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To cite this article: Berhanu Nega & Geoff Schneider (2012) Things Fall Apart: Dictatorships,
Development, and Democracy in Africa, Journal of Economic Issues, 46:2, 371-382, DOI:
10.2753/JEI0021-3624460212
Berhanu Nega is an associate professor and Geoff Schneider is a professor in the Department of Economics at Bucknell
University. This paper was presented at the annual meeting of the Association for Evolutionary Economics, January 6-
8, 2012 in Chicago.
371
©2012, Journal of Economic Issues / Association for Evolutionary Economics
372 Berhanu Nega and Geoff Schneider
Using evidence from the countries of sub-Saharan Africa and the countries
involved in the Arab Spring, we argue that dictatorship in Africa serves a function
akin to Myrdal’s backwash effects, thwarting economic progress in a cumulative and
circular way. Dictatorships do not develop the types of institutions necessary for broad
-based development. Instead, they develop clientelistic, kleptocratic institutions
designed to enrich supporters, buy off just enough of the populace, and shore up their
power base. Unfortunately, the institutions established under dictatorships reinforce
backwash effects, destroying civil society and productive institutions while shoring up
corrupt and unproductive ones. The extensive and expensive security apparatus
primarily designed to repress potential dissent within the country and to extend the
life of the dictatorship is but one example of a costly and development retarding
institution. Even more unfortunately, as is readily apparent from the Arab Spring, the
institutions established by dictators are extremely difficult to displace, especially when
the tenure of the dictatorship is long. The displacement comes with a huge cost in
human life and foregone production, and it subsequently requires a country to create
an entirely new set of institutions in order to develop its economy in a more broad-
based manner. Given that events of the Arab Spring have exposed dictatorships in
Africa as destructive and as damaging to economic development, we argue that
democratization must become a necessary criterion of engagement with African
countries to avoid repeating past mistakes.
For more than 50 years, some Western theorists argued that democratization is
culturally determined and Western in nature and that democratization follows
development and is therefore the purview of rich countries. A number of theorists
disputed these ideas (Acemoglu et al. 2009; Barber 2008), but the debate was
unresolved. However, the events of the Arab Spring appear to have resolved this
debate once and for all, and modernization theory has been found wanting.
For example, Huntington (1968, 1991a, 1991b) offered a cultural explanation
for the lack of democratization in Arab countries, blaming Islamic precepts. Clearly,
the fact that a number of Arab countries are now experiencing democratic revolutions
while many others are seeing democratic reforms puts to rest the notion that specific
cultures are inherently resistant to democracy. Similarly, scholars promoting
Modernization Theory argued that economic development gives a nation a greater
chance of obtaining and sustaining democracy (Huntington 1968; Inglehart
and Welzel 2009; Lipset 1959). The Arab Spring provides a major challenge to this
theory. According to the World Bank classification system, Yemen, Syria and Egypt
are lower-middle-income countries, while Libya and Tunisia are upper-middle-income
countries and Bahrain is a high-income country.1 Yemen, with a GDP per capita (PPP)
of $2,606 in 2010, ranks in the poorest 25% of economies in the world while Libya,
with a per capita GDP of $13,846 in 2010, ranks in the richest 35%.2 The countries
engaged in the democratic movements of Arab Spring are neither the wealthiest nor
the poorest countries in the world, and there is no clear connection between
Things Fall Apart 373
Although one can imagine a situation in which a benevolent dictator could facilitate
economic development in a particular country for a limited duration, the experiences
in Africa expose the futility of this approach. Dictatorships in Africa have not
developed the type of institutions necessary for broad-based development. Instead,
they create clientelistic relationships that reinforce backwash effects.
According to Myrdal (1958), a particular region may experience “backwash
effects” such as brain drain, capital flight, few linkages, and declining terms of trade
that reinforce its underdevelopment in a cumulative and causal fashion. Myrdal notes
that backwash effects are exacerbated by government inefficiencies, including
inadequate provision of health care, education and infrastructure. Corrupt autocrats
who undermine the provision of public goods contribute directly to the vicious circle
of cumulative causality. Furthermore, corruption and the capricious nature of
autocratic regimes in Africa contribute directly to brain drain and capital flight,
augmenting existing backwash effects.
The ongoing existence of corrupt, autocratic regimes in Africa is well-established
fact. Bueno de Mesquita et al. (2003) demonstrated that dictatorships in Africa and
elsewhere who primarily answer only to a small group of elites, especially the army and
the judiciary, have a direct incentive to establish patronage systems that preserve their
coalition, usually at the expense of broad-based development. This relationship is
stable as long as the dictator can continue delivering to its elite supporters.
Unfortunately, it is much easier for kleptocracies to extract revenues from the existing
economy to support their patronage systems than to create new, internationally
374 Berhanu Nega and Geoff Schneider
The financial and economic cost of dictatorship is, indeed, extremely high.
Table 1. Illicit Capital Outflows of Top 10 African Countries (Ranked by Illicit Flows as a % of GDP)
One must also consider the role that Western aid has played in this unfolding
scenario. Bueno de Mesquita et al. (2003, 478) establish convincingly that “aid
benefits less democratic recipients in their quest to hold onto office,” especially in
Africa. It is worth focusing on Egypt and Tunisia, the two countries involved in the
Arab Spring that are furthest along the path to democracy, to consider how aid has
affected the institutional makeup of each country.
In Egypt, “the survival of Mubarak’s regime was . . . aided by the support
conferred to it by Western governments. Both the EU and the U.S. were very
cautious, moderate and inconsistent in advancing political reform in Egypt, fearing
that this would destabilize the country and therefore, their vital interests in the
region” (Paciello 2011a, 5). Even economic liberalization “reforms” served to further
entrench the regime. Mubarak was able to keep economic sectors important to the
military and regime supporters untouched, while “the regime used economic
liberalization to re-distribute privileges to regime supporters and co-opt important
segments of the private sector, thus reinforcing its social basis. . . . Privatization . . .
benefited only men with connections to Egyptian politicians and the military
Things Fall Apart 377
establishment” (Paciello 2011a, 5). However, economic reforms did not bring the
expected increase in private investment, and there were sharp declines in the quality
of education, health services and welfare provisions. Ironically, Western “aid”
succeeded in democratizing Egypt because it failed so completely: by reinforcing the
power of a corrupt regime and undermining the conditions of much of the Egyptian
population, the West helped to create ripe conditions for revolution. Similarly, in
Tunisia, “[e]conomic reforms were used primarily to redistribute privileges to the
families of the president and his wife, to protect their vested interests, and to
reinforce the regime’s control over the private sector” (Paciello 2011b, 7). By shoring
up dictatorships for so long, the West seems to contribute unwittingly to their
eventual fall and their replacement by potentially illiberal forces.
Unfortunately, despite the dramatic changes of the last year, the institutions that
propped up the corrupt dictatorships are still largely present. In Egypt, the Supreme
Military Council, which will run the country until a new constitution is established
and which will continue to wield substantial power thereafter, “is drawn from men
who supported Mubarak’s regime until his departure and have little interest in giving
up their economic and political powers” (Paciello 2011a, 12). Local government, the
administration, the judiciary, the media, and other major institutions all remain in
the same hands, while civil society forces are poorly developed. In Tunisia, “the old
oligarchy still permeates the state apparatus, occupying key positions in the
administration, the Interior Ministry, the media, the judiciary, and so on” (Paciello
2011b, 12). These problems are exacerbated by the ties between the previous regime
and foreign entrepreneurs in Tunisia (Paciello 2011b, 20). As is typically the case
when a regime has an insecure grip on power, dictators in Egypt and Tunisia sought
to destroy or constrain civil society forces that were perceived as a threat. Libya has
perhaps the best chance to develop a fresh set of non-corrupt institutions in the wake
of its civil war due to the destruction of many of the vestiges of the old regime. But it
also paid the highest cost.
The human and economic costs of the Arab Spring are substantial and growing. First,
as Table 2 indicates, there has been a substantial loss of human life in all countries.
Table 3 lists some of the major economic costs.8 These costs do not include losses to
human life, infrastructure damage and business and foreign direct investment losses.
Table 4 illustrates some of the significant expenditures that autocratic regimes are
undertaking to buy the loyalty of the populace in the face of fears that the democracy
virus might spread. Despite the substantial promise for the future, we cannot ignore
the massive price that these countries paid to try to implement democracy, and the
substantial challenges that still remain. Surely there must be a better way to establish
democracy. Even based on this rudimentary data, however, it is clear that the cost of
transition is bound to be larger the higher the intensity of the conflict, which in turn
is a function of the relative brutality of the regime in power. The more peaceful and
short the transition, the lower the financial cost. As seen in Tunisia and Egypt, the
378 Berhanu Nega and Geoff Schneider
more the pressure from “friendly” countries, the shorter and more peaceful the
transition and its cost. However, none of these costs come close to the extremely high
cost incurred by dictatorships over their long tenure in power.
Cost to Cost of
Cost to Public public
GDP GDP Cost as Finance Government finance as %
(billions (billions of % of (billions of revenue of Govt.
Country of US$)1 US$)2 GDP US$)2 (2010)3 revenue
Libya 62.36 7.67 12.30 6.49 42.04 15.44
Syria 59.1 6.07 10.27 21.22 12.48 170.03
Egypt 218.9 4.27 1.95 5.52 47.66 11.58
Tunisia 44.29 2.03 4.58 0.49 10.29 4.76
Bahrain 20.56 0.39 1.90 0.69 5.786 11.93
Yemen 26.37 0.12 0.46 0.86 8.861 9.71
Table 4. New Spending Measures in Arab Countries to Preserve the Status Quo,
2011
Import cover
Budget Balance, (foreign exchange
% of 2010 GDP reserves), months
Algeria $156bn on new infrastructure; tax cuts on -3.5 38.0
sugar
Bahrain $100m to families; proposal for $2,500 for -0.1 3.6
each family
Jordan Salary increase for civil servants, military; -8.4 9.2
tax cuts on fuel and food; more money
to poor
Kuwait $4,000 for each citizen; free food for 14 +24.4 9.4
months
Libya $450 for each family; 150% wage increase +8.9 42.5
for some public-sector workers;
abolition of food taxes and customs
duties
Morocco Compensation system for wheat importers -4.3 7.1
Oman Minimum-wage increase from $364 to +1.4 5.9
$520 per month; 50,000 new
government jobs; monthly stipend of
$390 for job seekers
Saudi Arabia 15% pay increase for public-sector +6.5 34.2
workers; unemployment benefits,
housing subsidies
Syria Tax cut on coffee and sugar; reduced -4.5 11.8
customs duties on food; more money
to poor; increase wages and heating
allowances for civil service
Tunisia Increased welfare spending; food-price -5.0 5.3
subsidy increases
Yemen Increased welfare spending -5.1 6.5
At this point, given the huge human and economic cost of revolutionary
democratization, and given the uneven and unfinished nature of the democratic
project in the countries involved in the Arab Spring, one must ask if it is finally time
to implement formal, coordinated aid conditionality requiring steady progress on
implementing real democracy. Structuring aid engagement such that recipient
countries must make concrete, verifiable steps toward democracy might help to avoid
the huge costs incurred during revolutionary democratization while simultaneously
380 Berhanu Nega and Geoff Schneider
fostering the development of robust civil society institutions that are essential for
development. Unfortunately, “[t]o date, no Western government has been willing to
use conditionality as a means for advancing democratic change” (Heydemann 2010,
6). This is no longer acceptable both as a moral issue and because it is a very costly
and essentially an anti-development proposition.
Notes
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