Why Poor Countries Are Poor

The clues lie on a bumpy road leading to the world's worst library.

Tim Harford from the March 2006 issue

(Page 2 of 3)

"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.

Comments

charles|10.19.09 @ 7:05PM|#

I accidentally arrived at this article because of libraries and Africa and the magic name of TH. I was reminded of a grand new impressive library in East Africa, opened by a British PM. I took notice when several students at that university told me there were no books in it for the students. Of course libraries shouldn't have books. Libraries are buildings; just in case of books. Excuse me, I'm now off to get a sparkling new international airport built with my name on it, from whence no planes will really fly. So what? More importantly, it will bear my name.
PS Thank you for reminding us of Mancur Olson.