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 3 of 4)

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.

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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.

SteveMac|4.26.12 @ 9:20AM|#

PRINCE Charles??

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Richardhg|1.20.10 @ 11:02PM|#

The rest of the world have been complicit in propping up disastrous regimes, providing money to despots without requiring change that would benefit the people.

If we are going to continue to give them money, we should insist on some changes; a free press, Government transparency (public bids for large projects and Government service providers), and put a permanent office in place to overview progress, staffed by people who understand the projects in hand. Food assistance should be distributed directly without local Government intervention: oversight is OK.

SteveMac|4.26.12 @ 9:51AM|#

If they said you have to have free press and transparency, the dictator would probably say keep your money and I'll keep my power. Its not that easy. You're right though, a different approach is needed. I think they should directly invest instead of giving it to the government.

bstew|1.21.10 @ 11:06PM|#

Very wordy way to say "it's culture" Culture runs very deep and lasts for generations. If the culture doesn't change neither will the country.

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A Life Lesson from Poor Countries links to this page. Here’s an excerpt:

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|3.30.10 @ 6:38PM|#

Hi!
I agree with the whole good piece. Apart from one claim: Cameroon has an average IQ of 70. That is 30 points lower than the US. We know that IQ is very very strongly correlated with other abilities, indeed any moderate success in US college require at least IQ100. Imagine a whole country below that and you do have an explanation for all the bad decisions and institutions. The writer is probably at IQ 120, so for him to say that the average Cameroonean is no dumber than him, is completely false. Otherwise great little piece.

|9.4.10 @ 1:05AM|#

thank you, you have just insulted an entire nation!

where did you get that fallacious information? It too easy to say "oh it s because they are dumb"; and not look further. taking the easy way and not putting anymore thought into it. Hmmm I wonder, if you don t think too much and take the easy way, what does that make you?...{u actually don t deserve that use the word}

from a proud cameroonian.

|3.4.11 @ 9:29AM|#

I too disagree with Putty. The reason why IQ is low is the lack of investment in education (and everything in Cameroon). This includes food, which is essential in providing the body with so much) The government are deliberately keeping the population down to satisfy their own desires. If they had one chance for change, we would see a different Cameroon.

It isn't fallacious|12.16.11 @ 3:19PM|#

Its based on general intelligence assays which have demonstrated that West African blacks have an average IQ of ~70

see: Race Differences in Intelligence: An Evolutionary Analysis (2006) Lynn

SteveMac|4.26.12 @ 10:01AM|#

It is false. Lynn didn't do primary research to get that figure. He selected a set of ravens iq studies that had been carried out by other people in sub-Saharan Africa and got an average of 70. But his selection was arbitrary and he did not explain his selection criteria. If you look at all the ravens tests that have been done in sub-saharan Africa, the average iq is 80, not 70.

Incidentally, the average IQ in America in 1930 was also 80. It was been rising ever since due to the Flynn effect. As Africa develops, its average IQ could possibly rise too.

See Wicherts, Dolan, Carlson, van Der Maas, 'Raven's test performance of sub-saharan Africans: average performance, psychometric properties, and the Flynn Effect'

SteveMac|4.26.12 @ 10:05AM|#

..or rather I should say that its average iq should be expected to rise as it develops.

|12.20.11 @ 6:44AM|#

There is a huge talent drain in countries such as these. People who are smart enough to get out of these countries do. Those who stay should be applauded because in society as corrupt as this, they will never be appreciated or fairly compensated. Any study of West African IQ's will have an extreme survivor bias.

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Jester|12.4.10 @ 10:37PM|#

rebellion? :-S

it would be difficult, probably even more than that. with so much corruption for so long it could easily escalate into full scale domestic war or bloodbath in the worst case scenario. whit global and massive lack of motivation and probably fear of retaliation for such uprising this task becomes even more hard, verging on the unimaginable.

but then again, it's either that, or slow and painful death of the country. maybe 'death' it's not the best word here.., well, only if mentioned 'thieves' have enough brain power to recognize that they need someone to steal from.., although, they can always steal from each other, no? :-S
seem like the 'people' get screwed either way..

maybe my view is to grim..
please do comment, I would like to see other opinions too.

|2.17.11 @ 11:00AM|#

Can investors who fund these endeavors set up clauses, etc. that follows the money? Meaning, take part in the planning/regulating of monies spent? All too often, throwing money somewhere and waiting for a return simply is not enough. I suppose we need to further support social responsibility, or at least fight corporate waste. Thanks for the article. Indeed, I am a few years late in reading it.

|3.4.11 @ 9:44AM|#

The developed world and former colonial powers of African countries have to share the blame for some of the problems that Africa is still experiencing.

With so many Charity Orgs. in the world why do we still have so much suffering in Africa today? Why?

As a child I saw TV reports of children in Africa dying of starvation and disease. I still see these TV reports today. Utterly shocking, and yet I know the reason why.

The reason is not that the people cannot help themselves or do not want to, the reason is because of the government in power (dictator).

Why and how can the international community not erradicate this? Is this all too 'political' for them to intervene?

I'm so angry that the world still allows one sixth of the worlds population to starve and live in abject poverty and live under violence.

What is the purpose for all these International groups, UN, NATO etc.

From my perspective and I'm sure from the perspective of many Africans, is that they are not helping enough.

I am aware of the help that is provided but the simple fact of the matter is that the world is simply not doing enough.

RobS|12.11.11 @ 4:42AM|#

"Why and how can the international community not erradicate this? Is this all too 'political' for them to intervene?"

Because that would be a return to colonialism.

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RobS|12.11.11 @ 4:39AM|#

"Cameroonians are no smarter or dumber than the rest of us."

[citation needed]

|12.18.11 @ 9:22AM|#

Countries stay poor for two main reasons: government and culture.

Elite academia can't state the obvious, and neither can their progeny in big government, as the cannot be critical of foreign cultures or institutions. Multiculturalism and relatvism have stripped the "brain trust" of their ability to state the obvious.

The second order effect is that if you cannot name something, then you can't look for solutions.

British colonial efforts got this part right, they were there to reform another society.

While the US is often in this business, the inability to discuss it directly substantially reduces the ability to achieve a worthwhile result.

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