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Somalia After State Collapse: Chaos or Improvement?

Somalia After State Collapse: Chaos or Improvement?. Benjamin Powell Department of Economics Suffolk University and Senior Economist The Beacon Hill Institute . Background. Government Collapse in 1991 1993-1995 UN/US Humanitarian Interventions Governments in Exile

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Somalia After State Collapse: Chaos or Improvement?

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  1. Somalia After State Collapse: Chaos or Improvement? Benjamin Powell Department of Economics Suffolk University and Senior Economist The Beacon Hill Institute

  2. Background • Government Collapse in 1991 • 1993-1995 UN/US Humanitarian Interventions • Governments in Exile • Breakaway ‘States’ of Somaliland and Puntland

  3. Competing Theories • Hobbes/Buchanan/Olson • Rothbard/Friedman • Comparative Institutional Perspective

  4. Government Failure • 1969-1991 Dictatorship • Scientific Socialism • Land Nationalization and Redistribution • Population Relocation • Public Goods? • 1988-1989: 90% of all Govt spending was on defense and administration • Spending on ‘social services’ less than 1% GDP • Rural Pastoral Sector produced 65% of GDP from 1974-1988 but received less than 6% of Govt Spending • Informal/Black Market • Employed 70% of labor by mid 80s • banking, finance, dispute settlement, health, education

  5. Three Distinct Periods • Post 1991 Warring • US/UN Interventions 1993-1995 • 1995-2006 • 2006-Pres.

  6. Rural Pastoral Sector • Boom in Livestock Trade • In Garrissa Export Market the value of cattle sales increased 400% from 1991 to 1998 while volume quadrupled from 1989-1998 • In the north ports of Bossaso and Berbera exported 95% of all goats and 52% of all sheep in East Africa. Larger volume in 1999 than anytime under a government. • Drought 1999-2000 • Did better than neighboring Kenya and similar to other East African Nations • Security • Armed Security costs $0.01/km per animal • In 1999 Only 26 percent of traders identified security as a problem and only 13 percent thought it was more of a problem than in 1990

  7. Urban/Commercial Activity • Major Companies • Dole Fruit, Coca-Cola, DHL. • GM, BBC, British Airways • City of Borama • 150-300K Population • 95 Tea Shops, 90 Restaurants (8 with star ratings), 145 Elementary Shops, 69 Wholesalers, 106 Retail shops, 30 pharmacies, 16 hotels (4), 18 Fuel Stations (7), Airport (1), 2 hospitals, and a University with 100,000 books

  8. Overall Living Standards • Compared to Itself • Leeson (2006) 18 Indicators 1985-1990 to 2000-2005 • Finds 13 Improved, 2 Worse, 3 Questionable • Relative to 42 other Sub-Saharan Countries

  9. Complex Goods and Services • Airline Travel • 15 Firms 60 Planes 6 International Routes • Up From 1 National Carrier and 1 Route in 1989 • Banking/Funds Transfers • Hawala System moves $0.5-1 billion annually • SOS/$ • Roads • 3,000 KM per 1k pop = Neighboring Govts. • Social Insurance

  10. ‘Public Goods’ • Security/Protection • Privately hired • “Taxes payable to a tentative local authority or strongman are seldom more than 5%, security is another 5%...” Economist 12/05 • Little shows that rural security costs have not increased • Law • Clan based elder dispute resolution • common law of Xeer and Diya payment system • Muslim courts • National Defense...

  11. What About Pirates?

  12. Somalia does fairly well in a comparative institutional analysis • It succeeds in providing some law and order without a government • Given ideology, culture, and resources, Somalia is performing better than when it had a state and equal or better than many other African countries with governments.

  13. Implications for Africa • Customary law is not unique to Somalia • Need to distinguish between “modern” Africa and traditional Africa • Much effort is made to prop up “modern”

  14. Moving Forward • “The rogue African state should be left to the fate it deserves – implosion and state collapse.” George Ayittey, MPNR 173. • Line up informal and formal • Evolve customary law • What “we” can do

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