Understanding Prosperity and Poverty

読み終わりました。

第14章 Breaking the Mold

How a few countries changed their economic trajectory by changing their institutions.

近年になってinclusiveに向かったボツワナ、合衆国南部、中国について。

To top it all off, it was almost completely surrounded by the white regimes of South Africa, Namibia, and Rhodesia, all of which were hostile to independent African countries run by blacks. It would have been on few people's list of countries most likely to succeed. Yet over the next forty-five years, Botswana would 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...

How did Botswana break the mold? By quickly developing inclusive economic and political institutions after independence.

Early stages of independence would play out very differently in Botswana, again largely because of the background created by Tswana historical institutions. In this, Botswana exhibited many parallels to England on the verge of the Glorious Revolution. England had achieved rapid political centralization under the Tudors and had the Magna Carta and the tradition of Parliament that could at least aspire to constrain monarchs and ensure some degree of pluralism. Botswana also had some amount of state centralization and relatively pluralistic tribal institutions that survived colonialism. England had a newly forming broad coalition, consisting of Atlantic traders, industrialists, and the commercially minded gentry, that was in favor of well-enfoeced property rights. Botswana had its coalition in favor of secure procedure rights, the Tswana chiefs, and elites who owned the major assets in the economy, cattle.

Together with inclusive institutions came more rapid economic improvements in the South. In 1940 southern states had only about 50 percent of the level of per capita income of the United States. This started to change in the late 1940s and '50s. By 1990 the gap had basically vanished.

Botswana, China, and the U.S. South, just like the Glorious Revolution in England, the French Revolution, and the Meiji Restoration in Japan, are vivid illustrations that history is not destiny. Despite the vicious circle, extractive institutions can be replaced by inclusive ones. But it is neither automatic nor easy. A confluence of factors, in particular a critical juncture coupled with a broad coalition of those pushing for reform or other propitious existing institutions, is often necessary for a nation to make strides toward more inclusive institutions. In addition some luck is key, because history always unfolds in a contingent way.

第15章 Understanding Prosperity and Poverty

How the world could have been different and how understanding this can explain why most attempts to combat poverty have failed.

まとめと、現在のextactive statesのこれから。歴史が示すように、vicious circleから抜け出すのは難しいようですが、条件付援助にはいくらかの効果があるようです。

Our choice was motivated not by a naive belief that such a theory couuld explain everything, but by the belief that a theory should enable us to focus on the parallels, sometimes at the expense of abstracting from many interesting details. A successful theory, then, does not faithfully reproduce details, but provides a useful and empirically well-grounded explanation for a range of processes while also clarifying the main forces at work.
　　　Our theory has attempted to achieve this by operating on two levels. The first is the distinction between extractive and inclusive economic and political institutions. The second is our explanation for why inclusive institutions emerged in some parts of the world and not in others. While the first level of our theory is about an institutional interpretation of history, the second level is about how history has shaped institutional trajectories of nations.

...sustained economic growth requires innovation, and innovation cannot be decoupled from creative destruction, which replaces the old with the new in the economic realm and also destabilizes established power relations in politics.

...the ability of those who dominate extractive institutions to benefit greatly at the expense of the rest of society implies that political power under extractive institutions is highly coveted, making many groups and individuals fight to obtain it.

Why does the path of institutional change differ change differ across societies? The answer to this question lies in institutional drift. In the same way that the genes of two isolated populations of organisms will drift apart slowly because of random mutations in the so-called process of evolutionary or genetic drift, two otherwise similar societies will also drift apart institutionary - albeit, again, slowly. Conflict over income and power, and indirectly over institutions, is a constant in all societies. This conflict often has a contingent ooutcome, even if the playing field over which it transpires is not level. The outcome of this conflict leads to institutional drift. But this is not necessarily a cumulative process. It does not imply that the small differences that emerge at some point will necessarily become larger over time. On the contrary, ... ,small differences open up, and then disappear, and then reappear again.

...some guidelines as to what types societies are more likely to achieve economic growth over the next several decades.
　　First, vicious and virtuous circles generate a lot of persistence and sluggishness....

In sub-Saharan Africa this includes Burundi, Ethiopia, Rwanda, nations with long histories of centralized states, and Tanzania, which has managed to build such centralization, or at least put in place some of the prerequisites for centralization, since independence. In Latin America, it includes Brazil, Chile, and Mexico, which have not only achieved political centralization but also made significant strides toward nascent pluralism. Our theory would suggest that sustained economic growth is very unlikely in Colonbia.

...extractive institutions can re-create themselves under different guises, as we saw with the iron law of oligarchy... Thus the fact that the extractive regime of President Mubarak was overturned by popular protest in February 2011 does not gurantee that Egypt will move onto a path to more inclusive institutions.

...because the contingent path of history implies that it is difficult to know whether a particular interplay of critical junctures and existing institutional differences will lead toward more inclusive or extractive institutions, it would be heroic to formulate general policy recommendations to encourage change toward inclusive institutions. Nevertheless, our theory is still useful for policy analysis, as it enables us to recognize bad policy advice, based on either incorrect hypotheses or inadequate understanding of how institutions can change. In this, as in most things, avoiding the worst mistakes is as important as - and more realistic than - attempting to develop simple solutions.

Despite the recent emphasis in China on innovation and technology, Chinese growth is based on the adoption of existing technologies and rapid investment, not creative destruction.

In the case of China, the growth process based on catch-up, import of foreign technology, and export of low-end manufacturing products is likely to continue for a while. Nevertheless, Chinese growth is also likely to come to an end, particularly once China reaches the standards of living level of a middle-income country. The most likely scenario may be for the Chinese Communist Party and the increasingly powerful Chinese economic elite to manage to maintain their very tight grip on power in the next several decades. In this case, history and our theory suggest that growth with creative destruction and true innovation will not arrive, and the spectacular growth rates in China will slowly evaporate.

Modernization theory is both incorrect and unhelpful for thinking about how to confront the major problems of extractive institutions in failing nations. The strongest piece of evidence in favor of modernization theory is that rich nations are the ones that have democratic regimes, respect civil and human rights, and enjoy functioning markets and generally inclusive economic institutions. Yet interpreting this association as supporting modernization theory ignores the major effect of inclusive economic and political institutions on economic growth.

Argentina was also one of the richest countries in the world in the nineteenth century, as rich as or even richer than Britain, because it was the beneficiary of the worldwide resource boom; it also had the most educated population in Latin America. But democracy and pluralism were no more successful, and were arguably less successful, in Argentina than in much of the rest of Latin America. One coup followed another... even democratically elected leaders acted as rapacious dictators. Even more recently there has been little progress toward inclusive economic institutions... twenty-first-century Argentinian governments can still expropriate their citizens' wealth with impunity.

Though on their own many of these reforms might be sensible, the approach of international organizations in Washington, London, Paris, and elsewhere is still steeped in an incorrect perspective that fails to recognize the role of political institutions and the constraints they place on policymaking.

Small market failures are everywhere in poor countries, this approach claims - for example, in their education systems, health care delivery, and the way their markets are organized. This is undoubtedly true. But the problem is that these small market failures may be only the tip of the iceberg, the symptom of deeper-rooted problems in a society functioning under extractive institutions. Just as it is not a coincidence that poor countries have bad macroeconomic policies, it is not a coincidence that their educational systems do not work well. These market failures may not be due solely to ignorance. The policymakers and bureaucrats who are supposed to act on well-intentioned advice may be as much a part of the problem, and the many attempts to rectify these inefficiencies may backfire precisely because those in charge are not grappling with the institutional causes of the poverty in the first place.

Of the promised money, 20 percent of it was taken as UN head office costs in Geneva.The remainder was subcontracted to an NGO, which took another 20 percent for its own head office costs in Bruussels, and so on, for another three layers, with each party taking approximately another 20 percent of what was remaining. The little money that reached Afghanistan was used to buy wood from western Iran, and much of it was paid to Ismail Khan's trucking cartel to cover the inflated transport prices. It was a bit of a miracle that those oversize wooden beams even arrived in the village. ...Many studies estimate that only about 10 or at most 20 percent of aid over reaches its target.

One solution - which has recently become more popular, partly based on the recognition that institutions have something to do with prosperity and even the delivery of aid - is to make aid "conditional." According to this view, continued foreign aid should depend on recipient governments meeting certain conditions - for example, liberalizing markets or moving toward democracy. The George W. Bush administration undertook the biggest step toward this type of conditional aid by starting the Millennium Challenge Accounts, which made future aid payments dependent on quantitative improvements in several dimensions of economic and political development.

...foreign aid is not a very effective means of dealing with the failure of nations around the world today.

...since the development of inclusive economic and political institutions is key, using the existing flows of foreign aid at least in part to facilitate such development would be useful.

What can be done to kick-start or perhaps just facilitate the process of empowerment and thus the development of inclusive political institutions? The honest answer of course is that there is no recipe for building such institutions.

The media can also play a key role in channeling the empowerment of a broad segment of society into more durable political reforms,...