What produces success or failure of nations?

How the arguments advanced to explain nations that have rapidly transformed are the same for the nations that failed

What made South Korea (and Taiwan, Singapore, Hong Kong and Malaysia) develop so rapidly that was absent in sub-Sahara Africa and South Asia (India, Pakistan, Bangladesh, Sri Lanka, Burma and Nepal)?
I argued last week that while we have an idea about the factors that produce rapid social and economic transformation, we do not know how these factors interact with one another to bring this about. This is because even the worst development disasters have similar factors as the success stories.

Let us do a roll call of some of the arguments we often raise to justify our criticism of governments that have failed or in praise of those that have succeeded. I admit from the beginning that I am as guilty as everyone else of making these assertions, which on close examination turn out to be false.

First: Having a strong leader, like Gen. Park Chang Hee in South Korea (just like Lee Kuan Yew in Singapore or Chiang Kai Shek in Taiwan) is what drives rapid development. Park was a tough guy who killed opponents, rigged elections, ruled by decree under martial law from 1972-79. He extended subsidies, cheap loans and tax waivers to businesses owned by his cronies, suppressed the media, cracked on trade unions and gagged students. Yew and Chiang did similar things. These actions can also be used to make the case against leaders who presided over developmental disasters such as Mobutu Sese Seko of Zaire, Idi Amin of Uganda, Samuel Doe of Liberia, Sani Abacha of Nigeria, Siad Barre of Somalia etc.

Second: Park (like Lee and Chiang) was a benevolent tyrant with good policies i.e. openness to trade, massive investment in education and supporting local entrepreneurs. However, the policies Park pursued in South Korea like export-led industrialisation by supporting a select group of domestic industrial houses and in alliance with America were also pursued by other countries led by strong men like Kenya (under Jomo Kenyatta and Daniel arap Moi), Pakistan (under Field Marshal Mohamed Ayub Khan), Philippines (under Ferdinand Marcos), Nigeria (under Yakubu Gowon and Olusegun Obasanjo) and Zaire (under Mobutu). There may have been variations in detail but not in substance. And as Harvard’s Lant Pritchette has shown, many of the failed countries in Africa (e.g. Zambia and Angola) enjoyed faster expansion in human capital than South Korea.

Third: the problem with African leaders is that they tend to overstay in power: Mobutu (32 years in Zaire), a Paul Biya (32 years in Cameroon), an Eduardo Dos Santos (35 years in Angola), a Yoweri Museveni (28 years in Uganda), a Robert Mugabe (34 years in Zimbabwe), an Omar Bongo (42 years in Gabon) or a Gnassingbe Eyadema (42 years in Togo). Well leaders in East Asia overstayed in power as well. Park ruled from 1961 to 1979 (18 years) when he was assassinated (and he was not planning to retire; Malaysia (24 years of Mahathir Mohamed), Taiwan (30 years of Chiang Kai Shek), Singapore (32 years of Lee Kuan Yew) and Indonesia (32 years of Suharto). If longevity is responsible for the failure of sub-Sahara African countries to transform as rapidly as East Asian countries did, then we must understand the specific way in which it played this dysfunctional role.

Fourth: sometimes the coin is flipped. Africa failed because it was not democratic. Yet all historical experience shows that regular democratic changes of government through free and fair elections have not produced a rapid success story except in Mauritius (Botswana has been ruled by one political party for all its 48 years of independence). The largest democracy in the world, India, has experienced mediocre developmental performance in spite of (and many studies demonstrate “also because of” its free and fair regular elections, free press, multiparty competition and a vibrant civic life).

Nearly all the countries of Europe and North America were not democracies as we understand it today when they began their journey of transformation from agricultural to industrial economies. For example, women could not vote in almost all of Europe until after it was industrialised: UK 1918, France 1944, Italy 1945, Switzerland 1972, Germany 1918, Belgium 1918, Netherlands 1919, Denmark 1915, etc. In the USA, blacks got the real vote in 1965. In all these cases it took a big war to force through electoral reforms. Democracy seems to have been a product of transformation rather than a cause of it.

Fifth: corruption. Mobutu, Dos Santos, Abacha, Moi, Eyadema, Bongo, Museveni, Mugabe et al have presided over corrupt governments. That is why poverty is persistent. But there was as much corruption in South Korea as in Uganda today. In 1996, former President Roh Tae-woo of South Korea was arrested and he admitted to accumulating a fortune of US$650 million while in office. His predecessor, Chun Doo-hwan, was directed by the Supreme Court to return $200 million he took in bribes while in office. Indeed, as David Kang has demonstrated in his book, Crony Capitalism, corruption was not just a side effect of South Korea’s process of rapid industrial transformation but rather the very basis of it. Similar high levels of family-orchestrated “loot” were present in Suharto’s Indonesia - but it transformed.

Over years reading politics, economics and political economy, I have become skeptical of standard arguments about what drives success in poor countries. Now I believe that to understand the process of economic change, we should not deal with such issues as democracy versus dictatorship, honest versus corrupt government, good versus bad leaders, compromised or autonomous political institutions, good versus bad public policies on face value. All these arguments tend to obscure rather than illuminate the issues. This is because we deal with these issues as we do with a black box.

We need to open this black box and look at its contents – how all above elements interact to foster or impede progress. It is possible that a corrupt dictatorship in one country at a given time is what is necessary to achieve rapid change. But it can become dysfunctional in another country with different social and political dynamics. The building of a national identity and an effective state in homogenous Rwanda under a Tutsi president may demand honest government; but in heterogeneous Nigeria or DRC, corruption may be the glue to bring and hold diverse interests of powerful elites together. There is no one size that fits all.

amwenda@independent.co.ug

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