Stefan Dercon, Professor at the University of Oxford: ‘Democracy is no guarantee of prosperity’ – Politics

A country does not escape poverty because the people want it, but because it benefits the elite. It is the central thesis of the Flemish Oxford economist Stefan Dercon, who wrote his decades of experience in dozens of developing countries down in a sober book.

It is July 2013. Stefan Dercon, then chief economist at the UK Department for Development Cooperation, is attending a meeting with economic advisers to the Congolese government in Kinshasa. Speaking eloquently and smartly dressed, they give a series of presentations on the development plans for their country. The presentations contain all the recipes from the financial booklet and even impress Dercon. But everyone in the room knows what Dercon also knows: Nothing comes out of the beautiful plans. The contrast is great when Dercon attends a similar meeting in Ethiopia a few months later. The plans are less polished and not always financially substantiated. Yet Dercon knows that Ethiopia will succeed, which it later did. The land without land resources became the fastest growing country in the world in the last decade. Congo, a treasure trove of commodities, continued to drift backwards and is today one of the poorest countries.

It is July 2013. Stefan Dercon, then chief economist at the UK Department for Development Cooperation, is attending a meeting with economic advisers to the Congolese government in Kinshasa. Speaking eloquently and smartly dressed, they give a series of presentations on the development plans for their country. The presentations contain all the recipes from the financial booklet and even impress Dercon. But everyone in the room knows what Dercon also knows: Nothing comes out of the beautiful plans. The contrast is great when Dercon attends a similar meeting in Ethiopia a few months later. The plans are less polished and not always financially substantiated. Yet Dercon knows that Ethiopia will succeed, which it later did. The land without land resources became the fastest growing country in the world in the last decade. Congo, a treasure trove of raw materials, continued to drift backwards and is today one of the poorest countries. Growth and development do not come from good intentions. Basically, growth is a calculated investment by the elite, writes Dercon in his book Gambling on Development. In Ethiopia, leader Zeles Zenawi hoped to create growth through the development of agriculture and infrastructure to neutralize the political consequences of the war with Eritrea and provide the country with more food security after the droughts of 2002 and 2003. That commitment paid off. In the fifteen years since Zenawi launched its development plans in 2004, the country’s growth has never fallen below 7%. Conflicts and crises such as the war with Eritrea and the drought in Ethiopia are important motives for the elite to leave the status quo. Legitimacy is also a motive. Through growth, Zenawi was able to keep the various ethnic groups in his country happy. Yoweri Museveni, the president of the emerging country of Uganda, is also literally buying his legitimacy. He allegedly paid $ 80,000 per. Growth is thus a survival strategy for those in power. That bet can also go wrong. Investment in development initially means less profit to distribute, with the risk of own interests. Growth can also give rise to new elite groups, such as entrepreneurs, who threaten the traditional elite. The development is therefore often noisy and unpredictable. Ethiopia is also an example of this. New violence threatens to crush growth model.STEFAN DERCON. “China is not a democracy, and yet it is a very successful growth country. Democracy is no guarantee of prosperity. In Ghana, democracy has been a way to focus politics more on economic performance, while free elections in Malawi have made a small difference to growth. , which remained weak. What makes the difference is the ability to learn from mistakes and correct courses. In China, party discipline drives course corrections, in Ethiopia a skilled official keeps track of those in power. “But you know how it goes when the dust of the revolution settles. Are we still saying that the Arab Spring was a good thing?” DERCON. “A corrupt state that still chooses growth, it seems like a strange combination, but it can work. In Indonesia, General Suharto was forced into that combination in the 1970s to stay in power after his coup. As a soldier, he had no legitimacy. among the traditional elite, which he therefore had to smear with oil revenues. must tolerate corruption everywhere. It remains theft. ” DERCON. “In Congo and Nigeria, the population remains stuck in poverty because the elite can sustain themselves thanks to the mineral resources. There is enough money, so why develop and grow? The failure in those countries often has an economic explanation. The dependence on mineral resources supposedly hampers the diversification of The economy.The real problem, of course, is the behavior of the elite. “DERCON. “Congo is a textbook example of how history can weigh on a country. In many African countries, colonialism still continues. But it does not deprive the current elite of the opportunity to make the right choices. If it did, then all former colonies would “it’s miserable, and that’s clearly not the case. It’s all too easy to hide behind a burdensome colonial past.” DERCON. “I refuse to attribute the cultural differences. Africa is only a few decades behind Asia. Countries like China and Thailand have never been colonized. State borders were established long ago and the state apparatus should not be reinvented. Geography also plays a role. If some countries in your area lead by example, you tend to follow.China was an example for Vietnam, which in turn inspired Cambodia.But the main explanation is raw materials.It is no surprise that African emerging countries like Ethiopia and Ghana have no raw materials , while corrupt Sierra Leone has many of them. “DERCON. “Of course, I do not want to tolerate human rights violations. But I have a big problem linking human rights with the development of a country, also because Western countries are very hypocritical about it. In Cambodia, we are closely monitoring respect for human rights. .., in Vietnam much less because we have economic interests there.If human rights became the first condition, almost no country would receive development aid.Do not underestimate that the little man finally gets the chance for a better life through growth and development How hard would the arrest of a political activist in the capital roads for the poor villager in the Ethiopian countryside? “Development aid can be considered a supplement to the state budget. Whether the state’s resources are used well again depends on the intentions of the elite. Development aid is like dancing tango: it requires the commitment of both dancers, but one of them In this case, it is the country that receives the aid. In countries like Ghana and Bangladesh, development aid has contributed greatly to progress, also because the elite there chose growth and development. But donors must be careful not to disrupt the status quo and not strengthen self-interest The lack of growth in poor countries is not due to lack of resources Reducing development to a funding problem is a mockery of countries where the elite has chosen growth. I am against aid that, with the best of intentions, gives the elite the perfect excuse for doing nothing. ”DERCON. “I have often asked myself that question in countries like Malawi, Sierra Leone, Nigeria and Congo. Every now and then one has to dare to say, ‘Make your plan.’ Sierra Leone, etc. It is the supranational institutions such as the World Bank that have to say that, because that is what the large sums are about. ” DERCON. “Clearly, you do not want people to starve. But then try not to imagine food aid as development aid that provides sustainable improvements. If you want real change, work through local initiatives instead of the big charities. They may not live up to the quality standards of the supranational aid machinery, but thanks to their field knowledge, the aid will go more to where it is needed. This applies to any kind of assistance: ignore sweet talk and work on a thorough basic knowledge so that the money ends not in the wrong hands. there are people who think well: a local activist, a skilled civil servant or even a central banker with the right connections. ”DERCON. “Of course, but we want to invest in export-oriented industry. Unilever is simply circulating oil money with its sales of consumer products in Nigeria. Export sectors such as textiles, on the other hand, provide real growth, provided there are sufficient local spillovers. foreign textile companies in Jordan that bring in workers from Asia and otherwise have nothing to do with the local economy. ” And please remove the many Western trade barriers to exports from developing countries.Officially, it is technical standards that must guarantee quality and environmental friendliness, but we know better.It is encouraging that more and more textile companies are establishing themselves in Africa.You can see African T- shirts pop up in western stores.I look them up myself when I shop.Of course the wages of these African textile workers are low.But compared to what they would earn on their piece of land in the countryside it is much more.It is the beginning on development. ” Stefan Dercon, Gambling on Development. Why Some Countries Win and Other Lose, Hurst & Company, 398 pp., 33.45 euros

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