AN AFRICAN SUCCESS STORY: BOTSWANA

AN AFRICAN SUCCESS STORY: BOTSWANA

Acemoglu, Johnson & Robinson

In Rodrik, ed., In Search of Prosperity, pp. 80-122

 A Summary

In a Nutshell

This is a classic insitutionalist argument that attempts to explain the extraordinary growth record of Botswana based on the institutions that were in place. These institutions made the choice of economically orthodox policies and possible despite adverse post-colonial conditions of inequality and poverty. The reason that these institutions were able to exist in Botswana was primarily due to the pre-colonial existence of inclusive institutions, and the light handed British colonialism that enabled many of the indigenous institutions to remain in place even after independence. The protection of private property was in the interest of the elites, and there was significant revenues from diamond mining that were distributed widely meaning that there was little to be gained from seeking to capture those revenues.

 Institutions

  • In this context good institutions means that a broad cross-section of society have effective property rights. These contrast with extractive institutions. There is an implied limit to arbitrary and extractive behviour by the state which must be to a certain degree strong in order to protect those rights.

 Relevant History of Botswana

  • The chief was the central figure but there existed a hierarchy of public forums.
  • Land was farmed collectively but there was private ownership of cattle.
  • The location of Botswana was strategic and this was of value to the British rather than any territory or land that was thought to be attractive itself. This meant colonialism was very light.
  • Post-colonial politics saw the emergence of a party that sought to integrate traditional chiefs and the educated elites. This party has ruled ever since (not a great sign of democracy).
  • The president wanted a strong central state to prevent impediment by the regional rulers. The chiefs were gradually stripped of their powers.
  • Sub-soil rights were vested in the government so the government received 50% profits from diamond mines. The profits were used efficiently to invest in the government budget. Resources were thus invested not squandered.

 Political Economy of Botswana

  • The success of Botswana has been the enacting of good policies. But AJR argue these are not causes but outcomes of good institutions.
  • The economic outcomes of the immediate post-colonial system of development were beneficial to the elites and as such they had an interest in preserving the institutions they inherited. Once the diamond income started flowing in there was no struggle for control, as the degree of political stability that had been established along with the widespread use of the diamond funds to make productive investments meant that the elites were not afraid of losing their dominant position. The challenging of the institutional path in other words had a high opportunity cost meaning that no group wanted to fight – they didn’t want to rock the boat.
  • The interests were aligned as the political elites had an interest in preserving the institutional system they inherited upon independence. They could keep their power by following good policies.

[Implications

Following Przeworski, such analyses suffer from endogeneity problems. Why should we accept that it was the institutions of private property that drove growth in Botswana rather than the conditions that enabled those institutions? Putnam however, makes a case for saying that social capital is the foundation of those institutions and enables them to function.

 It is not clear how to disentangle the effects of the diamond revenues from the larger development picture.

 Nevertheless even if we submit to the logic of the paper and agree that it is the institutions of Botswana that have enabled it to develop, it is quite clear that this development is the product of a unique history, a history not shared by any other state, and thus no replicable. It would not be a valid strategy to export the institutions of Botswana to Somalia where the shared ideals and history, and social capital, is so different.

 This would suggest that interventions in Somalia should be based upon piecemeal solutions rather than any grand structural plans (Easterly).]

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