Is China Doomed to Fail in Africa?

This is from Wilson VornDick, a commander in the U.S. Navy Reserve, writing in the National Interest: 

It is unclear whether China could handle the financial repercussions of a larger, more systemic default or debt-forgiveness program across the African continent. Seeking relief, debtors to China would likely overwhelm existing mechanisms, like international arbitration, or China-backed forums such as the Export-Import Bank of China , China Development Bank , and Asian Infrastructure Investment Bank . More importantly, debt restructuring, recoupment, and, in the more extreme case, seizure may not be viable, reasonable, or sustainable for Chinese interests or presence continent-wide. Just such a dire economic scenario might push China to use its nascent military force to protect or even seize its interests. Looking back at the previous period of Great Power Competition more than a century ago, leveraging military might to force repayment was commonplace. The U.S. military made multiple incursions into Caribbean and South American nations as did the Western powers in Africa and Asia.

It is reasonable to assume that China would have little or no experience in any dire economic contagion across Africa. The one primary example, the take-over of Hambantota Port, was an isolated incident during calmer times, before the financial uncertainty stoked by a slowing global economy or the current U.S.-China trade war. Moreover, the port takeover has now become a watershed moment in Chinese behavior that has attracted significant international scrutiny and ire.

More broadly, VornDick articulates the potential merits (from a U.S. standpoint) of a “Let China Fail in Africa” strategy as part of Washington’s Great Power global competition with Beijing. The whole argument is worth a read.

A glaring omission in VornDick’s analysis, however, is the interests and roles of Africans in this whole game (note that this is a gap in the “China-in-Africa” genre more generally).

chinafricaA key weakness that I see in the “Let China Fail in Africa” strategy is that it vastly underestimates the extent to which Africans will be willing to work hand in hand with China to make the Sino-African relationship work.

China’s forays in Africa is creating complex tapestries of personal and institutional relationships that will become ever harder to undo. For example, in both electoral democracies and autocracies in the region, citizens have come to expect political elites to provide public goods — many of them financed and built by China. Demands for more of the same will likely only get stronger. The desire to secure funding for more public goods will likely push African elites even closer to Beijing. Furthermore, at a time when the U.S. is working hard to signal that Africans are not welcome on its shores, tens of thousands of African students are earning degrees in Chinese universities. Many of these students will probably go back to their respective countries and maintain ties with Chinese business and academic contacts. These kinds of investments in soft power will matter in the long run.

Global diplomacy is not just about crass material interests. It is also about values and shared commitments to respectful mutual cooperation. If African elites become convinced that they are better off bandwagoning with China, they will do so.

And most importantly, having made that choice, they will make specific investments (whether deliberately or not) to make their nations ever more closely allied with China. They will adopt specific technologies. Establish specific market relationships. Acquire specific weapons systems. And yes, more of their students will learn Chinese and go on to earn degrees in China. The closer the military, economic and “soft” ties, the more African elites will be willing to make costly investments in order to ensure that their respective states’ relationships with China work.

A good lesson in this regard is francafrique. The relationship between France and its former colonies in Africa is not winning any awards soon. But for almost six decades African elites have remained committed to the relationship and worked to give the French military free rein in the region and French firms access to vast natural resources. The French state, in turn, has worked to prop up the same elites despite massive economic and political failings.

The point is: China’s failure in Africa (if it comes to pass) is not what will determine the future of Sino-African relations. What happens before any such failure will likely matter more.

Here’s why African states value their economic and political ties with China

This is from an excellent essay by  in Foreign Policy:

…. when former U.S. Secretary of State Rex Tillerson raised a cautionary alarm for Africans to be wary of Chinese predatory investments just a few months ago, his lecturing tone did not go over well. Many African leaders reacted negatively to the underlying assumption that they were not qualified to figure out profitable from predatory investments on their own.

Sierra Leonean President Julius Maada Bio rebuked the warning as misguided, saying, “We are not fools in Africa. … At difficult times, when we needed help most, China was there for us.”

The expansion of Confucius Institutes across Africa is another part of the push worth engaging with. With more than 50 Confucius Institutes teaching Chinese language, as well as the Communist Party’s version of Chinese history and culture, more and more Africans have the chance to study Chinese and travel to China on cultural scholarships. In 2015, approximately 50,000 African students attended Chinese universities, compared with 40,000 in the United States and the United Kingdom. Elementary and middle schools in several African countries are now offering Mandarin as a foreign language.

I highly recommend that you read the whole thing.

H/T Judd Devermont

Are Metros Overrated?

This is from a story in The Guardian:

The ITDP bemoans Africa’s obsession with metros. Lagos in Nigeria – the largest city in the world without a functioning mass transit system – has been trying to build a metro since the 1980s. In the latest of many incarnations, the project was supposed to begin operations in 2012 at a cost of $2.4bn (£1.9bn). Six years after the supposed start date, construction is “nowhere near complete”, says Kost.

Abidjan, the economic capital of Ivory Coast, began construction of a metro last year. The French-financed and -built line is projected to carry 500,000 passengers a day at a cost of $1.7bn. Dar es Salaam’s bus system, by contrast, has capacity for 400,000 people and cost less than a 10th of that – about $150m.

Addis Ababa in Ethiopia opened a Chinese-built and -operated light rail line last year at a cost of $475m. Shenzhen Metro Group has a deal to run it for the first five years.screen shot 2019-01-09 at 4.03.54 pm“With a metro, an international firm will often just parachute in its own system,” says Kost. “Bus rapid transit allows existing stakeholders to get involved. That’s what we did in Dar es Salaam and what we’re planning in Nairobi, where the bus bodies will be built in the city and local operators will look after tickets, fare collection and IT. It’s good for the development of the local economy.”

Regular readers know that I have a bias for Kost’s argument. Read the whole thing here.

H/T Dina Pomeranz.

How can African governments increase their bargaining power vis-a-vis China?

Folashade Soule has answers.

First, a reminder that African governments are not uniformly bad at negotiating with China:

….when you look closely at what happens on the ground, some African countries are much better at negotiating with the Chinese than others. Railway projects in East Africa appear to be a good example. In Kenya, the Standard Gauge Railway is the largest infrastructure project since independence from Britain in 1963. China Eximbank provided most of the finance for the first phase – 472 kilometres of track between Nairobi and Mombasa – at a cost of US$3.2 billion.

In neighbouring Ethiopia, an electric train line from Addis Ababa to Djibouti, which is also Chinese-financed, opened two years ago. The cost for this more expensive type of railway was US$3.4 billion – for 756 kilometres. Kenya claims that its railway cost more for reasons like the terrain and the need to carry higher volumes of cargo. At the same time, however, many believe other issues to have been at play – including failures around the negotiation process.

Second, there are Soule’s suggested remedies:

Involve everyone: When all relevant government departments are involved in a negotiation, it does take longer. The process is more coherent, however, and the resulting project is less likely to breach national regulations.

Empower negotiators: The Chinese often adopt a take-it-or-leave-it approach. In many cases, Africans are not confrontational enough in return. They don’t appreciate that China has a surplus of domestically produced materials they are seeking to offload, for example. Wiser negotiators will play China off against other countries seeking to finance infrastructure projects on the continent, such as South Korea or the United Arab Emirates.

Keep the public onside: China tends to be popular in Africa – more so than the US in around 60% of countries on the continent. Yet the public also see negatives: many think Chinese products are poor quality, while there is a growing perception that dealing with China tends to favour Chinese labourers.

Increase knowledge: African governments are still relatively new to dealing with China; they should take every opportunity to share lessons with one another. There is a role for African universities here. They should set up more centres of Asian studies to close the gap in information and knowledge.

I fully agree.

While it is true that China has geopolitical ambitions in Africa, a lot of Chinese infrastructure plays in Africa are commercial in nature. It is in China’s interest that these projects succeed. That means that African governments could get better deals (in terms of value for money) by doing their homework (on Chinese politics and commercial and institutional architectures) before chasing the money. Similarly, public opinion presents a potential bargaining chip — (the threats of ) transparency and robust public participation should force Beijing’s hand in settling for better deals (from the perspective of African governments). 

All this, of course, is predicated on the assumption that African elites get loans from China to finance infrastructure projects; as opposed to dreaming up projects in order to get loans that then find their way into private bank accounts. 

Read the whole thing here.

H/T Zainab Usman.

Claims About “Good” Institutions

This is from Yuen Yuen Ang’s excellent book on How China Escaped the Poverty Trap:

When foreign experts enter developing contexts and insist that there is one standard of good institutions — namely, that found in wealthy societies — this by itself imposes a lethal impediment against localized adaptation. Imagine “good governance” in medieval European communes being measured according to how closely they approximated institutions in the future. Then imagine foreign consultants dispensing praise and conditional aid to these European communes based on how well they score in good governance alongside contemporary countries; such an index would be titled “Worldwide and Timeless Governance Indicators” (WTGI). Further imagine medieval commune leaders and merchants being herded into classrooms to be taught about the technicalities of replicating institutions from the future in their current communities. Could this be an environment that empowers medieval actors to improvise fitting solutions for the needs of their time?

Highly recommended.

What exactly is China up to in Africa?

Leading Afro-Chinese relations scholar Deborah Brautigam has a great piece over at the Washington Post:

On Chinese imported labor in Africa:

Surveys of employment on Chinese projects in Africa repeatedly find that three-quarters or more of the workers are, in fact, local. This makes business sense. In China, textile workers now earn about $500 a month — far more than workers in most African countries. Chinese investors flocking to set up factories in low-cost countries like Ethiopia are not thinking about importing Chinese workers. Like U.S. and European factory owners who moved their factories to China in past decades, Chinese firms are now outsourcing their own manufacturing to cheaper countries.

On Chinese loans to African states:

… In Africa, we found that China had lent at least $95.5 billion between 2000 and 2015. That’s a lot of debt. Yet by and large, the Chinese loans in our database were performing a useful service: financing Africa’s serious infrastructure gap. On a continent where over 600 million Africans have no access to electricity, 40 percent of the Chinese loans paid for power generation and transmission. Another 30 percent went to modernizing Africa’s crumbling transport infrastructure.

On alleged Chinese land grabs:

… the total amount of land actually acquired by Chinese firms was only about 240,000 hectares: 4 percent of the reported amount.

I like to remind my students of the qualitative difference of the “Chinese model” of resource exploitation in Africa.

Previously, Exxon, Elf and other Western resource sector firms would pay African leaders in cash, most of which wound up in Swiss banks, property in southern France, and various tax havens outside the Continent. This was, if you will, the “Western model” of resource exploitation in Africa.

afrobarometerEnter the Chinese. Their model is to pay for resources both in cash and in kind. African leaders still get cash that they can stash abroad. But they also get roads, railways, stadia, hospitals, water works, among other infrastructure investments. And more recently Chinese firms have begun to invest in actual factories — most notably in Ethiopia. It is no wonder that a majority of Africans have a favorable view of China (see image).

Some of these projects produced sub-standard structures (in the recent past the quality has gone up). And the level of indebtedness of African states as a result should concern every sane person. But this arrangement is orders of magnitude better than useless capacity building workshops and janus-faced democracy promotion on the back of rapacious pillaging with little public investments to show for it.

Finally, the inability of African states to negotiate reasonable deals with Beijing is on African political and economic elites. The Chinese have every right to rationally push for the best deals they can get. And if they are smart, they will also work to avoid future defaults by not overstepping their bounds.

To paraphrase a Mozambican diplomat at a recent event here on campus, Africans are too smart to allow themselves to be recolonized by the Chinese.

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.

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.

More Anglophone African Students are Joining Universities in China than the U.S.

This is from Rogue Chiefs:

chinauni.pngTHE surge in the number of African students in China is remarkable. In less than 15 years the African student body has grown 26-fold – from just under 2,000 in 2003 to almost 50,000 in 2015.

According to the UNESCO Institute for Statistics, the US and UK host around 40,000 African students a year. China surpassed this number in 2014, making it the second most popular destination for African students studying abroad, after France which hosts just over 95,000 students.

And it looks like soon Africans will comprise the biggest proportion of foreign students in China:

Chinese universities are filled with international students from around the world, including Asia, the Americas, Europe and Oceania. The proportion of Asian international students still dwarfs the number of Africans, who make up 13% of the student body. But this number, which is up from 2% in 2003, is growing every year, and much faster than other regions. Proportionally more African students are coming to China each year than students from anywhere else in the world.

Also, African students in China are mostly studying mandarin and engineering:

Based on several surveys, most students tend to be enrolled in Chinese-language courses or engineering degrees. The preference for engineering may be due to the fact that many engineering programmes offered by Chinese universities for international students are taught in English.

And they are more likely than their counterparts in the West to go back home after finishing their studies.

Due to Chinese visa rules, most international students cannot stay in China after their education is complete. This prevents brain-drain and means that China is educating a generation of African students who – unlike their counterparts in France, the US or UK – are more likely to return home and bring their new education and skills with them.

Perhaps the much-discussed skills transfer (or lack thereof) from China to African states will take place at Chinese universities instead of construction sites on the Continent.

The recent decline in the number of foreign students applying to U.S. colleges and universities will no doubt reinforce China’s future soft power advantage over the U.S. in Africa.

What does this mean for research in Africa? According to The Times Higher Education:

chinauni2.pngChina’s investment in Africa is having a positive impact on research, citing China’s African Talents programme. Running from 2012 to 2015, the programme trained 30,000 Africans in various sectors and also funded research equipment and paid for Africans to undertake postdoctoral research in China.

…. the 20+20 higher education collaboration between China and Africa as a key development in recent years. Launched in 2009, the initiative links 20 universities in Africa with counterparts in China.

And oh, the Indian government is also interested in meeting the demand for higher education in Africa.

In December 2015, Indian prime minister Narendra Modi also announced that the country would offer 50,000 scholarships for Africans over the next five years.

Notice that all this is only partially a result of official Chinese (or Indian) policy. The fact of the matter is that the demand for higher education in Africa has risen at a dizzying pace over the last decade (thanks to increased enrollments since 2000). To the extent that there aren’t enough universities on the Continent to absorb these students, they will invariably keep looking elsewhere.

According to the Economist: 

Opening new public institutions to meet growing demand has not been problem-free, either. In 2000 Ethiopia had two public universities; by 2015 it had 29. “These are not universities, they’re shells,” says Paul O’Keefe, a researcher who has interviewed many Ethiopian academics, and heard stories of overcrowded classrooms, lecturers who have nothing more than undergraduate degrees themselves and government spies on campus.

In those countries where higher education was liberalised after the cold war, private universities and colleges, often religious, have sprung up. Between 1990 and 2007 their number soared from 24 to more than 460 (the number of public universities meanwhile doubled to 200).

And on a completely random note, the black line on the graph above may explain the otherwise inexplicable persistence of the CFA zone in francophone Africa.

Is China ready for state-building duties?

This is from the Journal, reporting on the recent deaths of Chinese peacekeepers in South Sudan:

Inside China’s government, differences have emerged about how to use the military overseas, said people familiar with the discussions. The prevailing view in the foreign ministry, they said, is that China should rapidly expand peacekeeping activities to show global leadership, as Mr. Xi demands.

Many military commanders, they said, by contrast want to move more slowly, conscious of their troops’ lack of experience and sensitive to domestic and international criticism.

China’s foreign ministry declined to comment. A senior defense official denied there were differences within the government.

The tragedy speaks to a pillar of Mr. Xi’s political agenda. Last year, he pledged to build an 8,000-strong standby peacekeeping force, adding to 2,600 Chinese deployed today. China is the second-biggest funder of U.N. peacekeeping after the U.S. and the biggest troop provider of the five permanent Security Council members. U.N. insiders said China is lobbying for one of its officials to head the U.N. peacekeeping office next year.

This is the all-important paragraph:

One of Mr. Xi’s goals is to protect the nation’s expanding global interests and citizens abroad. China’s leaders were “stunned” by the deaths in Juba, said one senior Western diplomat involved in discussions with China on South Sudan. “They’re fast realizing you cannot be a commercial giant without being an imperial power in some way.”

If China follows through on Xi’s dreams, will Chinese interventions and state-building efforts be any different than what the EU and the US are already doing? Does China really believe that an 8,000 strong standby force will be enough (even just for South Sudan)?

Also, this anecdote suggests that China will need to build a robust pension system before it can deploy large numbers of troops in dangerous hotspots abroad:

The cohort comprises mostly children raised under China’s one-child policy, so fatalities are likely to leave parents with no one to support them in old age.

The potential impact of a Chinese slowdown on Africa’s economies

The FT reports:

For Africa’s non-oil exporters, the collapse in crude prices has provided a cushion. But, with many African countries import-dependent, the depreciation of currencies affects inflation and the cost of imports. It will also put a strain on those nations that have taken advantage of investors’ search for yields to tap into international capital markets.

The likes of Zambia, Ethiopia, Rwanda, Kenya, Ghana, Senegal, and Ivory Coast have all issued foreign currency dominated sovereign bonds in recent years. “In the past, foreign exchange weakness in Africa was largely shrugged off. Economies adapted and found a way to cope with it, but the recent surge in eurobond issuance has been a game-changer,” says Razia Khan, chief economist for Africa at Standard Chartered.

“Now, when currencies depreciate, external risks are magnified, public debt ratios rise, and perceptions of sovereign creditworthiness alter quite dramatically.”

Prof. Deborah Brautigam of SAIS sees the following happening:

  • Prices for African commodities will worsen, then improve. In recent years, China’s slower growth has pushed down prices for gold, crude oil, copper, platinum and iron ore. South Africa’s mining sector was expected to lose over 10,000 jobs due to lower demand
  • Africa will import even more from China. Cheaper Chinese exports will please African consumers while putting Africa’s manufacturers at a further disadvantage. There will be more pressure for tariff protections
  • [L]ow wages in Ethiopia and elsewhere had been attracting significant factory investment from China. With costs now relatively lower in China, the push to relocate factories overseas will slow. This will save Chinese jobs, but postpones Africa’s own structural transformation.

And concludes that:

In the short term it is hard to see how this devaluation can help Africa, notably its productive and export sectors.

The thing to note is that different African countries have different kinds of exposure to China. The commodity exporters (both petroleum and metals) will be hit hard. The effects will be somewhat attenuated in countries exposed primarily through Chinese FDI and infrastructure loans. Domestic fiscal reorganization and resources from the AfDB and other partners should plug a fair bit of the hole left by declining Chinese investments (although certainly nowhere near all of it). And with regard to sovereign debt, a Chinese downturn might persuade the US Central Bank to delay its planned rate hike — which would be good for African currencies and keep the cost of borrowing low.

Lastly, for geopolitical reasons I don’t see China rapidly reducing its footprint on the Continent. In any case, as Howard French makes clear in his latest book, there is a fair bit of (unofficial) private Chinese investment in Africa. Turmoil back home may incentivize these entrepreneurs to plant even deeper roots in Africa and expatriate less of their profits. The net result will be slower growth in Africa. And like in China, slower growth will challenge prevailing political bargains in democracies and autocracies alike.

Kenya’s Milk Consumption is the Highest in the Developing World

Last year the French company Danone (maker of Activia yogurt) bought a 40% stake in the Kenyan dairy firm Brookside, a sign of the growing importance of the dairy market in the wider eastern Africa region. But the story doesn’t end with the big household names. Smallholder farmers are also getting a piece of the dairy bonanza in Kenya:

[youtube.com/watch?v=AmlwgKeOiEA]

HT Sarora Dairies

On a related note, here is how a company in China is helping industrialize the country’s dairy sector:

A milk scandal erupted in China in 2008 when the industrial chemical melamine was found in dairy products nationwide. While many Chinese dairy companies faced huge losses or bankruptcy as a result, one small firm, Dairy United, accelerated its development. Dairy United is one of the fastest-growing and most innovative Chinese dairy producers, one that features an unusual organizational structure and business model. Unlike most corporate and cooperative dairies that purchase cows on the market, Dairy United leases dairy cows from local farmers, giving it access to its primary asset without a large up-front investment, and letting the firm grow its dairy herds with newborn heifers. In return, farmers receive fixed payments biannually, but relinquish control rights and residual claims to the firm. Thus, Dairy United’s leasing is helping transform Chinese milk production from a backyard, labor-intensive activity to a more industrialized mode of farming. The case is particularly interesting for understanding applications of agency theory in agribusiness.

That is according to a new paper in the American Journal of Agricultural Economics (which I hope chaps at the Ministry of Agriculture in Nairobi subscribe to).

quick hits

1. Our Man in Africa: A great article on former president of Chad Hissene Habre. Also, is current Chadian president Idris Deby a clandestine state-builder in the Sahel or is all this just empty waste of oil money? Whatever the answer, I think the Chadian state might have reached a point where it can’t be threatened by a bunch of bandits on technicals.

2. On the hunt for human uniqueness: If you dropped a dozen human toddlers on a beautiful Polynesian island with shelter and enough to eat, but no computers, no cell phones, and no metal tools, would they grow up to be like humans we recognize or like other primates? Would they invent language? Without the magic sauce of culture and technology, would humans be that different from chimpanzees? More here.

3. Will e-cigarettes re-normalize smoking? E-cigarettes are already allowed in jails where traditional cigarettes are banned.

4. The Unruled World: Global disorder is here to stay, so the challenge is to make it work as well as possible.

5. and How China is ruled.

China in Kenya

Increasing Chinese soft power in Africa is real.

China in Kenya

I have been spending a lot of time in government offices and libraries in Nairobi lately. One thing that struck me this morning is that China Daily now publishes an Africa Weekly magazine and that government offices in Nairobi actually subscribe to it. They do not subscribe to the IHT.

Where do the poor live, and how do we make them become middle class?

The Economist reports:

“WHERE do the world’s poor live? The obvious answer: in poor countries. But in a recent series of articles Andy Sumner of Britain’s Institute of Development Studies showed that the obvious answer is wrong. Four-fifths of those surviving on less than $2 a day, he found, live in middle-income countries with a gross national income per head of between $1,000 and $12,500, not poor ones. His finding reflects the fact that a long but inequitable period of economic growth has lifted many developing countries into middle-income status but left a minority of their populations mired in poverty. Since the countries involved include giants like China and India, even a minority amounts to a very large number of people. That matters because middle-income countries can afford to help their own poor.”

The article raises important issues that inform the debate on how to tackle problems of poverty and underdevelopment – is it all about politics & governance or all about economic expansion? The answer, of course is that it is a moderate mix of both.

But since political realities often force governments to concentrate on one or the other, a responsible answer is that it is all context-dependent; some places need strong economic expansion first, before political reforms can be anchored in society. In others, political change should be top of the checklist.

The Botswanas and Singapores of this world are lucky in that their leaders were smart enough to know what their countries needed and pursued it with singular ambition, despite the unavoidable mess that came with the choices they made.

This of course goes against the received wisdom among academics (me included) who believe in the strong power of the right types of (liberal, in the classical sense) institutions to put countries on the path to becoming Denmark. The problem with this approach is that it does not tell us how to compress the more than 600 years that transpired between the Magna Carta and the voting reform legislations in England in the latter part of the 19th century. Lest we forget, England (which is every scholar’s favorite source of empirical conceptualization of institutional development) has not always had good institutions.

Institutions take a lot of time to build. A lot more time than the average human life span.

So the question still stands: How do we get the most number of people out of poverty in the least amount of time with the least harm to their political and human rights?

More on this here.