Tag Archives: economic development

Oil, Terror, and Economic Development in Nigeria

This week marks the first 100 days in office for Nigeria’s President, Muhammadu Buhari. Buhari’s election in May marked a fundamental turning point in Nigeria’s conflicted political history. Buhari first assumed political power through a military coup in 1983. But he later resigned and political power transitioned to an elected president. Buhari unsuccessfully ran for the elected office in 2003, 2007, and 2011. Earlier this year he campaigned again for the position and won the popular vote, marking the first time in Nigerian history that an incumbent president lost the office through a popular vote.

Buhari’s presidential campaign centered on three main pillars: defeating the Boko Haram terrorist group that occupied much of the northern part of the country, fighting the rampant corruption that plagues Nigeria, and spurring economic growth. How has he done? Boko Haram has been dispelled from much of the territory it held in northern Nigeria but remains a threat. Corruption remains rampant. And economic growth in Nigeria has been undermined by falling global oil prices.

What do you think? Can Buhari spur economic growth in Nigeria? How? What would you counsel him to do if you were his political and economic adviser?

Advertisements

Combating Piracy Through Development

somali-piratesThe International Maritime Bureau on Thursday reported a sharp decline in piracy on the world’s seas. While the movie Captain Phillips—telling the 2009 story of Captain Richard Phillips and the Maersk Alabama hijacking by Somali pirates—receives best picture attention, the reality of global piracy is that it is at its lowest levels in more than six years.  In 2013, there were 264 attacks against merchant shipping vessels, resulting in 12 vessels being hijacked. This represents a 40 percent decline from the 2011 peaks.

The decline in piracy has been driven by several factors. Increased naval patrols by the United States, the European Union, and others in Gulf of Aden and other key waterways combined with a greater investment in security and countermeasures by global shipping companies has deterred some attacks. But increasing political stability and economic development in Somalia has also been critical. In 2010, 49 of the 53 ships hijacked around the world were taken off the coasts of Somalia. The country lacked any central government and was ruled—to the extent that it was ruled—by competing warlords. Fishing communities lacked any options for eking out a living, and thus turned to piracy. Today, the country has a fragile but existing government and is working with other countries in the region to establish itself. Things, in short, are moving in the right direction. And as a result, many who formerly viewed piracy as a means of survival are finding other options available to them. In other words, two of the key factors in combating Somali piracy were political stability and economic development.

Development, China Style

Angola's Presidential Ballot

Angola’s Presidential Ballot

Angolans are voting in the country’s second national election since the end of a 27 year civil war a decade ago. Incumbent President José Eduardo dos Santos, whose ruling Popular Movement for the Liberation of Angola (MPLA) has governed the country since 1979, is expended to soundly win reelection.

Angola today is a far cry from the country ravaged by a 27 year war involving three separate liberation movements and external intervention by the former Soviet Union, Cuba, the United States, and apartheid South Africa. That war, which resulted in the deaths of more than 300,000 Angolans, left deep scars on the country. But today, Angola is growing rapidly. Angola is home to extensive oil reserves, and has experienced rapid, double-digit economic growth since the 1990s. Between 2001 and 2010, Angola experienced the highest rate of economic growth in eh world, averaging 11.1 percent per year.

But Angola’s development has not been without its shortcomings. Despite its rapid economic growth, most Angolans remain desperately poor. Life expectancy and infant mortality rates are among the worst in the world. And economic inequality has increased, as a relatively privileged few benefit from the country’s newfound wealth while most continue to live in poverty.

As the New York Time notes,

Angola is one of several African countries that have molded their governments, in an unspoken fashion, on what is widely known as the Chinese model. Leaders who have been in power for decades in countries like Angola, Ethiopia, Rwanda and Uganda have delivered considerable economic growth and, by some measures, improvements in health, education and development.

Leaders of these nations, all of them scarred by internal conflict, have offered their citizens an implicit bargain of development and stability in exchange for robust democracy.

An election poster of the ruling MPLA party in Luanda

An election poster of the ruling MPLA party in Luanda

The exact nature of the “Chinese model of development” is contested. Nevertheless, at its core, Chinese development was defined by a combination of selective economic liberalization combined with continued political control. China’s economic opening was the result of specific and selective political decisions made by the Chinese Communist Party. Further, Chinese development brought into question the link between democracy and capitalism that hand long been assumed in the development literature. Angola, like many other developing countries, appears to be moving towards that model, encouraging economic liberalization while restricting political liberalization and democratization.

Certainly there is historical reason to question the connection between democracy and development. South Korea, for example, experienced rapid economic growth by selectively liberalizing the economy (in the context of extensive state regulations, much like China) but simultaneously maintained a repressive and undemocratic government. Indeed, South Korean economic development, which averaged an impressive 9.2 percent per year from 1961 to 1979, occurred largely while the country was a military dictatorship. Clearly the relationship between democracy and development is not clear cut.

What do you think? Does China present an alternative model for economic development in Africa? How does Chinese development differ from the historical patterns of industrialization and development experienced in the West? And perhaps most importantly, how are democracy and development connected?

Measuring Progress: The Failure of the United States?

Blogging at the Global Dashboard, Alex Evans posted an interesting graph comparing the International Monetary Fund’s “advanced economy” countries across a number of measures. The graphic is reposed here:

As Evans notes, the graphic paints a pretty sad picture about the standing of the United States in several key measures of development, including income inequality, food insecurity, life expectancy, prison population, and student performance in math and science. In all of these categories, the United States ranks at or near the bottom of the 33 countries included in the study. Despite having the largest economy in the world, the United States has not been able to translate its economic prowess into social development as effectively as many of our fellow developed countries have.

It’s enough to make one rethink the whole development project.

Do Democracies Grow Faster?

Meeting of the Chinese Communist Party

Meeting of the Chinese Communist Party

In the 1980s, there was considerable debate about whether authoritarian or democratic governments were better for economic development. The discussion centered on the economic performance of authoritarian states in the developing world, including countries like South Korea and Argentina, which seemed to experience a far faster pace of economic growth than democratic counterparts like India. Indeed, this observation led some to conclude that rapid economic development necessitated authoritarianism, as democratic governments lacked the popular independence necessary to enact dramatic economic reforms. 

The debate over authoritarian development re-entered the spotlight yesterday, when Dani Rodrik posted an article questioning the link in Russia. According to Rodik, Vladimir Putin’s policies in Russia undermine prospects for economic growth. Rodrik observers that, contrary to the literature that emerged in the 1980s,

Democracies not only out-perform dictatorships when it comes to long-term economic growth, but also outdo them in several other important respects. They provide much greater economic stability, measured by the ups and downs of the business cycle. They are better at adjusting to external economic shocks (such as terms-of-trade declines or sudden stops in capital inflows). They generate more investment in human capital – health and education. And they produce more equitable societies.

Authoritarian regimes, by contrast, ultimately produce economies that are as fragile as their political systems. Their economic potency, when it exists, rests on the strength of individual leaders, or on favorable but temporary circumstances. They cannot aspire to continued economic innovation or to global economic leadership.”

But the prospects of rapid economic growth—a la the Chinese model—are often hard to ignore. Still, it is possible to envision different paths. The story of Kerala State in India represents one such alternative. In Kerala, a strong emphasis on the provision of basic needs has led to a prolonged period of economic stagnation, but has also led to dramatic improvements in literacy, nutrition, health care access, and declining child mortality. More recently, according to Duncan Green, Venezuela has successfully reduced inequality, While Rodrik may be correct to conclude that democratic developers like Brazil, South Africa, and India are likely to outpace authoritarian developers like China and Russia, the political benefits of calling on people to sacrifice a little freedom for a little prosperity are clear, if not just.

World Bank Data

The World Bank recently announced that, effective July 1, much of its data would be available to the public online. It’s a rich dataset, focused on living standards around the world, including more than 2,000 indicators, many of which span more than 50 years. The data is a veritable treasure-trove for those interested in development. Happy reading!

New Confidence in a Nuclear India

Fareed Zakaria, foreign affairs analyst for CNN, posted a brief analysis of the domestic and international implications of the confidence vote in India.  Last week, I briefly discussed the difficulties facing the Indian government over the civilian nuclear power deal signed with the United States.  On Tuesday, the government narrowly survived the confidence vote and approved the deal—by a vote of 275 in favor, 256 opposed.

Zakaria’s analysis is insightful.  He argues that the victory of the Congress Party in the confidence vote likely means big changes for India.  Domestically, Zakaria argues that the ruling Congress Party’s break with their Communist Party allies means that economic reform, which had stalled for years in the face of leftist opposition, is now likely to move forward.  We’re likely to see more dramatic moves towards liberalization and privatization in India, which may spur economic growth (and perhaps growing inequality as well).

Internationally, the vote signals a shift in the balance of power in Asia, with India moving closer to the United States as a potential ally to rival China.  Big imlications from the Indian political re-alignment.