context, they tend to be very well paid. Dividing by per capita GDP is a rough and ready way to put salaries in context. With the help of my research assistant Mallika Snyder, we pulled together teacher salaries from as many countries as possible and ranked them in terms of their ratio to per capita GDP.

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And this is from a World Bank report:

After controlling for a number of factors—such as income per capita, cost of living, firm size, and sector of activity— we see that labor costs in Africa are at least 10 percent higher than they are in East Asia, while South Asia retains its strong comparative advantage over Africa with around 40 percent lower labor costs.

….. in nominal terms, without controlling for any other factors—the South and East Asian regions enjoy a labor cost advantage over Africa of 25 percent and 60 percent, respectively.

The absurdity of Cameroon’s Paul Biya

This is from the organized crime and corruption reporting project (OCCRP):

An investigation supported by the Organized Crime and Corruption Reporting Project (OCCRP) gathered information about the president’s travels from 35 years of editions of the daily government paper, the Cameroon Tribune. They show that, over that time, Biya has spent at least four-and-a-half years [abroad] on his “brief private visits.” This total excludes official trips, which add up to an additional year. In some years, like 2006 and 2009, Biya has spent a third of the year out of the country.

And here is a breakdown of Biya’s destinations over the last three and a half decades. It is almost as if Biya is a colonial governor of Cameroon, a Fanonian caricature.

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How does Biya pay for all this travel (estimated to be at least $185m in total)?

….. According to the International Monetary Fund, more than $300 million of the revenue of Cameroon’s national oil company in 2017 was not accounted for. The president has oversight over the company, whose oil sales, according to a leaked US diplomatic cable published by WikiLeaks, have historically been used as a slush fund.

Needless to say, the fascination with Geneva leaves little time for Biya to actually govern.

When Biya lands in Yaoundé, he also meets his government — at the airport. Formal ministerial councils are organized infrequently, every year or two at the most. But while Biya has used public funds to sustain a bureaucracy of 65 ministers and state secretaries, he mostly governs by decree or through a handful of laws sped through a rubber-stamp parliament.

Biya signs a flurry of acts between each of his trips. For example, in 2017, he signed a dozen laws — the entire legal output for that year – in a couple of days. It took him just three days to sign the entire year’s decrees.

Strong leadership can make a big difference in states with weak bureaucracies. But unfortunately for Cameroon, for 35 years it has been saddled with both an absentee landlord of a president and a barely coherent public service.

An enduring puzzle is why Cameroonian elites haven’t moved to come up with a more economically efficient means of keeping Biya in power and luxury. For instance, they could make him King, and have him sign decrees whenever he likes, but also have a Prime Minister that is responsible to a parliament and accountable to the people. Not that this would magically improve the quality of governance, but at a minimum, would likely introduce coherence within the public service (unless, of course, all of Cameroon’s elites simply want to appropriate public resources and spend their time in Geneva).

A response to this might be that elites in Cameroon are actually fine, constantly scheming and fighting for favor with Biya and access to governance rents.

But this still leaves open the question of why they wouldn’t want a more predictable means of accessing governance rents — that is not subject to the whims of Biya (who shuffles and jails ministers with wanton abandon). In any case, an elite-level collusion outcome — like the one described above — would create opportunities for the expansion of the pie beyond just oil and other natural resource sectors.

All to say that we should probably be spending more time exploring the seeming lack of elite-level political innovation across Africa (and Political Development more generally).

On the Odingas and Kenyattas of Kenya

This is from Jina Moore (who is doing a great job as East Africa bureau chief).

Jaramogi Oginga Odinga, the father of Raila Odinga, negotiated independence with the British. The colonial rulers wanted Mr. Odinga to lead the new Kenya, but Mr. Odinga had other ideas: He demanded Mr. Kenyatta’s freedom — and his appointment as Kenya’s first head of state.

“Kenyatta would not have been released, and he wouldn’t have been made prime minister, if it hadn’t been for Odinga’s backing,” said Daniel Branch, a professor of history at the University of Warwick and an expert on post-colonial Kenyan politics. “The two men always admired each other.”

Willy Mutunga, who was chief justice of the Supreme Court from 2011 to 2016, believes Mr. Odinga was motivated by more than mere admiration. “I think he genuinely believed that the country was going to be better off with somebody who had become a legend,” he said.

And so, in 1964, when Kenya became a republic, Jomo Kenyatta became its president, and Jaramogi Odinga vice-president.

The piece is worth reading. I liked the bits about the Odinga/Kenyatta conflict over land redistribution.

It would be interesting to think of the counterfactual: What if Odinga/Kaggia had won over Kenyatta/Mboya and redistributed all the land? What kind of Kenya would have emerged? Would it have been more stable and prosperous than present day Kenya? Was this a feasible option given the preferences of Whitehall? What would have been the political and human costs?

My (positivist) take is that most people under-estimate the important role that the “willing buyer willing seller” mantra played in facilitating elite-level buy-in into the Kenya Project (state-building and elite-level stability). It’s not just Kenyatta and his co-ethnics that got land. Lots of elites from other communities in the districts got land, too, and a chance to earn rents. For example, as part of his coup-proofing strategy, Kenyatta bought off the officer class in the armed forces (mostly composed of non-co-ethnics) with land. Kenyatta’s cabinets reflected this political economy reality, too. All the major districts had a representative.

On Zuma’s Exit in South Africa

Sisonke Msimang has a nice take over at FP:

Zuma was elected president of the ANC in December 2007 in a bitter and bruising battle against Mbeki, the man who had sacked him just a few years earlier. The following year, the ANC recalled Mbeki, triggering his resignation as president of the country.

Zuma bested his opponent in 2007 by gathering a coalition of the wounded. At the time, there were various factions within the ANC that felt aggrieved by Mbeki’s leadership style and by his economic conservatism. Many on the left within the party believed that in their haste to appease the markets and encourage international investment, the ANC’s leaders had conceded too much terrain to big business in the years following apartheid.

Zuma was known as an affable but flawed man. Union leaders and young radicals opposed to Mbeki — men such as Julius Malema, who was then the head of the ANC’s Youth League, and Zwelinzima Vavi, who headed the Congress of South African Trade Unions at the time — saw the man they were installing as malleable. They hoped Zuma would promote pro-labor and pro-poor policies, so they struck a Faustian bargain. Despite his obvious personal shortcomings, and the significant political liabilities he carried, they agreed to put him in power if he allowed them to run economic policy.

Being an economic conservative, albeit without Mbeki’s professorial demeanor, I am curious to see how President Cyril Ramaphosa will navigate popular demands for a renegotiation of the post-apartheid settlement which he helped midwife. Also, as corruption in South Africa did not begin with Zuma (or the end of apartheid), it will likely not end with his departure. Perhaps the biggest challenge ahead for the ANC will be to temper expectations. If Ramaphosa is seen to be too close to South Africa’s economic elite, it might elicit a populist backlash with dire economic and social consequences for South Africans. 

Here’s is Zuma’s resignation letter.

Interesting claims by Noam Chomsky regarding “Third World” intellectuals

A friend of the blog responded with this in an email:

This is an interesting take on the insularity of French intellectualism and French cultural ideology. Would like to hear more about this.
But after speaking about European intellectualism with such specificity, its unfortunate how he then goes and paints “Third World” intellectualism with such a broad stroke. His generalizations of “Third World” intellectualism follow some well worn paths of Europeans bemoaning the “mimicry” of European culture by citizens of the colonial/post-colonial world. He also seems to be saying that people of the “Third World” can’t be afforded the luxury to be  foucauldians or comparative literary scholars because they need to take up The Struggle!
After all, Edward Said was a comparative literary scholar. His work has mattered pretty profoundly.

Kenya: Flower Garden of the World

This is from CNN:

If you were the lucky recipient of a bunch of fragrant roses this Valentine’s Day, it’s likely that they came from Kenya.

The country is the third largest exporter of cut flowers in the world, accounting for around 35% of all sales in the European Union. Famed for being long-lasting, Kenya’s roses, carnations and summer flowers are also popular in Russia and the U.S. where last week several growers showcased their blooms at the World Floral Expo in Los Angeles.

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Here is MR:

Patchwork Leviathans? Pockets of Excellence in Otherwise Dysfunctional States

This is from Erin Metz McDonnell:

Within seemingly weak states, exceptionally effective subunits lie hidden. These high- performing niches exhibit organizational characteristics distinct from poor-performing peer organizations, but also distinct from high-functioning organizations in Western countries. This article develops the concept of interstitial bureaucracy to explain how and why unusually high-performing state organizations in developing countries invert canonical features of Weberian bureaucracy. Interstices are distinct-yet-embedded subsystems characterized by practices inconsistent with those of the dominant institution. This interstitial position poses particular challenges and requires unique solutions. Interstices cluster together scarce proto- bureaucratic resources to cultivate durable distinction from the status quo, while managing disruptions arising from interdependencies with the wider neopatrimonial field. I propose a framework for how bureaucratic interstices respond to those challenges, generalizing from organizational comparisons within the Ghanaian state and abbreviated historical comparison cases from the nineteenth-century United States, early-twentieth-century China, mid- twentieth-century Kenya, and early-twenty-first-century Nigeria.

…… Monolithically dysfunctional administrations are the exception, not the rule— albeit the exception that has long captured popular and academic attention (Evans 1989; Helman and Ratner 1992). Instead, many states regarded as uniformly ineffectual have great internal variation, with agencies spanning a continuum from ineffectual quagmires to competently achieving organizational man- dates in the public interest. These state “leviathans” are patch-worked: they are cobbled together from scarce available resources, with organizational diversity sewn loosely together into the semblance of unity. In such states, adapted Weberian-style bureaucracy exists in interstices—niches within predominantly neopatrimonial administrations.

The sociology of state and nation building, and development in general, is underrated.

Read the whole thing here.

Demography and the African future of the French language

This is from the Economist:

Today more people speak French in Kinshasa, capital of the Democratic Republic of Congo, than in Paris. By 2050, thanks to population growth in Africa, some 85% of the world’s French-speakers will live on the continent. Mr Macron has been promoting French on his recent travels to the Gulf, China and, pointedly, Ghana, an English-speaking west African country surrounded by French-speaking ones. Visiting Tunisia, he said he wanted to double the number learning French there by 2020.

I wonder what Ngugi wa Thiong’o makes of these developments.

Here is a possible answer:

La Francophonie “cannot just be an institution for saving the French language; that is not what Francophone countries are worried about,” explains Mr Mabanckou. “Africans don’t need the French language to exist.” He asks how many universities in France teach Francophone African literature, and complains that American students are more likely to study such writers than are French ones. The French literary world clings to a Paris-centric vision, Mr Mabanckou says, too often failing to consider writers from former colonies as part of mainstream literature, as British publishers and universities now do.

Interesting paper on the privatization of the “Rule of Law” in autocratic China

This is from Stanford’s Lizhi Liu and Barry R. Weingast:

We argue in this paper that, China has begun to fashion an alternative approach to establishing legal market infrastructure, which we call, “law, Chinese style.” Facing the authoritarian’s legal dilemma that constrains formal legal development, the central government has effectively off-loaded a substantial part of the development and enforcement of commercial law to private actors, namely, various online trading platforms. This approach allows the central government to cabin the domain of the legal system to private law.

To elucidate this private development of law, we focus on Taobao, China’s largest online trading platform, owned by Alibaba. We demonstrate that, with over 430 million users and more than 10 million vendors, Taobao is not simply an exchange platform, but a complete market that is in the process of developing a modern legal system. The system includes a very complex reputation mechanism, a credit score, a fraud detection program, and even a jury-like system in which ordinary users can vote to adjudicate cases or to change platform rules. With respect to exchange on the platform, this legal system helps creates law, enforce contracts, protect certain property rights, resolve disputes, and prevent fraud. By doing so, Taobao has begun to supply many aspects of market-supporting infrastructure normally associated with the state.

This the kind of paper that might interest folks in Kigali and Addis Ababa. Or Nairobi, these days.

What if China had conquered the world?

Reading Howard French’s fantastic book on how China sees itself in the world got me thinking about this question. Here’s an excerpt from the chapter on Vietnam:

While China failed in its ultimate task of once and for all wiping out Vietnamese culture and along with it any notions of separateness, during its twenty-year occupation (1407-1427) it succeeded to a degree that any of the world’s present-day nation builders could only envy in grafting onto Vietnam a new ruling culture based on neo-Confucianism, intensive agriculture and rigorous and energetic bureaucracy. It was this culture of governance that ironically allowed the Vietnamese state to render its own society much more “legible,” to borrow the language of the Yale Political Scientist James C. Scott, meaning enabling it to administer, police and especially tax its population more thoroughly.

Everything Under the Heavens is a must-read not only for those interested in comparative colonialism, but also for those who want to make sense of how China’s rise this time round might shape world history. It also a great primer on understanding East Asian inter-state relations. Being a journalist, French offers a great balance between extensive research and accessibility to audiences of varying familiarity with the subject matter.

Highly recommended.