It’s the economy stupid, N°2

Here’s episode 2 in our new series. If you missed the first instalment and the rationale behind, click here.

(1) Suppose you are a poor country that also has wide-scale corruption, what should you do first? Target scarce resources to fight corruption and hope that growth follows thereafter or grow first and then hope that corruption declines? It appears that the empirical evidence doesn’t give much guidance on what to do. This from Bjorn Lomborg’s Project Syndicate column this past week: “[E]xperts do not agree on whether good governance or development should come first. Historically, good institutions such as secure property rights and the rule of law were seen as the single most important factor driving variation in the wealth of countries, and more corruption was associated with lower growth. But more recent analyses have shown that it could just as easily be that higher wealth and economic growth lead to better governance.”

(2) Even more, conscious efforts at fighting corruption are hardly successful. This again from Lomborg: “A study of 80 countries where the World Bank tried to reduce corruption revealed improvement in 39%, but deterioration in 25%. More disturbing is that all of the countries the World Bank didn’t help had similar success and failure rates – suggesting that the Bank’s programs made no difference.”

(3) More on corruption: A few weeks ago, Transparency International released their 2015 Corruption Perceptions Index report and African countries were singled out as being some of the most corrupt in the world. This is not to deny that corruption is a big issue on the continent, just as its more sophisticated nature is a big issue in Western countries. But what all this discussion neglects to mention is that there is currently a scholarly debate as to whether the Corruption Perceptions Index tells us anything meaningful about the extent of corruption, particularly in the developing world. (We also wrote about this in 2010).

(4) Is all this focus on corruption a red herring? A sort-of “Anglo-American fetish”? After all, who can confidently say corruption was nil when the West was rising?

(5) We were disturbed to learn that Malawi has a 60 year old Colonial-era Tax Treaty with the U.K. that makes it easy for U.K. companies to limit their tax obligations in Malawi. The treaty was “negotiated” in 1955 when Malawi was not even Malawi yet. Malawi (or Nyasaland, as it was known then) was represented in the negotiations, not by a Malawian, but by Geoffrey Francis Taylor Colby, a U.K. appointed Governor of Nyasaland. You can’t make this stuff up.

(6) Back in 2007, the cognoscenti were lauding Ghana as the next African star performer. Ghana then followed this up by going an international borrowing binge. It turns out that much of Ghana’s performance was built on pillars of sand, well sort of.

(7) Over at the LSE Africa Blog was this thought-provoking piece on the informal sector in Africa. The piece argues that the informal sector is important for Africa’s development. Whereas we don’t deny that thinking about the informal sector should be part and parcel of a broad development strategy on the continent, we are a bit apprehensive about the potential for the sector on its own to drive self-sustaining growth. We wrote about this last year.

(8) Another one, from the LSE Africa Blog about the “brain drain” in Africa.

(9) Here’s Dani Rodrik talking about some of the adverse effects of so-called “Free Trade” Agreements.

(10) Talking about the adverse effects of free trade, there appears, sadly, to be a link between free trade and mortality.

(11) Who knew that China, a big creditor to the world, was itself heavily indebted.

(12) Finally, Admiral Ncube, a Zimbabwean aid worker has penned this brilliant poem on aid work as an insult to the poor. An excerpt:

Experts have risen who have not been poor
Whose studies and surveys bring no change
Whose experiments and pilots insult the poor
Whose terms and concepts, tools always change
An industry of sorts – an insult to the poor.

 The part of Ncube’s poem talking about “experiments and pilots” as insults to the poor, reminded us of this story from last year on a most indignifying economic experiment conducted in villages in Western Kenya. We weren’t pleased.

Grieve Chelwa

Grieve Chelwa is a Contributing Editor at Africa is a Country and currently a postdoctoral fellow at Harvard University and visiting fellow at the Wits Institute for Social and Economic Research (WISER) in Johannesburg.

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