Wednesday, July 8, 2009

Collier on development in dangerous places

Paul Collier makes a case for intervention (military and aid) because of lack of security (internal rebellion) and accountability. A mouthful of discussion and provocative recommendations that sound as bizarre as it could get but is probably one in the right direction.

Chad is not alone. It is one of a group of about 60 small, impoverished, post-colonial countries that “came unnatural into the world.” With neither the social unity needed for cooperation, nor the size to reap the benefits of larger scale, they are structurally unable to provide the public goods—such as security—that are critical for decent quality of life and imperative for economic development. They have diverged from the rest of mankind. They will never tap their vast reservoir of frustrated human potential unless the international community, at least for a time, supplies basic public goods that go beyond the typical aid agenda. This, stated baldly, is the thesis of my new book, Wars, Guns, and Votes. It is a troubling thesis. I have come to it reluctantly, and the international community has shied away from it, as have the societies of the bottom billion themselves.

Size matters: the production of public goods, by nature, is characterized by economies of scale.Security and accountability are two public goods that make economic development possible. […]Poverty, stagnation, abundance of valuable natural resources, and ethnic diversity made rebellion easy. Further, governments faced a dilemma: a large and well-equipped military might help to discourage rebellion, but it might also increase the risk of a coup d’├ętat.

[…]The costs of civil war are, as Hobbes observed, enormous: life is solitary, poor, nasty, brutish, and short, and even the possibility of war is enough to deter investment and stunt growth. Thus, without security, economic development is extremely difficult. […]for the bottom billion the accountability of government to citizens may be more than a nice bonus: it may substantially improve the chances of development. If countries of the bottom billion are structurally unable to supply security and accountability, then some form of international supply is required. Below a threshold per-capita income of around $2,700, democracy actually appears to increase the risks of many forms of political violence, including rebellion. The societies of the bottom billion are way below this threshold. This is not an argument against the pursuit of democracy, but it does imply that security and accountability are distinct needs.

[…]ordinary people are still befuddled by an outdated rhetoric: international pressure for accountability is presented by threatened elites as a return to colonialism. Protected by this conveniently emotive assertion, presidents grandly claim that they are defending national sovereignty. However, since they are usually not accountable to citizens, what they are really defending is presidential sovereignty. […]As public goods, security and accountability are like that malaria vaccine: those who need them cannot adequately supply them.

[…]Any international intervention should be acceptable both to the citizens of the recipient society and to citizens of the providing societies, and most suggestions for action fail this test. Most, but by no means all. […]Peacekeeping and “over-the-horizon guarantees” (a promise of military intervention if it becomes necessary) are effective ways to provide security.

Making aid conditional on government actions can also help. But those actions should relate to the accountability of government to citizens rather than to the adoption of economic policies, which was the past practice of donors. Policy conditionality detracts from the accountability of government to citizens because it relives government of responsibility for some economic decisions.

Bill Easterly argues that Collier “wants to de facto recolonize the “bottom billion”” and that his research is based on “one logical fallacy, one mistaken assumption, and a multitude of fatally flawed statistical exercises.” When Easterly uses the word “recolonize”, I feel he is speaking like a desperate leader in developing country who wants to cling to power by any means, often by drumming up support for his rule by blaming ‘foreigners attempting to recolonize their nation and sovereignty’ (say, blame-of-last-resort argument). Collier (indirectly) addressed this issue in his piece. Easterly fails to see it.

Given that Collier’s evidence base collapses when subject to scrutiny, it is all the more disturbing that his policy recommendations are remarkably interventionist. Collier tells bottom-billion societies that are recovering from civil war that they must accept international “peacekeepers” (a nice euphemism to help us forget that these are soldiers who kill people), whose deployment is decided by the Western powers.

Foreign armies invade and control the whole political process—yes, the word “neocolonial” is overused, but with Collier’s recommendations I think one could drop the “neo.” Such aggressive interventions will almost certainly have unintended negative consequences. Will Western violence beget more local violence? Will there be a violent backlash against foreign intervention? Foreign armies will likely kill some innocents in the process of peacekeeping. The motto “first, do no harm” puts the burden of proof on the academic interveners. Collier falls short by intercontinental ballistic missile range.

Larry Diamond disagrees with Collier:

None of these endemically poor countries can climb out of misery without better governance. Collier appreciates this, but he does not fully grasp the vital distinction between Asia’s developmental dictatorships and Africa’s dictatorial disasters. The classic authoritarian Asian tigers—Korea, Taiwan, Singapore, Indonesia—all had near-death experiences with communism that led them to realize it was time to “develop or die.” None faced ethnic complexity as daunting as in Nigeria or Ethiopia, but Singapore and Indonesia did have to work to forge an overarching national identity. Whatever their other faults, all of these countries’ ruling elites (and later the regimes in China and Vietnam) came to identify their own political interests with generating the public goods necessary for transformative development.

By contrast, the typical African ruling elites have settled into a different pattern of behavior and expectations. Security—for the individual ruler and his family, clique, and party—derives from generating private goods and stashing them away in real estate and numbered bank accounts abroad. To say that the West has indulged this pattern does not begin to capture our complicity in the problem. When foreign aid funds up to half the recurrent budget of many of these morally bankrupt states, it is not hard to draw a nearly straight line from aid to venality.

Nancy Birdsall likes three S’s-- sovereignty, size and security-- but is skeptical about over-the-horizon military guarantee.

I am less confident, however, about Collier’s endorsement of over-the-horizon military guarantees. I would recommend other interventions, less exciting but better grounded in experience and evidence.

An arrow towards Easterly:

[..]speaking of evidence, there has been plenty of grousing about Collier’s reliance on econometric results to “prove” that one thing (peacekeeping, democracy) causes another (growth, increased violence). I am inclined to be more tolerant. He is putting big issues on the table, and in reality the issues get more attention because he is purporting to show they matter. Would there be a Collier TED talk and an essay in Boston Review if he had never published a “scholarly” article?

The kind of internal security guarantees Collier suggests need not be off the table. Even if the empirical work behind his assertions is flawed, the story he constructs starts from first principles and is compellingly consistent with history and current experience. You never know where and under what conditions over-the-horizon military guarantees would be the best solution. But there are other proposals the development community should advocate as well, and first. Even though they do not involve guns and war, we ought not ignore and underfund them.

Edward Miguel’s note of dissent:

Africa is still lagging behind the most successful Asian countries, and many of its gains are fragile. Still, I disagree with Collier: the past decade surely offers hope.

Mike McGovern’s disagreement:

Culture and history interact with political economy, regional and international political dynamics, and the personalities of key actors in complex ways. This is why, even though I suggested for Liberia and Sierra Leone many of the recommendations Collier proposes, I reject his strategies when applied generally to the “bottom billion.” […]Rather than coercing potentially rogue leaders into governing responsibly, this policy primarily emboldens military officers to stage coups.

Collier’s response to these criticisms here (especially directed at Easterly)

In presenting his own optimistic case for autonomous recovery and convergence, William Easterly utterly misrepresents the argument of The Bottom Billion as being that of a “poverty trap” and then argues at length that there is no such trap. Indeed, he is so eager to criticize that he appears to have confused me with Jeffrey Sachs, the true evangelist of the poverty-trap thesis, which I explicitly reject. Certainly, growth is complicated. My argument is that a few salient factors have been important in the persistent divergence between rich and poor countries, while in no sense suggesting that this is an exhaustive account. An example is dependence upon natural-resource wealth, which makes the politics of development more difficult. Another is being landlocked without natural resources and surrounded by bad neighbors. Does Easterly deny that these are intractable problems that have contributed to the current stark disparity in living standards? […]It is important to recognize that behind expressions of statistical fastidiousness lurks a recognizable philosophical hostility to public action that has no statistical foundation whatsoever. In critiquing the scope for international action, Easterly simply trots out disaster stories.

But since Easterly has mounted an aggressive critique, I will take a moment to defend myself. Eight years ago my colleague Anke Hoeffler and I proposed that three economic characteristics—low income, slow growth, and dependence upon natural resources—all made conflict more likely. Each of these propositions has since become considerably more robust. The balance of the statistical evidence suggests that the propositions are correct.

As to method, my colleagues and I adopt the statistical approach of “general-to-specific,” in which insignificant variables are systematically and progressively deleted by the rule of stepwise deletion: this is not data mining. If it were, our results would not have been accepted by professionally refereed economics journals. Easterly’s twists on my remarks concerning new results—where a doubling of the sample and other improvements led to a minor refinement in our previous results on the effect of ethnic diversity—typify his bias. If doubling a data set should not lead to any changes in results, he should not have titled one of his papers, “New Data, New Doubts.” Our more recent results on peacekeeping are, as we readily admit, a first attempt. We very much hope to encourage or provoke other researchers to work on the question. But it should be said that in 2008 this work was assessed by a panel of Nobel-laureate economists who found it a sufficiently solid basis for their policy recommendation: peacekeeping was a good use of public money.

Nothing could better illustrate the true nature of the disagreement about peacekeeping than Easterly’s accusation of colonialism. This accusation is founded on coarse thought, not statistical rigor. Colonialism was an oppressive system in which non-democratic empires conquered territories and ran them according to the interest of their own elites. International peacekeeping is temporary, sanctioned by democratic governments whose electorates have no appetite for empire, and aimed at establishing governments that are accountable to their own citizens. Conflating peacekeeping with colonialism is too crude to constitute abuse.