ArticlePDF Available

Extractive Versus Weak Institutions in the Development Crisis in Africa: Towards a Humanist Theory of Explanation and Recovery

Authors:

Abstract

Africa is at a threshold of collapse with its developmental strides having grossly lagged behind other developing countries in the world. For instance, per capita GDP in East Asia has essentially grown by over 800% since 1960 and, in some low income countries, per capita GDP has since doubled. The reverse is the case in Sub-Saharan Africa with virtually abysmal per capita GDP growth, if at all, over the same period. Consequent upon this economic stagnation are poverty, very high rates of unemployment and insecurity which have ravaged the continent. Available data shows that while only about 12.5% of the world population is domiciled in Africa, approximately 43% of the world's poor (more than 330 million in 2012) are Africans. The socioeconomic capital deterioration in Sub-Sahara Africa is, indeed, alarmingly worrisome. This persisting and rather enigmatic phenomenon has inevitably begged the following questions: what really is the issue with Africa? Any prospects for the future? Several scholars have given a compte rendu on the root causes of the African developmental puzzle. Scholars like Daron Acemoglu and James Robinson have argued that nations fail basically as a result of 'extractive institutions'. Using the descriptive and analytic methods and, with Nigeria as a case, the paper examines this claim and posits that, beyond extractive institutions, the real problem lies in weak institutions that give judicial imprimatur to issues like corruption and bad governance, which are the basis of extractive institutions. It concludes that the solutions that will successfully recover African states from the verge of collapse and repositioned for sustainable development must be humanist in nature.
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
52
Extractive Versus Weak Institutions in the Development Crisis in
Africa: Towards a Humanist Theory of Explanation and Recovery
Peter Echewija Sule
Department of Philosophy, Federal University Lafia, P.M.B 146, Lafia, Nasarawa State, Nigeria
Abstract
Africa is at a threshold of collapse with its developmental strides having grossly lagged behind other developing
countries in the world. For instance, per capita GDP in East Asia has essentially grown by over 800% since 1960
and, in some low income countries, per capita GDP has since doubled. The reverse is the case in Sub-Saharan
Africa with virtually abysmal per capita GDP growth, if at all, over the same period. Consequent upon this
economic stagnation are poverty, very high rates of unemployment and insecurity which have ravaged the
continent. Available data shows that while only about 12.5% of the world population is domiciled in Africa,
approximately 43% of the world’s poor (more than 330 million in 2012) are Africans. The socio-economic
capital deterioration in Sub-Sahara Africa is, indeed, alarmingly worrisome. This persisting and rather enigmatic
phenomenon has inevitably begged the following questions: what really is the issue with Africa? Any prospects
for the future? Several scholars have given a compte rendu on the root causes of the African developmental
puzzle. Scholars like Daron Acemoglu and James Robinson have argued that nations fail basically as a result of
extractive institutions’. Using the descriptive and analytic methods and, with Nigeria as a case, the paper
examines this claim and posits that, beyond extractive institutions, the real problem lies in weak institutions that
give judicial imprimatur to issues like corruption and bad governance, which are the basis of extractive
institutions. It concludes that the solutions that will successfully recover African states from the verge of collapse
and repositioned for sustainable development must be humanist in nature.
Keywords: Extractive Institution, Weak Institution, Corruption, Underdevelopment, Africa
1. Introduction1
The list of the poorest countries in the world today is dominated by countries in sub-Saharan Africa. If you went
back fifty years, Asian countries like Singapore and South Korea would not be among the richest countries today,
but the lot does not change for Africa, particularly Sub-Saharan African (SSA) countries.2 Why is it that African
countries have remained consistently poor? What went wrong? The developmental crisis in Africa appears to
defy solutions and have shaken the very foundations of postcolonial African states. This phenomenon manifests
in various forms: extreme poverty, wars, terrorism, religious conflicts, food shortages, lack of basic health and
educational services, HIV/AIDS and other deadly diseases, massive unemployment and, above all, escalating
debt.
These facts about Africa and other poor countries led (among other things) to the Millennium
Development Goals (MDGs) aimed at gross reduction of poverty and increased access to education, etc. by 2015.
It is no surprise that none of the SSA countries came close to meeting these targets, particularly on halving
poverty by 2015. Thus we are left with the same, age long question: what is the issue with Africa? What are
those things that have stagnated Africa? These questions have not changed for African intellectuals since post-
colonialism; that is, even scholarship has been held a retrograde by the developmental crisis.
Several scholars have offered a compte rendu on the root causes of the African developmental puzzle.
Acemoglu and Robinson (2012) have argued that nations, particularly African nations, fail basically as a result
of extractive institutions’. This paper is a reaction to the extractive institutions problematic in explicating the
crisis of Africa’s underdevelopment, particularly in Nigeria. It is structured in five parts aside the introduction
and conclusion. The first part examines the dialectics of Africa’s developmental woes, while the second aspect
focuses on the reasons and or theories scholars have adumbrated as responsible for this malaise. The third
section is a critique of Acemoglu and Robinson’s explicative theory of the African development crisis. In the
fourth section, I argue on the need to see the roots of the problem in weak rather than extractive institutions,
while the fifth holds that without a philosophy of humanism, a recovery process to these challenges cannot even
be started let alone sustained.
1 Special thanks to Dr Chika Mba (Post-Doctoral Fellow, Rhodes University, Uhuru, South Africa) and Dr Isaiah Negedu
(Department of Philosophy, Federal University Lafia, Nigeria) for their useful comments, suggestions and assistance with
resource materials. However, I am solely responsible for any remaining errors.
2 The examples of rapidly developing Asian countries like Singapore, Korea and Taiwan since 1960s, the growth spurts in
China since the late 1970s and, in recent times, India, show that the truism ‘‘the rich (countries) stay rich, while the poor stay
poor,’’ need not hold in the absolute; staying behind is not a sealed fate (Gradstein and Konrad, 2006: p.3).
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
53
2. The Dialectics of Underdevelopment and Afro-Pessimism in Africa
The cover story of the May 1319, 2000 edition of The Economist dramatically described the woes in Africa a
map of Africa, a picture of a young soldier with a gun slung over his shoulder with the caption: “The Hopeless
Continent.” Explicating this story, the editors highlighted issues of floods, famine, poverty, diseases and state -
sponsored thuggery that have consistently plagued the continent (excerpted in Bongmba, 2006). Although this
report drew a lot of criticism for its supposed bias, shallowness, and negativity. But the question remains, is it far
from the truth?
The discourse on Africa is a dialectics about agony and afro-pessimism. The world’s optimism about
post-independent Africa following initial signs of development has waned as a consequence of very abysmal
performances by African governments. Development in Sub-Saharan Africa has trailed other developing regions
of the world, especially Asian countries. For instance, per capita GDP in East Asia has essentially grown by
800% since 1960 and, in some low income countries, per capita GDP has since doubled (Madavo, 2005). The
reverse is the case in sub-Saharan Africa with virtually abysmal per capita GDP growth over the same period.
Going by the World Development Indicators, the average growth rate of income per capita in East Asia and the
Pacific in the period 1960 to 2004 was a remarkable 4.9 percent; among the OECD countries it was 2.7 percent,
but it was a paltry 0.5% in sub-Saharan Africa (Gradstein, and Konrad, 2006).
Available data shows that while only about 12.5% of the world population is domiciled in Africa,
approximately 43% of the world’s poor (more than 330 million in 2012) are Africans (Beegle et’al, 2016).
Frustratingly, Africa’s poor population defied the Millennium Development Goals which, among other things,
aimed at halving the world’s poor population by 2015. The number of poor people in Africa in 2005 was in the
region of 300 million. With very rapid population growth at 2.7% annually, the figure today is in the region of
436 million. This is alarmingly disturbing as expert projections have suggested that, in the coming future, the
world’s extreme poor will be increasingly concentrated in Africa (Beegle et’al, 2016).
Thus, Africa is the only region of the world where poverty is increasing in stark contrast to the dramatic
gains in the fight against poverty that are seen elsewhere, most notably in Asia (see table 1 below). Data from the
World Bank shows that of the 26 countries where the rate of extreme poverty is over 40%, only 2 are not in Sub-
Sahara Africa (Gharib, 2014). There is also increasing evidence not only that more Africans are falling into
poverty, but of a wide gap of income inequality between ordinary Africans and African elites. These elites
control both the dwindling economic opportunities and the machinery of the state, ensuring the protection of
their economic and political privileges. In such environments, Madavo (2005) observes, efforts to open
opportunities for the majority of the population have very few powerful supporters (p. 2).
Table 1. Regional Breakdown of Poverty in Developing Countries
Millions of people living on
Less than $1 per day
Less than $2 per day
Region
1990
2002
1990
2002
2015
East Asia and Pacific China
472
21
1116
748
260
China
375
180
825
533
181
Rest of East Asia and Pacific
97
34
2
292
215
78
Europe and Central Asia
2
10
23
76
39
Latin America and Caribbean
49
42
125
119
106
Middle East and North Africa
6
5
51
61
40
South Asia
462
437
958
1091
955
Sub-Saharan Africa
227
303
382
516
592
Total
617
1011
2654
2611
1993
Source: World Bank. Culled from Gradstein, and Konrad (2006: 6)
Africa has also performed poorly in terms of other income and non-income indicators of development.
For example, globalization today is integrating world economies and contributing to the growth of many
developing countries. If anything, the impact of globalization on Africa has been largely negative. Africa’s
volume of world trade has declined from 3.5% in the 1970’s to 1.5% today. This decline is equivalent to an
annual loss of approximately $70 billion; a figure which, when compared with the $25 billion that come to
Africa yearly as developmental aid, the significance of Africa’s declining participation in international trade
becomes even more clearer. In addition, and as Madavo (2005:2) asserts, “less engagement with the global
economy means that Africa is also missing out on the technical transformation critical to laying the investment
foundations for the future.”
Africa’s decline in international trade is clearest in the 2006 Trade and Development Index (TDI) global
rankings. Of 123 countries studied, the United States ranked 1st in TDI, followed by Germany, Denmark and the
United Kingdom. The top positions were occupied by developed economies with the exception of Singapore,
which ranked fifth. Southern European countries are at the bottom of the top 30, while only five developing
countries made the cut of top 30 performers. Besides Singapore, the others include the Republic of Korea (No.
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
54
21), China (No. 25), Malaysia (No. 27) and Thailand (No. 29). At the other end, all but 2 of the bottom 20
countries are either Least Developed Countries (LDCs 14 countries) or sub-Saharan African countries or both.
The exceptions are the Syrian Arab Republic (No. 105) and Yemen (No. 117) in the Middle East and North
African region. More precisely, nine of the bottom 10 are sub-Saharan African countries, seven of which are
LDCs.1 “Indeed, only two African countries – South Africa (No. 47) and Mauritius (No. 50) are among the top
50. This indicates the severity of problems confronting LDCs and sub-Saharan African countries in integrating
trade and development” (United Nations, 2007: 10).
Africa’s gradual but consistent decay from the early 1970s to the beginning of the 1990s can also be
gleaned from social indicators. Over this period, Africa has trailed other regions of the world in the areas of
access to piped water and sanitation, primary education completion rates, and gender equality. These problems
were then compounded by the HIV/AIDS pandemic, series of destructive conflicts and, today, terrorism. An
estimated 30 million people have been displaced by conflicts and terrorism, with large numbers dying in such
places as the Great Lakes region, Sierra Leone, Sudan, Somalia, Nigeria, and so on. Many children on the
continent are malnourished or stunted, many others die before their 5th birthday. Millions more do not attend
schools and many girls face limited opportunities simply because of their gender. The youths’ future is already
being mortgaged in many ways. Most of them are either unemployed or underemployed (Mavado, 2005). Even
though these were part of the issues that necessitated the Millennium Development Goals (MDGs), it is
instructive that Africa did not come close to achieving those targets (Beegle et’al, 2016).
These scenarios are exacerbated by the decimation of African economies by the political elites, which
undermine their duty to govern. Beginning almost immediately after independence, African states assumed some
expanded roles amidst considerable pressure. As Mavado (2005) couched it, “Coups, conflicts, and the
estrangement of the nation-state from its citizenry led to a deterioration in governance and a rise in official
corruption. By the 1980s, most African economies were in “freefall,” suffering from stagnation, contraction and
decline” (p. 4); a period many have described as the continent’s ‘lost decade.’ Consequently, the ‘unbounded
optimism’, which was the thinking about Africa in the 1950s, shifted to a ‘deep pessimism’ in the 1970s and,
today, ‘Afro-pessimism’ (Coleman and Halisi, 1983). However, we must not forget that Africa is a continent and
that within this broad categorisation are individual countries such as Equatorial Guinea, Botswana and Mauritius
whose governments are committed to good governance, poverty reduction, fight against corruption and
development in general. These exceptions notwithstanding, the tale of development in Africa is one of a failed
political economy, puny institutions, and an excessive abuse of power by African elites.
3. Africa’s Underdevelopment: Towards a Theory of Explication
Africa’s developmental quagmires have retarded post-colonial African scholarship by kerbing it within a vicious
circle of adumbrating the problems and solutions to Africa’s nauseating developmental challenge. Most
academic conferences in the decades since independence border on development in one way or another. And the
sad truth is that scholarship cannot progress beyond this stage of societal development until these challenges are
overcomed. This is true because post-development scholarship in Africa can only be on matters arising from
development such as how to sustain such development amidst basic human rights issues like equality,
distributive justice in wealth management, and so on.
In the spirit of this scholarship confinement, many theories and factors have been adduced as
responsible for the development crisis in Africa. As a consequence, and as Bongmba (2006) argues, the
discourse about the failure of the states in Africa has now become a discipline with a very large library. “A
survey of the literature would be a daunting task, as would an attempt to give a comprehensive account of the
various interpretations” (p. 5). Nevertheless, I shall attempt a discussion of these various interpretations under
two broad categorisations: external and internal. Some scholars, even today, blame Africa’s development
challenges squarely on colonialism. If you argue that there are other colonised nations, especially in Asia, that
are now doing very well, attention is drawn to the varying degrees of colonial exploitation and denigration in
both continents. Relatedly, there are those who argue that the problems are as a result of deteriorating terms of
trade and a generally hostile environment in the global economy. The solution, they asserted, lay in greater self-
reliance. Such arguments, according to Mavado (2005), had translated into policies that have effectively shut off
Africa from the global economy.
Another external factor (although with some internal underpinnings) is the issue of foreign aid. Here
scholars attribute the ubiquitous incidences of underdevelopment to the intervention of world institutions like the
World Bank and the International Monetary Fund (IMF). These interventions, they argue, come in aids to assist
Africa’s development, but with certain conditionalities that are harmful to African economies. Despite the
1 These include Central African Rep. (No. 112), Zambia (No. 112), Ethiopia (No. 114), Cameroon (No. 115), Guinea (No.
116), Yemen Rep. (No. 117), Angola (No. 118), Congo, Democratic Rep. (No. 118), Niger (No. 120), Nigeria (No. 121),
Guinea-Bissau (No. 122), Sudan (No. 123). (See United Nations, 2007: 11).
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
55
substantial amount of aid to African countries, no meaningful development can be said to have been achieved.
Some scholars have blamed this failure on both legal and illegal capital flights from Africa, which exceeds $50
billion a year. Some estimates go as high as $100 billion; this far exceeds annual receipts of aid, which averaged
$20 billion between 2000 and 2004 or of private investment estimated at $10 billion. “The amount of capital held
abroad by Africans is thought to be over $500 billion, most of it owned by Africa's political and bureaucratic
elite” (Mistry, 2005: 666). Most of these funds accrue from aid and earnings from natural resources, which are
not properly accounted for.1
With Sachs and Warner’s (1995) observation that natural resource rich countries tend to grow slower
than countries without significant resources, scholars have substantially studied the nexus between resource
abundance and corruption (Leite and Weidmann, 1999; Sala-i-Martin and Subramanian, 2003; and Vicente, C.,
2006). Leite and Weidmann (1999) argued that abundance in natural resource across countries is an important
factor in determining the level of corruption in such countries. Sala-i-Martin and Subramanian (2003), using
Nigeria as a case, maintained that natural resources exert a negative and nonlinear impact on growth via their
deleterious impact on institutional quality; they argued that waste and corruption from oil rather than Dutch
disease are responsible for Nigeria’s poor economic performances. To this end, therefore, it is argued that what
poses binding constraints on Africa’s development is not financial capital, but chronic corruption. For Mistry
(2005), Africa suffers from “a chronic inadequacy of human, social and institutional capital. Without such
human social and institutional capital (which is not the same as capacity-building), development in Africa will
not occur, no matter how much aid is thrown at it” (p. 666).
On the other hand, some scholars have argued that, although external factors contributed to the
hardships in Africa, the problem of underdevelopment in Africa is basically internal. Such internal factors
include issues of bad leadership and governance, corruption, political instability, violent conflicts and terrorism.
Analysts who favour this trend in explicating the woes of Africa no longer find the blame game rhetoric
colonialism, neo-colonialism, and imperialism fashionable. This is because, according to Jeffry (2013: 121),
Africans themselves are the major culprits of the destruction of Africa today. Similarly, Udoka (2006: 74) points
to the fact that previously colonised countries in Asia have wriggled out of underdevelopment:
…in view of current global occurrences, it is difficult to continue to attribute
underdevelopment in Africa to the effect of monopoly, capitalism and imperialism.
Currently, former colonies of European imperial expansion in Asia have broken out of the
shackles of underdevelopment and have created strong structures in manufacturing, finance
and technology. Indeed, the Asian tigers namely, South Korea, Philippines, Malaysia,
Singapore, Indonesia, Pakistan, Hong Kong, Taiwan on the one hand, and India, China, and
Brazil on the other hand, which were once colonized, are now dictating the pace of global
economic growth.
For scholars like Udoka, the issues with Africa today are a consequence of several insalubrious internal
factors of which corruption and bad governance rank topmost. Other analysts blame the predicament on Africa’s
geography, culture and politics.
Some scholars attribute the development challenges in Africa, especially northern and western African
countries like Egypt, Niger and Mali, to its geography. The argument is that parts of these countries are mostly
desert with a lack of adequate rainfall. More so, that the soils and climate of these regions do not allow for
productive agriculture. But there are many other African countries like Nigeria with adequate rainfall where
development, especially in the agricultural sector, is still a very big challenge.
Others instead point to culture as the root cause of these problems. For such thinkers, African cultures
are inimical to economic development and prosperity. Scholars in this school of thought are both indigenous and
foreign. Arguments from African scholars like Manthia Diawara runs thus:
Tradition, with its encumbering rituals, chauvinism, and tribal identity, presents the same threat to
African modernization that it posed to colonialism. I often wonder why we have not put our traditions
in museums and folklore centers, as have other nations. Travelling to Europe, America and Asia, I
have had occasion to observe that other peoples once had some of the same rituals, masquerades, and
belief systems that we Africans consider unique to our own traditions today. The difference is that
they have put the relics of their traditions in museums, preferring to come to their rendezvous with
1 Obiang Mbasogo, former president of Equatorial Guinea, was known to have taken control of his country’s treasury by
depositing more than half a billion dollars into accounts under his control at Riggs Bank in Washington, DC. This was in
addition to major US oil companies (Exxon Mobil, Hess Corporation, etc.) directly paying revenues into same accounts at
Riggs Bank. Similarly, the IMF, in a leaked un-published report, held that Angola cannot account for more than $4.3bn oil
inflows. Several NGOs and civil society groups have accused President Jose Eduardo Dos Santos of spiriting much of the
country’s oil money abroad with the Swiss criminal authorities having, in 2003, frozen $56m held in a Geneva bank
belonging to him. Similar cases abound of Republic of Congo (Brazzaville), Nigeria and other resource rich African states
(see Vicente, 2006: Pp.126-7).
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
56
modernity with as little baggage as possible, whereas we always come to the table burdened with our
traditions-approaching things as Africans, not as individuals (cited in Odhiambo, 2002:1).
Similarly, the World Bank in 1994 invited leading African humanist scholars such as Ali Mazrui, Wole
Soyinka, Francis Mading Deng as well as Africanist experts from North American universities to its Washington,
D.C., headquarters to talk about the place of culture in African development. The non-African Africanists at the
meeting gave what Odhiambo, also present at the meeting, has described as an “arcane knowledge" about Africa.
Among the reasons given for African culture's being the stumbling block to development were allegations
derived from earlier treatises, including the notion of African hedonism the propensity to consume whatever
surpluses Africa stumbles upon with no thought of tomorrow and the ever-persistent "magic of despair" (p. 3).
Corroboratively, Patrick Chabal and Jean-Pascal Deloz (1999) uncharacteristically argued for a cultural
adjustment programme in their supposed quest to unearth the internal (as opposed to external) factors militating
against Africa. In reference to some works by African scholars on the place of culture in African development,
they argue:
Clearly what is new in such arguments is the self-critical approach rejecting the habitual exculpating
explanations of Africa's predicament and focusing attention both on the putative incompatibility of
African culture [s] with modern economic development and on the hitherto virtually taboo question of
mentalities.... What we want to understand more concretely is the cultural matrix within which
Africa's own distinct modernization is taking place [....] Of these we would stress fatalism, understood
as a rational response to the huge degree of uncertainty faced by most of the continent's population,
and the primacy of the collective over the individual, itself the outcome of realistic appraisal of what
constitutes the best guarantee of survival in the face of a perennially threatening outside world" (cited
in Odhiambo, 2002: 4-5).
The culture question in Africa’s development has generated a lot of reactions from African philosophers
like Sodipo J.O., Kwame Gyekye, Olusegun Oladipo, Kwasi Wiredu and a host of others who have defended the
positive role culture can play in development. Their defence is anchored on the understanding of culture as value
systems which are dear to a particular set of people. Their argument has revolved around those cultural values of
Africans that ought to be preserved in the race to development.
For Wiredu, the culture puzzle in African development can be resolved through a process of cultural
cross-breeding i.e. of analysing, identifying and separating the backward aspects of African culture from those
that are worth preserving. In other words, cultural negatives like superstition and authoritarianism must be
rejected for positive ones like the humanistic orientation of traditional ethical thinking and the sense of
community. This, for him, can be blended with the good of other cultures such as the science-oriented mode of
thought, which are existentially beneficial. Wiredu believes that no culture is self-sufficient and that adopting the
positive aspects of other cultures does not amount to betrayal of African cultures: “to borrow from another
culture does not necessarily imply a belief in the overall superiority of that culture”. Notwithstanding, Wiredu
cautions that this borrowing must be selective and that we must not forego our positives when he says: “it would
profit us little to gain all the technology in the world and lose the humanist essence of our culture” (cited in
Oladipo, 1996: 82).
Wiredu’s argument, like most other African philosophers, is that while it is useful to employ science
and technology, Africa must guide the process with own cultural values. Asia is developing fast because they
have successfully balanced the technical aspect of development with their culture. Amartya Sen gives an
example of Japan. In a paper presentation to the World Bank in December, 2000 entitled “Culture and
Development”, Sen argues that culture has a way of influencing a people’s behaviour and their contribution to
the process of economic and social development. He argues that the Japanese have been able to bring aspects of
their traditional culture (such as the ethics of their Feudal system, Confucian ethics, the influence of the Samurai
Code of Honour, etc.) to bear in their push for development. As a result, Sen (2000) concludes, the combination
of these “behavioural norms with practical business has certainly played a major part in Japan’s astonishing
economic success, which has transformed a backward economy into one of the most prosperous nations in the
world in less than a century” (p. 6).
Another approach to the internal dialectics of Africa’s underdevelopment is that given by Acemoglu
and Robinson (2012), and it states that Africa as well as other nations of the world fails not necessarily as a
result of bad policies and corruption, but as a result of extractive institutions’. These institutions are both
economic and political, and they are extractive when they are closed to other people coming into the polity. This
entails lack of both economic and political opportunities within a society. According to them, political and
economic institutions can be inclusive and encourage economic growth or extractive and become impediments to
economic growth. Their argument, therefore, is that nations fail when they have extractive economic institutions,
supported by extractive political institutions that impede and even block economic growth:
NATIONS FAIL TODAY because their extractive economic institutions do not create the incentives
needed for people to save, invest, and innovate. Extractive political institutions support these
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
57
economic institutions by cementing the power of those who benefit from the extraction. Extractive
economic and political institutions, though their details vary under different circumstances, are always
at the root of this failure. In many cases… this failure takes the form of lack of sufficient economic
activity, because the politicians are just too happy to extract resources or quash any type of
independent economic activity that threatens themselves and the economic elites (p. 414).
Quite lucid from the above submission is that a nation has extractive institutions when those institutions
are controlled by a few elites in the society. Since this paper is a direct reaction to this theory of explanation, I
shall stay analysis on it for the next section to which we now turn.
4. Extractive Institution as the Bane of Africa’s Development: A Critique
In marshalling their point as to why nations fail, Acemoglu and Robinson analysed different countries and their
level of development. Examples of countries with extractive institutions include Zimbabwe and Egypt, while
countries with non-extractive institutions were given as Botswana and South Korea. Let us briefly examine their
arguments in relation to Zimbabwe and Botswana.
According to Acemoglu and Robinson (2012), the roots of many economic and political institutions in
Zimbabwe, as is the case for much of sub-Saharan Africa, are traceable to the colonial period. Zimbabwean
independence came as a result of international pressure and the guerrilla warfare waged by Mugabe’s ZANU
(the Zimbabwe African National Union) and ZAPU (the Zimbabwe African People’s Union), led by Joshua
Nkomo. Like most African countries, Mugabe upon independence inherited a set of extractive economic
institutions created by the colonial regime. He rewrote the constitution and quickly established his personal
control by violently eliminating his opponents or co-opting them into government. Mugabe made himself
president having started as prime minister. ZANU-PF was created in 1987 as a result of a merger of ZAPU and
ZANU with Joshua Nkomo being politically sidelined as a consequence. State employment expanded rapidly,
with jobs given mainly to ZANU-PF’s supporters. Mugabe abolished white voter rolls that were part of the
independence agreement and, in 1990, got rid of the Senate and introduced positions in the legislature into which
he could make nominations. A de facto one-party state headed by Mugabe was the result. “The tight government
regulation of the economy suited the ZANU-PF elites because it made it difficult for an independent class of
African businessmen, who might then have challenged the former’s political monopoly, to emerge” (p. 411).
The deteriorating economic performance of Zimbabwe soon made Mugabe very unpopular but, with
coercion, intimidation and electoral fraud in the series of elections held, he has managed to remain in office.
Following the weakening of his political control, Mugabe intensified repression and the use of government
policies to buy support. In 2000 he unleashed a full-scale assault on white landowners by expropriating their
lands. These acts were often led by independence-war veterans’ associations who, together with ZANU-PF elites,
became beneficiaries of the expropriated lands. The insecurity of property rights wrought by Mugabe and
ZANU-PF led to a collapse of agricultural output and the economy. As the economy crumbled, the only other
option for Mugabe was to print money to buy support, which led to enormous hyperinflation. Prior to this time,
the inflation rate in Zimbabwe was hovering around 20 percent. But by 2002 it had reached 140 percent; by 2003,
almost 600 percent; by 2007, 66,000 percent; and by 2008, 230 million percent. “In January 2009, it became
legal to use other currencies, such as the South African rand, and the Zimbabwean dollar vanished from
circulation, a worthless piece of paper” (p. 413).
For Acemoglu and Robinson (2012), the Zimbabwean post-independent experience was commonplace
in sub-Saharan Africa. Zimbabwe inherited a set of highly extractive political and economic institutions in 1980.
These were maintained relatively untouched for the first decade and a half. It was a tale of continuous extractions;
colonial extraction being replaced by the extractive and repressive regime of Robert Mugabe. Even though
elections were held, political institutions were anything but inclusive. Any society structured along these
extractive lines is sure to fail.
When Botswana (Bechuanaland) became independent in 1966, it was one of the poorest countries in the
world with only a total of twelve kilometers of paved roads, twenty-two university graduates and one hundred
secondary school graduates. It found itself amidst Namibia and Rhodesia, countries run by the white regimes of
South Africa, and which were hostile to independent African countries ruled by blacks. It was a country with an
infinitesimal hope for survival. But Botswana today has become one of the fastest-growing countries in the
world. “Today Botswana has the highest per capita income in sub-Saharan Africa, and is at the same level as
successful Eastern European countries such as Estonia and Hungary, and the most successful Latin American
nations, such as Costa Rica” (Acemoglu and Robinson, 2012: 450).
How did Botswana break the mold? By quickly developing inclusive economic and political institutions
after independence. President Seretse Khama’s government quickly made some adjustment and implemented
some reforms (such as the subsoil mineral rights, land rights, etc.) that led Botswana onto a path of inclusive
economic and political institutions. The country has remained democratic ever since, holding periodic and
competitive elections; it has never experienced civil war or military intervention. The government set up
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
58
economic institutions that enforced property rights, leading to a stable macro economy that encouraged the
development of an inclusive market economy. The discovery of diamonds in the 1970s did not lead to civil war,
rather, it provided a strong fiscal base for the government to harness revenues to invest in public services. Thus,
the incentives to overthrow the government and control the state by a few elites were much less. In the case of
Botswana, therefore, “[i]nclusive political institutions bred political stability and supported inclusive economic
institutions… [In other words], inclusive economic institutions increased the viability and durability of inclusive
political institutions” (Acemoglu and Robinson, 2012: 454).
On the face of it, this theory of explanation sounds very plausible. Development is only sustainably
guaranteed under inclusive governments or institutions. But does it really give the true accounts of why nations
fail? Does it explain why, for instance, Nigeria is underdeveloped? Is ‘inclusiveness’ all that is required for
development? Nigeria, like most other sub-Saharan African states, does not have the extremely extractive
political and economic tendencies as Zimbabwe, Egypt, as well as communist China (under Mao Tse-tung).
Nigeria has an open economic system with recognised property and land rights, yet it is still underdeveloped.
There have been cases of transitions from extractive to inclusive institutions which ought to have led to
economic growth but did not. The shedding of colonial institutions, like the concept of Ujamaa, is a case in point.
Ujamaa was the African socialism blueprint for socio-economic development introduced in post-colonial
Tanzania by President Julius Nyerere as a breakaway from extractive colonial regimes. Ujamaa institutionalised
social, economic and political equality through the creation of a central democracy, and abolished discrimination
based on ascribed status. What can be more inclusive? But did this bring about, in accordance with Acemoglu
and Robinson’s thesis, the desired economic development? Ujamaa failed not because of extractism, but because
of the oil crisis in the 1970s, the collapse of export commodity prices (particularly coffee and sisal), a lack of
foreign direct investment, two successive droughts and the onset of the war with Uganda in 1978, which bled the
young Tanzanian nation of valuable resources. Similarly, the extension of franchise to the black populations in
South Africa and, more dramatically, in Zimbabwe can hardly be regarded as ‘less inclusive’ or ‘more
extractive.’ “Yet despite that fact that the extension of the franchise was also accompanied by the lifting of
foreign trade restrictions, in neither case did the more inclusive economic institutions result in economic growth”
(Boldrin et’al, 5). Quite truly, the extractive cum capitalist nature of colonialism led many newly independent
African countries to adopting socialism. However, instead of this supposedly inclusive system translating to
development, the reverse poor economic consequences was the case.
5. Nations Fail Because of Weak Institutions
Nations fail because of Weak, not extractive, institutions. This is because the question of political inclusiveness,
which robs on economic inclusiveness, does not arise because, at any given time, inclusiveness is determined by
the constitution. In other words, political institutions can only allow in a sizeable amount of people in the polity
at a given time. One may argue that if the election that brought people into a given political institution is
fraudulent, such institution is extractive. But this is not the central thesis of Acemoglu and Robinson (2012)
because electoral fraud is corruption and this, for them, is only a symptom of institutional malaise (p. 410). If
corruption is an institutional malaise, it therefore means that extractive institution is not necessarily corruption.
That is to say, extractive institution breeds corruption and not the other way round i.e. corruption breeds
extractive institution.
As a direct response to pressing developmental issues in developing countries, there has been increasing
research on the role of political institutions in the development process, addressing issues of democracy,
inequality, and growth; political obstacles to development-enhancing policies; and, most importantly, weak
institutions and corruption (Gradstein and Konrad, 2006). What is clear from these studies (Hall and Jones, 1999;
Torvik 2002; Gyimah-Brempong, 2002; and Rodrik et al., 2004) is the fact that the quality, transparency and
predictability of institutions have both direct and indirect impact on economic growth and development. Rodrik
et’al (2004) emphasized the primacy of strong, quality institutions over geography and trade in determining
income levels and development around the world. Other scholars are more concerned with the direct and indirect
nexus of corruption and institutions’ ability to drive economic growth. For Hall and Jones (1999: 95), a country’s
long-run economic performance is determined by its social infrastructure, i.e. the institutions and government
policies which provide incentives that may either encourage productive activities or predatory behaviour like
rent-seeking, corruption, and theft. Gyimah-Brempong (2002) observed that a unit increase in corruption reduces
the growth rates of GDP and per capita income by between 0.75 and 0.9 percentage points and between 0.39 and
0.41 percentage points per year respectively (p. 185). Torvik (2002) argues that corruption and rent-seeking
activities, which translate into the natural resource curse, are more likely to result in a country with weakly
developed institutions.
The example of Botswana is quite instructive here. A government minister was once asked why his
country is so different from other African countries, and his reply was that, at independence, the country was so
poor that there was nothing to steal from public office. The culture of not stealing in public office became so
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
59
ingrained in Botswana that even after the discovery of diamonds, the country did not go back on decades of
acquired habit (Oguejiofor, 2010). Botswana’s outstanding exemption to the decadence in Africa is a product of
the strong institutions set in place by successive post-colonial governments. If the proper institutions were not in
place when diamonds were discovered, it is most likely that the country would have suffered from the so -called
natural resource curse.
Extractive institutions are products of corruption; it takes a corrupt regime to be extractive. Now this is
not the same with the view of Acemoglu and Robinson. The point being stressed here is that the theory of
inclusiveness obscures what really is at the heart of failed or underdeveloped states in Africa; it is corruption,
and by this I mean weak institutions. Only weak institutions can breed extractive regimes. Where the institution
is not weak like a corrupt judiciary, executive (where the president is bigger than the state/constitution and can
nominate members of the legislature if he so pleases) and legislature, corrupt military and the police force
extractive institutions will not surface.
With reference to how easily the judiciary can be mamipulated, a particular People Democratic Party’s
(PDP) senator in North-Central Nigeria is fond of saying ‘elections are easier won in courts than in polling units’.
Therefore, the argument goes, get announced at the polling units by any means and the court is a mere formality.
Such argument is the hallmark of a highly corrupt and weak judicial institution. President Muhammadu Buhari
made a submission that also attests to the weakness of the judiciary in Nigeria. According to him, the current
state of the judiciary is the biggest challenge in the fight against corruption: “[o]n the fight against corruption
vis-à-vis the judiciary, Nigerians will be right to say that is my main headache for now” (Premium Times, 2016).
He drew attention to how long it takes to prosecute a case in Nigeria’s courts, particularly how he was frustrated
at the Supreme Court in past elections: first attempt in 2003 lasted 13 months, second attempt in 2007 lasted
about 20 months while the third attempt in 2011 lasted 9 months. With this he concluded that far-reaching
reforms of the judiciary are a top priority for his administration if it is to succeed in the fight against corruption.
Such reforms must include obsolete aspects of the Penal Code of Nigeria. It will be recalled that most of
the high profile cases of corruption in the country (Tafa Balogun, November 2005; Lucky Igninedion, December
2008; and John Yusuf, January 2013, to mention a few) in recent past have been resolved through plea bargain to
the chagrin and utter mortification of the populace. Arguments in favour of plea bargain often claim that it saves
time and cost in the prosecution of criminal cases. For instance, in the plea-bargained case of John Yusuf (who
diverted 27.2 billion police pension fund), the maximum sentence in section 309 of the Penal Code under which
he was charged is a jail term of not more than two years with an option of fine (it will be recalled that John
Yusuf paid the fine of N750, 000 right in court and walked away a free man). Most proponents of plea bargain
would have no issues with such sentence because, for them, it will amount to a great disservice to use, say ten
million naira (N10, 000, 000) of tax payers’ money to prosecute a case in which the maximum sentence is a 2
years jail term or a N750, 000 fine. But is this punishment proportional to the severity of the c rime? Did the
pensioners whose monies were diverted and who suffered untold hardships of varying degrees get justice? What
is justice? Is a mere court ruling essentially just? These are questions that beg for answers that are beyond the
scope of this paper. Nevertheless, one thing is clear: as far as the judiciary is concerned, the Penal Code is a great
weakness and Nigeria must review it together with other weak aspects of the judiciary for any fight against
corruption to be meaningful and achieve desired results.
6. Beyond Afro-Pessimism to Optimism: A Humanism of Recovery
Whether we follow the extractive or weak institution schema, one thing is certain. The crisis in Africa is
undoubtedly a consequence of political practices that have eliminated political participation and entrenched a
culture of despoliation that have stagnated economies particularly in sub-Sahara Africa. Independence offered a
critical juncture, an opportunity for African leaders to break away from the colonial past which was not too
distinct from the state of nature where life was brutish, nasty and short. Claude Ake (1996) better captured this in
his assertion that little changed at the dawn of independence in that “state power remained essentially the same:
immense, arbitrary, often violent, always threatening . . . politics remained a zero-sum game; power was sought
by all means and maintained by all means” (p. 6). Independence was an opportunity to articulate a political
vision of participatory politics. Only very few postcolonial leaders like Seretse Khama of Botswana seized this
opportunity. Many others have toed the Mugabean route where the elites that control the states have become so
rich at the expense of the masses. Politically, this route is easier to take than the former. It takes a leader with a
deep sense of humanism; one who truly value the essence of the human being, to take after the likes of Seretse.
This point is better gleaned from the assertion of Aung San Suu Kyi:
The true development of human beings involves much more than mere economic growth. At its heart
there must be a sense of empowerment and inner fulfilment. This alone will ensure that human and
cultural values remain paramount in a world where political leadership is often synonymous with
tyranny and the rule of a narrow elite. The people’s participation in social and political transformation
is the central issue of our time. This can only be achieved through the establishment of societies which
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
60
place human worth above power, and liberation above control (cited in Bongmba, 2006: 199)
For any development to be meaningful, therefore, it must be underscored by the value of the human
person. In fact, no genuine development project, be it fight against corruption, building of infrastructure or
human capita development can be kick-started unless the worth of the individual in the society is well considered.
Such humanism on the common good can be deduced from different statements by President Buhari: “if we
don’t kill corruption, corruption will kill Nigeria”; “the theft of oil by some Nigerians who felt that the oil
belonged to them was irritating to those of us who participated in the civil war for 30 months in which at least
two million Nigerians were killed”, among others. Are humanist statements like these to be taken to heart or with
a pinch of salt? Part of former President Goodluck Jonathan’s campaign speech in the 2011 election reads: “in
my early days in school, I had no shoes, no school bags. I carried my books in my hands but never despaired…in
spite of these, I finished secondary school, attended the University of Port Harcourt, and now hold a doctorate
degree. Fellow Nigerians, if I could make it, you too can make it” (The Nigerian Voice, 2010). We cannot
ascertain the truth value of President Buhari’s humanist assertions today, but we can about those of President
Jonathan. If these statements were really genuine, we would not be having the high profile corruption cases
being unearthed almost on a daily basis, particularly the ‘Dasuki Gate’. The money involved would, at least,
have saved the lives of many parents (against the onslaught of Boko Haram) in the north east, whose children not
only have no shoes, but are now orphaned. Alternatively, if that money was put into education, it will not only
buy shoes and bags, it will take every child from the street for primary education; and this is a fundamental
human right. President Buhari is his own judge; he will provide us the yardstick with which to assess his own
humanist assertions.
The contention here is that only a regime with genuine humanist outlook can pursue a human-centred
development. Though not very successful, theories in African humanism such as Ubuntu and Ujamaa prioritize
the human person and the human community. Western philosophical ideas such as Kantian categorical
imperative also emphasize the primacy and essence of the human person. To claim that human life is important
is to accept that humans have a basic desire and right to thrive and not merely to struggle to survive, as many do
in Africa. Moral values, which underscore law and order in society, ought to enable all members of the society to
experience well-being. Unless African leaders inculcate this and allow it to drive developmental projects of all
kinds, progress and development will either continue to be a mirage or meaningless.
7. Conclusion
One may argue that democracy is the best system of governance, provided it is not hijacked by a few elites. But
how do we prevent that? Strong institutions! If our institutions are strong enough, elections will be credible;
citizens will be able to vote in and out governments of their choices. As argued in this paper, the central problem
of development in Africa, particularly Nigeria, is largely an institutional problem. That is, a failure to design
effective political institutions like the judiciary, electoral bodies, as well as other institutions that are in the
saddle of enforcing the rules that will make the federating states and economy function optimally. Bribery,
corruption, and other forms of rent-seeking behaviours both cause and entrench this failure. To this end,
therefore, if Africa is to break this vicious circle of underdevelopment, it will require a focused and strong
leadership that will engineer effective institutions. This calls for good governance, transparency, civic
participation and a genuine campaign against corruption, all of which are crucial to transforming weak
institutions into stronger, viable and development oriented ones. But this, as have been argued in this paper,
cannot be realized outside a humanism that emphasizes the intrinsic value and worth of the individual.
REFERENCES
Acemoglu, D. and Robinson J.A. (2012). Why Nations Fail: The Origins of Power, Prosperity and Poverty New
York: Crown Publishers.
Ake, C. (1996). Democracy and Development in Africa. Washington, DC: The Brookings Institution.
Beegle, K. et’al. (2016). Poverty in a Rising Africa. Washington D.C: The World Bank Group.
Boldrin, M. et’al. “A Review of Acemoglu and Robinson’s Why Nations Fail.” [Online] Available:
dklevine.com/general/aandrreview.pdf
Bongmba, K. E. (2006). The Dialectics of Transformation in Africa New York: Palgrave Macmillan.
Coleman, J.S. & Halisi, C.R.D. (1983). "American Political Science and Tropical Africa: Universalism vs.
Relativism." African Studies Review 26 (3/4): 25-62.
Gharib, Malaka (2014). “25 Most Shocking Global Poverty Facts.” [Online] Available:
https://www.one.org/us/2014/10/21/25-most-shocking-global-poverty-facts/
Gradstein, M. & Konrad, K. A. (2006). “The Development Puzzle.” In: M. Gradstein and K.A. Konrad (Eds.),
Institutions and Norms in Economic Development. Cambridge: The MIT Press. Pp 3-18.
Gyimah-Brempong, K. (2002). “Corruption, Economic Growth, and Income Inequality in Africa. Economics of
Governance 3(3): 183209.
Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.6, No.7, 2016
61
Hall, R. E., & Jones, C. I. (1999). “Why do some Countries Produce so much more Output per Worker than
others?” The Quarterly Journal of Economics 114(1): 83116.
Jeffry, E. I. (2013). “Dependency Theory and Africa’s Underdevelopment: a Paradigm Shift from Pseudo-
Intellectualism: the Nigerian Perspective.” International Journal of African and Asian Studies. 1: 116-
128.
Leite, C., & Weidmann, J. (1999). “Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic
Growth.” IMF Working Paper 85.
Madavo, C. (2005). “Africa: The Development Challenges of the 21st Century.” The Africa Program: The
Woodrow Wilson International Center For Scholars. [Online] Available:
http://www.wilsoncenter.org/sites/default/files/OP004.pdf
Mistry, S. P. (2005). “Reasons for sub-Saharan Africa's Development Deficit That the Commission for Africa
Did Not Consider.” African Affairs, 104(417): 665-678.
Odhiambo S. A. (2002). “The Cultural Dimensions of Development in Africa. African Studies Review, 45(3): 1-
16
Oguejiofor, J.O. (2010). “In Praise of African Philosophy.” Inaugural Lecture Series, No 14. Nnamdi Azikiwe
University, Awka.
Oladipo, O. (1996). Philosophy and the African Experience: the Contributions of Kwasi Wiredu Ibadan: Hope
Publications.
Premium Times (2016). “Nigeria’s Judiciary is my main Headache in Corruption war – Buhari.” [Online]
Available: www.premiumtimesng.com/news/headlines/197761-nigerias-judiciary-main-headache-
corruption-war-buhari.html January 31, 2016.
Rodrik, D. et’al. (2004). “Institutions rule: The Primacy of Institutions over Geography and Integration in
Economic Development.” Journal of Economic Growth 9(2): 131165.
Sachs, J. D., & Warner, A. M. (1995). “Natural Resource Abundance and Economic Growth.” NBER Working
Paper 5398.
Sala-i-Martin, X., & A. Subramanian (2003). “Addressing the Natural Resource Curse: An Illustration from
Nigeria.” National Bureau of Economic Research: NBER Working Paper W9804.
Sen, A. (2000). “Culture and Development”. (World Bank Tokyo Meeting 13 December, 2000). [Online]
Available: http://info.worldbank.org/etools/docs/voddocs/354/688/sen tokyo.pdf
The Nigeria Voice (2010). “The Goodluck Jonathan Declaration: I Once had no Shoes.” [Online] Available:
thenigerianvoice.com/news/34767/1/the-goodluck-jonathan-declaration-i-once-had-no-sh.html.
Torvik, R. (2002). “Natural Resources, Rent-seeking and Welfare.” Journal of Development Economics 67: 455
70.
Udoka, I. A. (2006). “History and the Challenge of Underdevelopment in the 21st Century Africa.” Journal of the
Historical Society of Nigeria, 16: 72-80. Available at: http://www.jstor.org/stable/41857132
United Nations (2007). “United Nations Conference on Trade and Development: Developing Countries in
International Trade 2007 (Trade and Development Index).” New York and Geneva: United Nations
(UNCTAD/DITC/TAB/2007/2).
Vicente, C. P. (2006). “A Theory of Corruption, Political Exclusion, and Windfalls.” In: M. Gradstein and K. A.
Konrad (Eds.), Institutions and Norms in Economic Development. PP 111-139.
ResearchGate has not been able to resolve any citations for this publication.
Article
Full-text available
Over the years, African political and development scholars, writers and commentators have blamed the Europeans for the underdevelopment of African. This has necessitated the evocation of Dependency theory in explaining Africa's cum Nigeria's underdevelopment situation, hence Africa's underdevelopment has been linked to two categories of factors: internal and external. The internal factors, Nnadozie said, fan the ember of the external factors and therefore require and deserve more attention hence the connivance of African elites with the Europeans elites to impoverish the continent. Recently, there has been a clarion to a paradigm shift from the Pseudo-Intellectualism of the dependency theorist made manifest in the Walter Rodney's 'How Europe underdeveloped African' to Igwe' and Ghanaian Chronicle's 'How Africa underdeveloped Africa' and finally, Ope-Agbe's 'How Nigeria underdeveloped Nigeria'. This paradigm shift is the thrust of this paper.
Book
A discussion of political and religious crisis in Africa, this book covers such topics as democratic transition, good governance, civil society and the African renaissance. Elias K. Bongmba proposes humanistic interventions centred on the recovery of interpersonal relations and seeks to understand the ongoing struggles in Africa.
Article
Cet article souligne et soulève la question de la résurgence récente, à la fois dans les universités et les institutions financières internationales, de la thèse selon laquelle la culture africaine a été un obstacle au progrès du développement. Nous cautionnons au contraire une perspective de développement fondée sur les réalités de l'Afrique d'aujourd'hui. Nous mettons en valeur les opinions des humanistes et des philosophes africains. Nous présentons des arguments soutenant le retour aux racines indigènes de la culture africaine comme fondation du progrès.
Article
In the West are the 'haves', while much of the rest of the world are the 'have-nots'. The extent of inequality today is unprecedented. Drawing on an extraordinary range of contemporary and historical examples, Why Nations Fail looks at the root of the problems facing some nations. Economists and scientists have offered useful insights into the reasons for certain aspects of poverty, such as Jeffrey Sachs (it's geography and the weather), and Jared Diamond (it's technology and species). But most theories ignore the incentives and institutions that populations need to invest and prosper: they need to know that if they work hard, they can make money and actually keep it - and the key to ensuring these incentives is sound institutions. Incentives and institutions are what separate the have and have-nots. Based on fifteen years of research, and stepping boldly into the territory of Ian Morris's Why the West Rules - For Now, Daron Acemoglu and James Robinson blend economics, politics, history and current affairs to provide a new, persuasive way of understanding wealth and poverty. And, perhaps most importantly, they provide a pragmatic basis for the hope that those mired in poverty can be placed on the path to prosperity.
Article
Despite a substantial amount of aid (much larger in per capita terms than provided to any other region), sub-Saharan African countries, with very few exceptions, have regressed since independence. The general history of Africa since achieving independence has been one of development failure. Some protagonists point to signs of change that argue for more aid. This article suggests that aid to Africa has not worked because human, social and institutional capital - not financial capital - poses the binding constraint. In that context, doubling aid to Africa from $23 billion in 2004 to $50 billion annually by 2015 seems a questionable proposition. This commentary suggests unconventional ways of dealing with the problems involved in importing the essential ingredients that Africa needs. It concludes with the observation that the aid community's current obsession with poverty reduction and the Millennium Development Goals (MDGs) may be harming rather than helping the cause of development in Africa and argues that the focus on growth and development should be restored. © The Author [2005]. Published by Oxford University Press on behalf of Royal African Society. All rights reserved.
Article
In this Trade and Development Index (TDI), UNCTAD presents some of its research on the link between trade and development in a new, integrated fashion. The TDI is an outcome of the secretariat's analysis to identify the complex interdependence of current economic conditions in both developing and developed nations. The index offers a comprehensive review of the global trade and development performace of different countries, and idenfities the strengths and weaknesses of their institutional and policy environment. It showcases not only the tremendous progress that many developing countries have achived in recent years, but also raises several pertinent issues which will require further attention in formulating trade and development policies. The TDI also aims to provide policymakers and researchers with a new tool for policy analysis and formulation, by presenting an analytical framework to understand how to enhance the enabling environment for trade and development . We believe that this framework will contribute to understanding why certain countries have made progress towards achieving the United Nations Millennium Development Goals (MDGs), while others have not. The analytical framework will also allow the UNCTAD Secretariat to enhance the overall coherence of its work, ranging from technical assistance to promoting Aid for Trade.
Article
A new and very simple mechanism to explain why natural resource abundance may lower income and welfare is developed. In a model with rent seeking, a greater amount of natural resources increases the number of entrepreneurs engaged in rent seeking and reduces the number of entrepreneurs running productive firms. With a demand externality, it is shown that the drop in income as a result of this is higher than the increase in income from the natural resource. More natural resources thus lead to lower welfare.