Artikel: Why Poor Countries Are Poor

[Martijn Meijering]

REPLY TO: D66 at nic.surfnet.nl

Mooi artikel Bart, dank. In minder ernstige vorm geldt dit vrees is ook
voor westerse democratieen...

> REPLY TO: D66 at nic.surfnet.nl
>
> http://www.reason.com/news/show/33258.html?id=05dr3
>
> Wel aardige leeskost vond ik, hoe krijgen we toch eens voor elkaar dat
> er in die arm blijvende landen eens behoorlijk bestuur komt.
>
> Welke krachten kan de internationale gemeenschap uitoefenen, behoudens
> dom geweld? Zorgen dat verkiezingen eerlijk verlopen, maar dan ook echt?
>
> Dus inclusief vrije pers, vrije informatie, het uitsluiten van fraude en
> dwang, en zorgen dat iedereen kan stemmen?
>
> Ik zet de tekst hier toch maar even onder:
>
> Why Poor Countries Are Poor
>
> The clues lie on a bumpy road leading to the world's worst library.
>
> Tim Harford | March 2006 Print Edition
>
> They call Douala the "armpit of Africa." Lodged beneath the bulging
> shoulder of West Africa, this malaria-infested city in southwestern
> Cameroon is humid, unattractive, and smelly. On a torrid evening in late
> 2001, I was guided out of the chaotic Douala International Airport by my
> friend Andrew and his driver, Sam, who would have whisked us immediately
> to the cooler hillside town of Buea if Douala were at all conducive to
> being whisked anywhere. It isn't. Douala, a city of 2 million people,
> has no real roads.
>
> A typical Douala street is 50 yards wide from shack to shack. It's
> packed with street vendors, slouched beside a tray of peanuts or an
> impromptu plantain barbecue, and with little clusters of people,
> standing around a motorbike, drinking beer or palm wine, or cooking on a
> small fire. Piles of rubble and vast holes mark unfinished construction
> or demolition work. Along the middle is a strip of potholes that 20
> years ago was a road.
>
> Down that strip drive four streams of traffic, mostly taxis. The streams
> on the outside are usually made up of cabs picking up fares, while the
> taxis on the inside weave in and out of the potholes and other cars with
> all the predictability of ping pong balls in a lottery machine. Douala
> used to have buses, but they can no longer cope with the decaying roads.
> So the taxis are all that's left: beaten-up old Toyotas, carrying four
> in the back and three in the front, sprayed New York yellow, each with a
> unique slogan: "God Is Great, " "In God We Trust," "Powered by God, "
> "Toss Man."
>
> Nobody who sees a Douala street scene can conclude that Cameroon is poor
> because of a lack of entrepreneurial spirit. But poor it is. The average
> Cameroonian is eight times poorer than the average citizen of the world
> and almost 50 times poorer than the typical American. And Cameroon is
> getting poorer. Can anything be done to reverse the decline and help
> Cameroon grow richer instead?
>
> That's no small question. As the Nobel laureate economist Robert Lucas
> put it, "The consequences for human welfare involved in questions like
> these are simply staggering: Once one starts to think about them, it is
> hard to think about anything else."
>
>
> The Missing Jigsaw Piece
>
> Economists used to think wealth came from a combination of man-made
> resources (roads, factories, telephone systems), human resources (hard
> work and education), and technological resources (technical know-how, or
> simply high-tech machinery). Obviously, poor countries grew into rich
> countries by investing money in physical resources and by improving
> human and technological resources with education and technology transfer
> programs.
>
> Nothing is wrong with this picture as far as it goes. Education,
> factories, infrastructure, and technical know-how are indeed abundant in
> rich countries and lacking in poor ones. But the picture is incomplete,
> a puzzle with the most important piece missing.
>
> The first clue that something is amiss with the traditional story is its
> implication that poor countries should have been catching up with rich
> ones for the last century or so--and that the farther behind they are,
> the faster the catch-up should be. In a country that has very little in
> the way of infrastructure or education, new investments have the biggest
> rewards.
>
> This expectation seems to be confirmed by the experience of China,
> Taiwan, and South Korea--not to mention Botswana, Chile, India,
> Mauritius, and Singapore. Fifty years ago they were mired in poverty,
> lacking man-made, human, technical, and sometimes natural resources. Now
> these dynamic countries, not Japan, the United States, or Switzerland,
> have become the fastest-growing economies on the planet.
>
> Since technology is widely available and increasingly cheap, this is
> what economists should expect of every developing country. In a world of
> diminishing returns, the poorest countries gain the most from new
> technology, infrastructure, and education. South Korea, for example,
> acquired technology by encouraging foreign companies to invest or by
> paying licensing fees. In addition to the fees, the investing companies
> sent profits back home. But the gains to Korean workers and investors,
> in the form of economic growth, were 50 times greater than the fees and
> profits that left the country.
>
> As for education and infrastructure, since the returns seem to be so
> high, there should be no shortage of investors willing to fund
> infrastructure projects or lend money to students (or to governments
> that provide education). Banks, domestic and foreign, should be lining
> up to lend people the money to get through school or to build a new road
> or a new power plant. In turn, poor people, or poor countries, should be
> very happy to take out such loans, confident that investment returns are
> so high that the repayments will not be difficult. Even if, for some
> reason, that didn't happen, the World Bank, established after World War
> II with the express aim of providing loans to countries for
> reconstruction and development, lends billions of dollars a year to
> developing countries. Investment money is clearly not the issue; either
> the investments are not being made, or they are not delivering the
> returns the traditional model predicts.
>
>
> A Theory of Government Banditry
>
> As our car slowly bumped and lurched through the crowds, I tried to make
> sense of it all by asking Sam, the driver, about the country.
>
> "Sam, how long was it since the roads were last fixed?"
>
> "The roads, they have not been fixed for 19 years."
>
> President Paul Biya came to power in November 1982 and had been in
> office for 19 years by the time I visited Cameroon. Four years later, he
> is still in power. He recently described his opponents as "political
> amateurs"; they are certainly out of practice.
>
> "Don't people complain about the roads?"
>
> "They complain, but nothing is done. The government tells us there is no
> money. But there is plenty of money coming from the World Bank and from
> France and Britain and America--but they put it in their pockets. They
> do not spend it on the roads. "
>
> "Are there elections in Cameroon?"
>
> "Yes! There are elections. President Biya is always re-elected with a 90
> percent majority. "
>
> "Do 90 percent of people vote for President Biya?"
>
> "No, they do not. He is very unpopular. But still there is a 90 percent
> majority. "
>
> You do not have to spend a long time in Cameroon to realize how much
> people resent the government. Much of government activity appears to be
> designed expressly to steal money from the people of Cameroon. According
> to the global watchdog Transparency International, Cameroon is one of
> the most corrupt countries in the world. I was warned so starkly about
> government corruption, and the likelihood that officials at the airport
> would attempt to relieve me of my wad of West African francs, that I was
> more nervous about that than the risk of malaria or a gunpoint mugging
> in the back streets of Douala.
>
> Many people have an optimistic view of politicians and civil
> servants--that they are all serving the people and doing their best to
> look after the interests of the country. Other people are more cynical,
> suggesting that many politicians are incompetent and often trade off the
> public interest against their own chances of re-election. The economist
> Mancur Olson proposed a working assumption that government's motivations
> are darker still, and from it theorized that stable dictatorships should
> be worse for economic growth than democracies, but better than sheer
> instability.
>
> Olson supposed that governments are simply bandits, people with the
> biggest guns who will turn up and take everything. That's the starting
> point of his analysis--a starting point you will have no trouble
> accepting if you spend five minutes looking around you in Cameroon. As
> Sam said, "There is plenty of money...but they put it in their pockets."
>
> Imagine a dictator with a tenure of one week--in effect, a bandit with a
> roving army who sweeps in, takes whatever he wishes, and leaves.
> Assuming he's neither malevolent nor kindhearted, but purely
> self-interested, he has no incentive to leave anything, unless he plans
> on coming back next year. But imagine that the roaming bandit likes the
> climate of a certain spot and decides to settle down, building a palace
> and encouraging his army to avail themselves of the locals. Desperately
> unfair though it is, the locals are probably better off now that the
> dictator has decided to stay. A purely self-interested dictator will
> realize he cannot destroy the economy and starve the people if he plans
> on sticking around, because then he would exhaust all the resources and
> have nothing to steal the following year. So a dictator who lays claim
> to a land is a preferable to one who moves around constantly in search
> of new victims to plunder.
>
> I cannot confirm that President Biya fits Olson's description of a
> self-interested dictator. But if he did, it wouldn't be in his interest
> to take too much from the Cameroonian people, because then there would
> be nothing to take next year. As long as he feels secure in his tenure,
> he will not wish to kill the golden goose. Like the virus whose very
> existence relies on the bodies it afflicts, Biya would have to keep the
> Cameroonian economy functioning in order to keep stealing from it. This
> suggests that a leader who confidently expects to be in power for 20
> years will do more to cultivate his economy than one who expects to flee
> the country after 20 weeks. Twenty years of an "elected dictator" is
> probably better than 20 years of one coup after another.
>
> Staying with the simplifying assumption that Biya has absolute power
> over the distribution of Cameroon's income, he might decide to steal,
> say, half of it every year in the form of "taxes" that go into his
> personal bank account. That would be bad news for his victims, of
> course, but also bad news for Cameroon's long-term growth. Think of a
> small business owner considering an investment of $1,000 in a new power
> generator for his workshop. The investment is expected to generate
> income of $100 a year. That's 10 percent, a pretty good return. But
> since Biya might take half of it, the return falls to a much less
> attractive 5 percent. The businessman decides not to make the investment
> after all, so he misses out and so does Biya.
>
> Olson does not predict that stable dictatorships will do good things for
> their countries, just that they'll damage the economy less than unstable
> ones. Of course, Biya might make his own investments--for instance,
> providing roads or bridges to encourage commerce. While they would be
> expensive in the short term, they would help the economy to prosper,
> leaving Biya with more opportunities to steal later. But the flip side
> of the businessman's problem applies: Biya would be stealing only half
> of the benefits, not nearly enough to encourage him to provide the
> infrastructure that Cameroon needs.
>
> When Biya came to power in 1982, he inherited colonial-era roads that
> had yet to fall apart completely. If he had inherited a country without
> any infrastructure, it would have been in his interest to build it up to
> some extent. Because the infrastructure was already in place, Biya
> needed to calculate whether it was worth maintaining, or whether he
> could simply live off the legacy of Cameroon's colonial rulers. In 1982
> he probably thought the roads would last into the 1990s, which was as
> long as he could reasonably have expected to hold onto the reins of
> power. So he decided to live off the capital of the past and never
> bothered to invest in any type of infrastructure for his people. As long
> as there was enough to get him through his rule, why bother spending
> money that could otherwise go right into his personal retirement fund?
>
>
> Bandits, Bandits Everywhere
>
> But perhaps Biya is not in control as much as it first appears. A little
> traveling in Cameroon reveals that whether or not Biya is the
> bandit-in-chief, there are many petty bandits to satisfy.
>
> If you want to drive from the town of Buea to Bamenda, farther north,
> the most popular way to make the trip is by bus; minibuses ply all
> long-distance routes in Cameroon. Designed to seat 10 people in comfort,
> they will depart as soon as 13 paying passengers have boarded. The
> relatively capacious seat beside the driver is worth fighting for. The
> vehicles are old bone-shakers, but the system works pretty well. It
> would work a lot better if not for all the roadblocks.
>
> Bullying gendarmes, often drunk, stop every minibus and try their best
> to extract bribes from the passengers. They usually fail, but from time
> to time they become determined. My friend Andrew was once hauled off a
> bus and harassed for several hours. The eventual pretext for the bribe
> was his lack of a yellow-fever certificate, which you need when you
> enter the country but not when riding a bus. The gendarme explained
> patiently that Cameroon had to be protected from disease. The price of
> two beers convinced him that an epidemic had been prevented, and Andrew
> caught the next bus, three hours later.
>
> This is even less efficient than Mancur Olson's model predicts. Olson
> himself would have admitted that his theory in its starkest form
> underestimates the damage that bad governments inflict on their people.
> Biya needs to keep hundreds of thousands of armed police and army
> officers happy, as well as many civil servants and other supporters. In
> a "perfect" dictatorship, he would simply impose the least damaging
> taxes possible in whatever quantity was necessary and distribute the
> proceeds to his supporters. This approach turns out to be impracticable,
> because it requires far more information about and control over the
> economy than a poor government can possibly muster. The substitute is
> government-tolerated corruption on a massive scale.
>
> The corruption is not only unfair; it is also hugely wasteful. Gendarmes
> spend their time harassing travelers in return for modest returns. The
> costs are enormous. An entire police force is too busy extracting bribes
> to catch criminals. A four-hour trip takes five hours. Travelers take
> costly steps to protect themselves: carrying less money, traveling less
> often or at busier times of the day, bringing extra paperwork to help
> fend off attempts to extract bribes.
>
> The blockades and crooked police officers comprise a particularly
> visible form of corruption, but there are metaphorical roadblocks
> throughout the Cameroonian economy. To set up a small business, an
> entrepreneur must spend on official fees nearly as much as the average
> Cameroonian makes in two years. To buy or sell property costs nearly a
> fifth of the property's value. To get the courts to enforce an unpaid
> invoice takes nearly two years, costs more than a third of the invoice's
> value, and requires 58 separate procedures. These ridiculous regulations
> are good news for the bureaucrats who enforce them. Every procedure is
> an opportunity to extract a bribe. The slower the standard processes,
> the greater the temptation to pay "speed money."
>
> Inflexible labor regulations help ensure that only experienced
> professional men are given formal contracts; women and young people have
> to fend for themselves in the gray market. Red tape discourages new
> businesses. Slow courts mean that entrepreneurs are forced to turn down
> attractive opportunities with new customers, because they know they
> cannot protect themselves if they are cheated. Poor countries have the
> worst examples of such regulations, and that is one of the major reasons
> they are poor. Officials in rich countries perform these basic
> bureaucratic tasks relatively quickly and cheaply, whereas officials in
> poor countries draw out the process in hopes of pocketing some extra
> cash themselves.
>
>
> Institutions Matter
>
> Government banditry, widespread waste, and oppressive regulations are
> all elements in that missing piece of the puzzle. During the last 10
> years or so, economists working on development issues have converged on
> the mantra that "institutions matter." Of course, it is hard to describe
> what an "institution" really is. It is even harder to convert a bad
> institution into a good one.
>
> But progress is being made. We've just seen one kind of institution:
> business regulations. Sometimes, it can be improved with simple
> publicity. After the World Bank revealed that entrepreneurs in Ethiopia
> couldn't legally start a business without paying four years' salary to
> publish an official notice in government newspapers, the Ethiopian
> government scrapped the rule. New business registrations jumped by
> almost 50 percent immediately.
>
> Unfortunately, it is not always so easy to get corrupt governments to
> change their ways. Although it is becoming clearer and clearer that
> dysfunctional institutions are a key explanation of poverty in
> developing countries, most institutions cannot be described with an
> elegant model like Mancur Olson's, or even with careful data-gathering
> by the World Bank. Most unhappy institutions are unhappy in their own way.
>
> Such a uniquely backfiring setup was responsible for the world's worst
> library. A few days after I arrived in Cameroon, I visited one of the
> country's most prestigious private schools--Cameroon's equivalent of
> Eton. The school boasted two separate library buildings, but the
> librarian was very unhappy. I soon understood why.
>
> At first glance the new library was impressive. With the exception of
> the principal's palatial house, it was the only two-story structure on
> campus. Its design was adventurous: a poor man's Sydney Opera House. The
> sloped roof, rather than running down from a ridge, soared up in a V
> from a central valley like the pages of an open book on a stand.
>
> When you're standing in the blazing sunlight of the Cameroonian dry
> season, it's hard to see at first what the problem is with a roof that
> looks like a giant open book. But that's only if you forget, as the
> architect apparently did, that Cameroon also has a rainy season. When it
> rains in Cameroon, it rains for five solid months. It rains so hard that
> even the most massive storm ditches quickly overflow. When that kind of
> rain meets a roof that is, essentially, a gutter that drains onto a
> flat-roofed entrance hall, you know it's time to laminate the books. The
> only reason the school's books still existed was that they'd never been
> near the new building; the librarian had refused repeated requests from
> the principal to transfer them from the old library.
>
> I was tempted to conclude that the principal was in an advanced stage of
> denial when I stepped inside the new library to see the devastation. It
> was in ruins. The floor contained the stains of countless puddles. The
> air carried the kind of musty smell associated with a damp cave. The
> plaster was peeling off the walls. Yet the library is only four years old.
>
> This is a shocking waste. Instead of building the library, the school
> could have bought 40,000 good books, or acquired computers with Internet
> connections, or funded scholarships for poor children. Any of these
> alternatives would have been incomparably better than an unusable new
> library. The school never even needed a new library in the first
> place--the old library works perfectly well, could easily hold three
> times as many books as the school owns, and is waterproof.
>
> If the library was such a pointless endeavor, why was it built at all?
> It's all too tempting for the visitor in Cameroon to shrug his shoulders
> and explain the country's poverty by presuming that Cameroonians are
> idiots. Cameroonians are no smarter or dumber than the rest of us.
> Seemingly stupid mistakes are so ubiquitous in Cameroon that
> incompetence cannot be the whole explanation. There is something more
> systematic at work. We need to consider the incentives of the decision
> makers.
>
> First, most of the senior education officials in northwest Cameroon come
> from the small town of Bafut. Known as the Bafut Mafia, these officials
> control considerable funds for the education system, which they hand out
> based on personal connections rather than necessity. Not surprisingly,
> the principal of this prestigious private school was a senior member of
> the Bafut Mafia. Wanting to convert her school into a university, the
> principal needed to build a library of university size and quality. It
> was irrelevant to the principal that the current library was more than
> sufficient, and that the taxpayers' money could have been better spent
> in other ways or by other schools.
>
> Second, nobody was monitoring the principal or her spending. Staff
> members are paid or promoted not on merit but at the principal's
> command. This is a prestigious school with good conditions for teachers,
> so staff members would be particularly eager to keep their jobs, which
> meant keeping in good favor with the principal. In fact, the only person
> able to defy the principal was the librarian, who was accountable only
> to the Voluntary Service Overseas office in London. She turned up after
> the library was built but was at least in time to prevent the book
> collection from being transferred and destroyed.
>
> Either the principal was so stupid that she did not realize water ruins
> books, or she did not care very much about the books and simply wanted
> to demonstrate that the library had some books in it. The second
> explanation seems more likely. With the money at her fingertips and
> nobody to object to the wastefulness of building a second library, the
> principal had full control over the project. She appointed a former
> pupil of the school to design the library, probably to demonstrate the
> quality of education provided by the school; she did prove a point,
> although perhaps not the one she intended. But no matter how incompetent
> the architect, the flaws in the design would have been spotted if
> anybody concerned had a strong interest in making sure the library
> functioned as a library. But that was never the prime concern of anybody
> with authority. The people in power simply cared about putting up
> something that could qualify the school as a university.
>
> Consider the situation: money that was provided because of social
> networks rather than need; a project designed for prestige rather than
> use; a lack of monitoring and accountability; and an architect appointed
> for show by somebody with little interest in the quality of the work.
> The outcome is hardly surprising: A project that should never have been
> built was built, and built badly. The lesson of the story might appear
> to be that self-interested and ambitious people in power are often the
> cause of wastefulness in developing countries. But self-interested and
> ambitious people are in positions of power, great and small, all over
> the world. In many places, they are restrained by the law, the press,
> and democratic opposition. Cameroon's tragedy is that there is nothing
> to hold self-interest in check.
>
>
> Does Development Have a Chance?
>
> Development specialists often focus on helping poor countries become
> richer by improving primary education and infrastructure such as roads
> and telephones. That's surely sensible. Unfortunately, it's only a small
> part of the problem. Economists who have pulled apart the statistics, or
> studied unusual data such as the earnings of Cameroonians in Cameroon
> and the earnings of Cameroonians who immigrate to the United States,
> have found that education, infrastructure, and factories only begin to
> explain the gap between rich and poor. Because of its lousy education
> system, Cameroon is perhaps twice as poor as it could be. Because of its
> terrible infrastructure, it's roughly twice as poor again. So we would
> expect Cameroon to be four times poorer than the United States. But it
> is 50 times poorer.
>
> More important, why can't the Cameroonian people seem to do anything
> about it? Couldn't Cameroonian communities improve their schools?
> Wouldn't the benefits easily outweigh the costs? Couldn't Cameroonian
> businessmen build factories, license technology, seek foreign partners,
> and make a fortune?
>
> Evidently not. Mancur Olson showed that kleptocracy at the top stunts
> the growth of poor countries. Having a thief for president doesn't
> necessarily spell doom; the president might prefer to boost the economy
> and then take a slice of a bigger pie. But in general, looting will be
> widespread either because the dictator is not confident of his tenure or
> because he needs to allow others to steal in order to keep their support.
>
> The rot starts with government, but it afflicts the entire society.
> There's no point investing in a business because the government will not
> protect you against thieves. (So you might as well become a thief
> yourself.) There's no point in paying your phone bill because no court
> can make you pay. (So there's no point being a phone company.) There's
> no point setting up an import business because the customs officers will
> be the ones to benefit. (So the customs office is underfunded and looks
> even harder for bribes.) There's no point getting an education because
> jobs are not handed out on merit. (And in any case, you can't borrow
> money for school fees because the bank can't collect on the loan.)
>
> It is not news that corruption and perverse incentives matter. But
> perhaps it is news that the problem of twisted rules and institutions
> explains not just a little bit of the gap between Cameroon and rich
> countries but almost all of the gap. Countries like Cameroon fall far
> below their potential even considering their poor infrastructure, low
> investment, and minimal education. Worse, the web of corruption foils
> every effort to improve the infrastructure, attract investment, and
> raise educational standards.
>
> We still don't have a good word to describe what is missing in Cameroon
> and in poor countries across the world. But we are starting to
> understand what it is. Some people call it "social capital," or maybe
> "trust." Others call it "the rule of law," or "institutions." But these
> are just labels. The problem is that Cameroon, like other poor
> countries, is a topsy-turvy place where it's in most people's interest
> to take actions that directly or indirectly damage everyone else. The
> incentives to create wealth are turned on their heads like the roof of
> the school library.
>
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--
Martijn Meijering
Meijering & van Sterkenburg
Niels Bohrweg 11-13
2333 CA LEIDEN
The Netherlands
phone: +31-(0)71-5282833
fax:   +31-(0)71-5282834

VAT NL1754.15.407.B.01
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