Gideon's Blog

In direct contravention of my wife's explicit instructions, herewith I inaugurate my first blog. Long may it prosper.

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Monday, December 27, 2004
 
Steve Sailer posts on "colonialism's surprisingly weak impact" in response to an interesting article in Legal Affairs. The article asserts that the legal inheritance of different countries has a lot to do with their subsequent relative success or failure, and starts by comparing two countries, Malaysia and Indonesia, both Southeast Asian Muslim societies, but one a former British colony and the other a former Dutch colony. Malaysia, formerly British, has economically outperformed Indonesia, formerly Dutch. This the article attributes to their different legal inheritance: Malaysia's legal system is based on the British common law approach, while Indonesia's is based on the French civil law approach.

Sailer replies:



C'mon, the main reason Malaysia is better off than Indonesia is because about a quarter of Malaysia's population are Chinese, who, according to Malaysia's former President Mahathir Mohamad, are smarter and harder working than the indigenous "bumiputras." Mahathir set up a clever system of affirmative action for the majority that keeps them from rioting against the Chinese while not burdening the more productive group so much that they all leave Malaysia. In contrast, as Amy Chua pointed out in World on Fire, Indonesia is only 3% Chinese, and the ruling Suharto family climbed in bed with the Chinese businessmen, so that when the Suhartos were overthrown in 1998, the Chinese were attacked in populist pogroms, many fled to Chinese-run Singapore, and the new "democratic" government nationalized $58 billion worth of Chinese-owned businesses, with the usual disastrous results for the economy.

Good point. I will point out that the second paragraph of the Legal Affairs article reads as follows:


Economists might explain these divergent paths by pointing to the countries' different responses to the Asian financial crisis of the mid-1990s. Sociologists might find a cultural explanation in the close-knit community of Chinese immigrants who are the most powerful force in Malaysia's business community. Historians might point out that Malaysia's struggle
for independence was much less bloody than Indonesia's.
(Emphasis added, of course.)

I'm not trying to twit Sailer; I think he does have a very good point. You don't have to get on some kind of genetic-determinist hobby-horse to recognize that group interactions and relative competitiveness are, well, really important if you want to understand the world. Sailer gets in trouble for pointing this out all the time, and God bless him for it because somebody has to. And at least Sailer, while possessed of a number of politically incorrect opinions, is unequivocally not a "bigot" or a "hater" as anyone who's read his series on how to help the "left half" of the bell curve can attest. (That series can be found here, here, here, here and here.) Not to digress too much into a defense of Steve Sailer (though he probably deserves such a digression; maybe I'll write something more lengthy at another time), the suggestions he comes up with are a mix of right-wing, left-wing and no-wing ideas, and the only thing that they have in common is that they are certainly sincere in their aim to improve the well-being of those American citizens who most need their well-being improved. But because he's a rational empiricist, and follows the facts where he thinks they lead, he gets regularly pilloried in the mainstream press (whenever they notice he exists, that is).

In any event, to return to the main point: I wonder how the LLSV folks would account for the similarity in outcome between Taiwan and Singapore: both Chinese, both formerly colonies of more developed powers, both highly developed today and with almost identical GDPs per capita. But Singapore has a British pedigree and Taiwan a Japanese one. (Ironically, of course, Singapore is the one that's a dictatorship, while Taiwan is a democracy.) There's obviously some real value to not being ruled by Mainland China, but it doesn't seem to matter half as much who does the colonizing.

Or compare Malaysia and Thailand. They have roughly similar GDPs per capita (Thailand is a little behind). But Thailand was never colonized at all. (Thailand, by the way, is about 14% ethnic Chinese, not so wildly different from Malaysia's 24%.) Thailand's legal system is described in the CIA factbook as "based on civil law system, with influences of common law" so maybe that "influence" is decisive. (Taiwan's system is based on civil law, while Singapore's is based on common law.)

Or, heck, compare Britain and France. Britain has a per-capita GDP of $27,700 on a purchasing power parity basis. France has a per-capita GDP of $27,600. And you'd think legal differences related to the treatment of shareholders and so forth would count for more in an advanced, finance-based economy than in a developing economy.

I took a look, finally, at Africa. Looking at the various African countries by former colonial power and GDP per capita, there's no obvious connection between the latter two factors. You can find pairings that look like they support the Legal Affairs contention and pairings that look like they refute it.

Ghana ($2,200 gdp/cap, fmr British) is doing better now than Togo ($1,500), Benin ($1,100) or the Ivory Coast ($1,400) (all fmr French). But Nigeria ($900) and Sierra Leone ($500) (both fmr British) are doing substantially worse than Cameroon ($1,800) and Guinea ($2,100) (both fmr French). And Senegal ($1,600) (fmr French) and the Gambia ($1,700) (fmr British) look pretty much identical. Algeria ($6,000, fmr French) and Egypt ($4,000, fmr British) each have Arab populations, lots of sand and some oil. But Algeria is doing better economically in spite of the fact that it's been more politically unstable of late, and the fact that Egypt has the canal and massive American support. The bottom four basket cases on the list, in economic terms - Tanzania ($600), Malawi ($600), Sierra Leone ($500) and Somalia ($500) - were all at least partly colonized by Britain.

Britain's most successful former colonies in sub-saharan Africa in terms of current GDP per capita are South Africa ($10,700), Botswana ($9,000) and Namibia ($7,200), plus Swaziland ($4,900) and Lesotho ($3,000), which were never precisely colonies. South Africa dominates the economy of the region, and it is only 75% black African. Namibia is 87% black African and Botswana's stats are not usefully broken out (they count white in the category "other" and I don't know what else is in that category; "other" is 7% of the country). So it's plausible to attribute the outperformance of this entire region to South African exceptionalism, which is surely related to the exceptional racial heritage of the country. (And no, I'm not saying black populations can't be economically successful; I'm just pointing out that South Africa and, to a lesser extent, Namibia and Botswana had a substantial First World population plonked down in the middle of a Third World population for a long period of time, which would surely be expected to affect their economies overall.) Of the next batch - Ghana ($2,200), Zimbabwe ($1,900), Gambia ($1,700) and Uganda ($1,400) - none has a non-African population above 2%.

Meanwhile, the most successful French former colonies in sub-Saharan Africa (I'm leaving off the Arab- and Berber-dominated colonies of North Africa because they have very different histories and populations) are Gabon ($5,500), Guinea ($2,100), Cameroon ($1,800), Senegal ($1,600) and Togo ($1,500). Gabon is 1% French, but 11% "other Africans and Europeans" and it has a tiny population, so maybe it's an outlier and we should discount it. The next four countries have non-African populations of well under 2% - smaller, on average, than the four British successes. And their average GDPs are pretty similar to the four British successes.

Here's a table for easier comparison:



Country.....................Colonial Power........Non-African-%.......Total-Population........GDP per Capita
Ghana..........................Britain..........................<1%.........................20.8mm...................$2,200
Guinea.........................France..........................<1%...........................9.3mm...................$2,100
Zimbabwe...................Britain..........................<2%.........................12.7mm...................$1,900
Cameroon....................France..........................<1%.........................16.1mm...................$1,800
Gambia.........................Britain............................1%...........................1.6mm...................$1,700
Senegal.........................France............................1%.........................10.9mm...................$1,600
Togo..............................France..........................<1%..........................5.6mm...................$1,500
Uganda.........................Britain............................1%.........................26.4mm...................$1,400

Do you see a pattern here? I don't. It looks to me like the French legal heritage works about as well as the British if you compare otherwise similar countries.

Now, all that said, the LLSV guys do have some kind of a point. Corruption is an enormous barrier to development; maybe the British legal system is one of the more effective in terms of combatting corruption. And, similarly and not unrelatedly, a bad property rights regime where many people (particularly poorer people) don't have good title to their property is another big barrier to development. This is the factor that Hernando de Soto has made his own personal hobby horse. But these things aren't either-or. And it's pretty obvious that a British legal heritage means precious little if the guy who comes to power after independence decides to nationalize everything and burn down the estates of the blood-sucking landlords.

Here's a trickier post-colonial development question. Sailer concludes that colonialism had a pretty superficial impact when all's said and done. But its impact clearly went deeper in some places than in others. Might that - the intensity of the colonial experience - correlate with economic development?

Again, let's look at Africa with the ends lopped off - take out North Africa and South Africa/Namibia/Botswana as culturally and economically distinct, and look at the rest of the continent. It's pretty clear that the countries that are economically best off now are to the west of the ones that are worst off. Up at the top of the charts are Gabon, Equatorial Guinea, Ghana, Guinea, Angola, Mauritania Cameroon, the Gambia, Senegal, Togo and the Ivory Coast, all with coasts on the west side of Africa. The only interior or east-coast states with comparable GDPs per capita are Zimbabwe (which I would argue is a special case, like Botswana), Sudan (which is half Arab) and Uganda. At the bottom of the charts, meanwhile, are interior or west-coast states like Somalia, Malawi, Tanzania, Burundi, both Congos, Comoros, Eritrea, Ethiopia, Niger, Madagascar, Zambia, Mali, Kenya and the Central African Republic. The only west-coast states with comparable GDPs per capita are Sierra Leone, Nigeria and Liberia (ironically, all countries with common-law legal systems, two of them former British colonies).

I suspect that what's at work here is the intensity of the colonial experience. The countries on the west African coast were more intimately involved economically with the colonial metropole, and so got more developed. That in turn is probably in part a matter of simple geography. But geographic positioning for easy trade isn't enough; look at Tanzania, which you'd think would benefit more from their position on the Indian Ocean than they have if geography was all there was to it.

And there may even be an aspect to this geographic correlation that cuts the opposite way from the LLSV thesis. After the Indian Mutiny, the British shifted their colonial approach from direct to indirect rule - the latter meaning: rule through the local elites. And the latter system is the one that got implemented in Africa and the Middle East. So it's not inconceivable that French West Africa got a more intensive imperial administration than did many of Britain's African colonies, and that this fact is positively correlated with post-independence performance. But this is not really my area of expertise, I'll admit. What's clear is that the LLSV thesis is by no means some kind of "magic bullet" explanation for relative underperformance among developing countries. The data is all over the map.