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Jody-Ann Jones

Overcoming the Resource Curse in African States: Examining the Effectiveness of the Developmental State Framework on Economic Development in Resource-Rich African Countries. Jody-Ann Jones. Outline of Presentation. Introduction Context Research Problem

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Jody-Ann Jones

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  1. Overcoming the Resource Curse in African States:Examining the Effectiveness of the Developmental State Framework on Economic Development in Resource-Rich African Countries Jody-Ann Jones

  2. Outline of Presentation • Introduction • Context • Research Problem • Botswana: An African Developmental State • Research Question • Research Argument • Research Design • Core Elements of the Developmental State (Leftwich) • Core Elements of the Botswana Developmental State (Acemoglu, Johnson and Robinson) • Operationalizing the Core Elements of the Developmental State • Measurement Issues • Model One’s Hypotheses • Model Two’s Hypotheses • Methodology • Model One’s Findings • Model Two’s Findings • Implications of the Study • Conclusion

  3. Introduction: Resource Abundance in Africa Source: U.S. Geological Survey, "2009 Minerals Yearbook: Africa," U.S. Department of the Interior (September 2011).

  4. Context • The Resource Curse thesis (Sachs and Warner, 1999; Ross, 1999; Auty, 2001; Humphreys, Sachs and Stiglitz, 2007): • The abundance in natural resources is inversely correlated with economic development because of several factors: • Dutch Disease • Vulnerability to Market Price Volatility • Rent-Seeking

  5. Research Problem

  6. Botswana: A Developmental State • What is a developmental state? • Adrian Leftwich describesthe developmental state as “those states whose politics have concentrated sufficient power, autonomy, capacity and legitimacy at the center to shape, pursue, and encourage the achievement of explicit developmental objectives” (Leftwich, 2000).

  7. Research Question • To what extent does the developmental state framework mitigate the resource curse, and hence improve economic development in resource-rich African states?

  8. Research Argument • I argue that it is not the abundance of natural resources that causes low development, but rather it is the absence of key aspects of the developmental state model. • Conversely, the presence of elements of the developmental state model in resource-rich African countries should be associated with higher levels of economic development as illustrated in Botswana.

  9. Research Design • In order to assess the efficacy of the developmental state framework, I empirically test the effects of the operationalized concepts from the developmental state literature on economic development (measured by GDP per capita) • In terms of African developmental states, two seminal texts are Adrian Leftwich’s States of Development and Acemoglu, Johnson and Robinson’s article “An African Success Story: Botswana.”

  10. Core Elements of The Developmental State (Leftwich) • Developmental Elite • Relative State Autonomy • Bureaucratic Power • Weak Civil Society • Strong Capacity in Managing State’s Economic Interests • Weak Human Rights • Legitimacy i.e. Widespread Support for the Regime in Power

  11. Core Elements of the Botswana Developmental State (Acemoglu et. al) • Basic system of law and contract • Limitation of state and private predation • Relatively noncorrupt bureaucracy • Government investment in infrastructure and public goods • Prudent fiscal policy • Strong private property institutions

  12. Operationalizing the Core Elements of “The Developmental State”

  13. Measurement Issues • In order to measure the strength of the civil society, I use the GINI Index of Inequality. However, because of the lack of sufficient data coverage for this variable, it was omitted from the data analysis.

  14. Methodology • In order to test these hypotheses, I analyze two time-series cross-sectional multiple regression models for the period 1989-2011 based on data collected from the World Bank’s African Development Indicators, Doing Business Index, Transparency International Corruption Perceptions Index, and the Polity IV Project.

  15. Model One’s Findings

  16. Model Two’s Findings

  17. Implications of the Study • In order to better understand the economic dynamics of resource-rich African countries, we need to look at three important dimensions: • Corruption • Regime Legitimacy and Stability • Private Property Institutions

  18. Conclusion • This study’s empirical evidence supports its research argument that not all African countries encounter the resource curse. The resource curse thesis states that countries which are highly endowed with natural resources tend to experience lower economic growth and subsequently lower economic development. However, the statistical results from the models tell us that the resource-rich African countries that experience relatively higher levels of development incorporate elements of the developmental state framework to some extent. • Botswana has utilized this framework to some degree and has had remarkable economic success. Possibly, a solution to the resource curse in other resource-rich African states is to adopt the key elements of the developmental state framework based on this study’s findings: 1) decrease the incidents of public sector corruption, 2) improve the legitimacy and stability of their regimes, and 3) enhance their private property institutions.

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