Dar es Salaam and the megacity

Joe Boyle at the BBC has written an interesting piece on the rapid growth of Dar es Salaam.  It’s a fairly pessimistic read, starting out hopeful but then sketching the city as under-siege from  informal hordes, only to find salvation in Singapore-style urban planning.

The UN estimates that 70% of Dar es Salaam’s population live in informal settlements; there are no slums in Singapore.

Slum clearance would be vital to any regeneration project. It would involve rehousing possibly hundreds of thousands of people, and the extra headache of clarifying the legal status of the land that has often passed down through generations of families without any legal paperwork.

Most of my work in the last two or three years of my PhD has been focused on the slums of Dar. I’ve written about my views of slum formation on this blog before: I do think they represent a missed opportunity, but I’m not sure that slum clearance is the answer. While there is something appealing about wiping the slate clean and doing things properly, the Tanzanian government doesn’t have a history of well-managed land expropriation, often botching both the relocation and compensation of those displaced.

In one of the neighbourhoods where our land titling project is running, over 200 homes have been marked for demolition by the local authority due to their proximity to a river (which was the source of major flooding in December). Ostensibly, all houses within a certain distance are to be bulldozed, but glancing around it’s clear that the targeting has been a little haphazard, and many people are still holding out under the assumption that the actual clearance might not happen for months or years.

There’s little discussion in Boyle’s piece about an alternative route: giving the residents of slums good reasons to embrace formality. We often look at the informal property market as being inherently dysfunctional, but it’s amazing just how well they do work in allocating a scarce resource to incoming migrants. The government would undoubtedly (I think) prefer everyone to have formal titles, so they can be identified, taxed, and regulated. But what slum-dwellers need to see is a formal system which gives them protection from unnecessary expropriation, lets them buy and sell with relative ease, and gives them access to the sort of public goods and infrastructure that taxes should buy you. Over the last decade, the government tried to get everyone to buy-in, advocating a cheap, renewable tenure system which would required everyone to pay land rent, but it failed to deliver on the pro-quo of infrastructure and services.

The slum clearance route would do this bluntly, by pushing people into planned housing and trying to do the same with newcomers, but I think formal systems which are put in place without good incentives for everyone to invest in them are bound to fail. Boyle’s article discussed the creation of a new master plan for Dar es Salaam as a means to curb slum formation. It might be worth noting that the last master plan was updated in 1979, just before several decades of absolutely massive informal growth.

Finally, I’m also a bit perplexed by the comments of Taweza’s Rakesh Rajani:

He says Tanzania could face a similar conflagration to Kenya in 2007, when thousands of people were killed in post-election violence.

Rajani undoubtedly is more in touch with the average Dar es Salaamer than I am, but I still find such a prediction hard to swallow. Yes, there are tensions, both today and historically, especially with young men (David Brennan’s article on the Tanu Youth League makes for some good reading), but the sort of violence Rajani is afraid of needs both a spark and incentives to keep the flame alight. I don’t know if I see either in Dar es Salaam, although I am typing this from my desk in Oxford.

Hat tip to @AndreaScheible for the BBC link.

 

Ex-president

One evening, back in 2010, I found myself stuck in Dar es Salaam’s soul-destroying evening traffic. I was trapped on Ocean Road, which leads from the ferries crossing the harbour past the presidential grounds. Often clogged with government workers and ex-pats trying to escape to the peninsula and beyond, the local street sellers have long-since adapted to this particular group, often selling international magazines (the Economist!) and informational maps and posters. It is here that I picked up my 2010 African Leaders Calendar poster, which devotes 90% of its space to African heads of state and 10% to anything calendar related.

I never put the poster up – it always sat on a shelf behind my desk in the department. It started seeming terribly out of date after the Arab spring and the second Ivorian civil war, so I started crossing presidents off when they were no longer in office. Not as part of some macabre hit list, but just to keep track of who had left. Out of the 56 countries represented, about 12 heads-of-state are no longer in power. The reasons for an X are myriad – failed re-elections, retirements, untimely deaths, revolutions and coups. Not always, but often, an X represents a shift for the better – or at the very least change.

Today I crossed off Professor John Evans Atta Mills, president of Ghana, who died yesterday. It’s not totally clear what illness Mills died of, possibly a complication of his throat cancer. I’ve written before of the tendency for African president to unexpectedly fall off their perches, felled by common ailments of the elderly such as cancer or strokes.

Two and a half years have seen an attrition of about 20%s. How long until that number hits 100%? At the top of the poster sit two of the stalwarts: Museveni and Kagame. I fear it will be quite some time before this calendar is finished.

By the way, if anyone can get their hands on either the 2011 or 2012 posters, let me know.

Why predictions fail

If *only* we had included institutions in our prediction model

Over at the Why Nations Fail blog, Daron Acemoglu and James Robinson’s discuss a set of growth predictions made by Paul Rosenstein-Rodan, the father of  the Big Push model, illustrating just how wrong they were:

Acemoglu and Robinson argue that the these predictions were off primarily because the Big Push model ignored politics and institutions:

Of course, things didn’t quite work out that way. In fact, many of the economies about which Rosenstein-Rodan was bullish are not much richer today than they were in 1961. Liberia and Haiti’s economies contracted since then. Angola, Kenya, Nigeria and Uganda haven’t done so well either. We of course know that Afghanistan, India and Pakistan grew more slowly than South Korea, Taiwan, Thailand and Singapore. Argentina and Haiti were no match for Costa Rica, the Dominican Republic and Panama.

The main reason why Rosenstein-Rodan got it so wrong is because he completely ignored the role of institutions and politics.

It’s hard to disagree that Rosenstein-Rodan should have taken these into account – but are they the primary drivers? What about geography, natural resources, export commodity prices, health and the myriad other factors which might drive a country’s growth rate? Without a little more effort, the models lack of effectiveness doesn’t tell us anything about why it is ineffective. I understand that Acemoglu and Robinson consider institutions to be the chief determinant of everything since the beginning of time, but arguing that the Rosenstein-Rodan prediction is wrong because it ignored institutions is a little like arguing that a car missing all four wheels won’t drive because – damn it – it’s also missing four tires.

Slightly more disconcerting: A&J are only displaying a subset of predictions from Rodan’s original paper. Why? My guess is that eye-balling the full dataset doesn’t reveal as much. This calls our for a slightly more rigorous approach than pointing to a few bad predictions. Even better, does someone have the time to crunch the numbers and see if Rodan’s predictions are less useful than predictions being made today?

Obscure Causality

"I knew something was obstructing the fish's breathing..."

I’m currently on the shelf, waiting for my new job to start, and I’ve been filling the time doing a lot of reading. Mainly fiction from developing countries (which sometimes tell us quite a lot about the process of development), but I’ve also been re-reading David Landes’ The Wealth and Poverty of Nations, in which he looks at why the West is so wealthy through historical analysis. To sum up a five hundred page book in a few sentences, his argument is: the West had better natural endowments, and learnt respect for property rights earlier and better than other countries, which when coupled with an innovative impulse in Judeo-Christian societies lacking in others, ensured that it pulled away from other regions early and decisively. He is absolutely adamant that ‘for the last thousand years, Europe (the West) has been the prime mover in development and modernity’.

Consensus among historians now is that Landes’ argument is, not to put too fine a point on it, wrong in a number of aspects. Most centrally, his claim that Europe has been the world leader for one thousand years has taken heavy knocks of late. Kenneth Pomeranz’ The Great Divergence was the big counterargument, suggesting that ‘European exceptionalism’ emerges much later, perhaps in the 18th Century or even a little after this. This squares very much with the view taken by those historians who have taken the widest and most comprehensive view of the emergence of the world we live in, Chris Bayly and Victor Lieberman (of whose book I’ve only read the introduction – the other couple of thousand pages will have to wait).

Despite covering a period 500 or so years ago, this argument actually has great relevance for the modern business of development and moving people out of poverty. Though the bulk of historians suggest European dominance in the world economy happens late, there is a strong argument that those things that would eventually allow Europe to pull ahead of the rest start to emerge a couple of centuries before economic development truly accelerates away.

These characteristics and advances that would propel growth include property rights and innovation as specified by Landes, but also encompassing military organization and capacity, the emergence of maritime expeditions (which would lead to extraction of resources and the mercantilist system), and the development of credit and banking services, as well as new forms of ownership and patterns of landholding This is a really important point: the motors of development took around 200 years or more to interact and whir into action for the first-movers in modern development processes. Later developers also show a long lead-in for development: Japan since the Meiji Restoration in 1868 after which changes widely held to be important preconditions for the emergence of Japan as economic power in the 20th Century were introduced.

Why is this important? It raises the possibility that the time scales we’re talking about in modern development might be completely out of proportion to the those that historical development processes have taken, because we’ve been so engaged with proximate causes of transformation rather than underlying ones. I’m not suggesting that all development processes will and should take 200 years. Far from it – you would expect first movers to take far longer catch-up nations for a number of reasons, and we know much more about economies and care much more about generalizing economic development than at any stage before in human history. That said, of we accept that underlying causes of development operate over very long time frames, there are important implications for development thinking.

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Reading is Fundamental

... and if you don't think so, it might be time to enroll in this school...

Rajiv Shah has chosen a set of his favourite development books over at The Browser. It’s obviously a selection designed to stimulate a bit of interest in USAID’s current approaches to development, and it’s a pretty good one (though Chris Blattman has a legitimate beef with one of his comments).

One thing I like about the list is that it goes outside the standard development texts, with one selection about the development and impact of fixed nitrogen fertilizer. He also selects a work of economic history, Gregory Clark’s A Farewell to Alms. I’m glad to see some economic history here, but I probably would have chosen some different ones. Here are some suggestions:

The Great Divergence by Kenneth Pomeranz, which looks in detail at the Industrial Revolution, and why it didn’t occur in Japan or China. I can’t stress enough how important it is that we understand why massive economic transformations occur, because every country that goes from poor to rich goes through one. Why did China not have its own in the 19th Century? Pomeranz looks at some of the reasons.

Of course, one of the seminal papers about the Industrial Revolution was Jan de Vries’ The Industrial Revolution and the Industrious Revolution, which makes great play of the importance of increased output and consumption powered by effort and extended working hours – these provided a kick that supported deeper processes pushing an Industrial Revolution. It’s been criticised since its publication, but it injected a layer of complexity into the analysis of the industrial revolution that was missing. Its ideas contribute to Chris Bayly’s thinking in The Birth of the Modern World, probably the most impressive work of history I’ve come across.

Another cracking book, again flawed, is David Landes’ The Wealth and Poverty of Nations, again explicitly looking at the role of cultural norms in generating industrial transformation. I don’t agree with this 100% or even close to that, but it’s a thought provoking and excellently written work.

Finally, I’m going to cheat a little with my last two. The first is one I haven’t actually read yet: The Origins of Capitalism by Ellen Wood, subtitled A Longer View. This looks absolutely fascinating, bringing together history, economics, culture, philosophy and ideology into a wide-ranging analysis of modernity and capitalism in Europe. I can’t wait to read it.

The last book I would select as an economic history is actually a work of fiction (harking back to a previous post when I suggested five non-standard sources of learning on development). I read North and South by Elizabeth Gaskell on the recommendation of my brother-in-law and I couldn’t agree more with his high estimation of it. Written in 1855, at a time when industrial capitalism was just taking root in England, it offers remarkably thoughtful critiques of the cultural and economic impacts of industrialization and the ways in which capital and labour interact and would continue to interact under this system. It’s astonishing to think it wasn’t written with a century of hindsight. It recognizes the transition to capitalism for what it is: messy, violent, hugely beneficial and all-encompassing: no one can opt out.

Any other favourite development books out there? Always grateful for new suggestions, especially those that are well written as well as intelligent.

Catalysis and Consumption

You mean this might actually be a *good* thing?

A couple of weeks ago, I took sceptical aim at a post by Nancy Birdsall at the Center for Global Development in which she revealed that she and her colleague Andy Sumner would be initiating a research programme looking into the middle classes, and in particular, what she calls ‘the catalytic class’. I (with all the subtlety of a steroid-guzzling sledgehammer with STUDENT OF POLITICAL ECONOMY embossed on its head) made the point that ‘the catalytic class’ was merely a synonym for capitalists.

In this post, I want to draw out some of the subtlety from the sledgehammer, because there’s value to the research agenda they speak of: it’s true that the middle classes and capitalists have a hugely important role in the development of an economic system that successfully employs large numbers of the poor and provides the resources required for the state to provide public and market sub-optimal goods it must. However, I would strenuously argue that to focus on the ‘catalytic class’ is incorrect: rather, we must understand the conditions under which catalysis occurs.

Further, the role of the middle classes in general and how they function, and the role of capitalists and how they function are quite different, though they are profoundly connected as well, and its important to understand both the differences and the connections.

To start with, it’s very important to be clear about who I am talking about when I say ‘middle classes’ and ‘capitalists’. After my first post, a really good response came up from Chris Prottas. He’s quite critical of my initial shot at the CGD, arguing that the catalytic class were a very special subset of the middle classes who, in fighting for their own betterment, inadvertently improve the lot of the poor as well. The key passage:

Yes, the emergent bourgeoise are capitalists … but what makes them (potentially) a special ally of the poor is that they economically support a new set of public interests to compete with those of the existing elite… To the extent this new class’ power benefits from public goods that benefit the poor, the emergent bourgeoisie may indeed catalyze positive change that would not otherwise occur…

The catalytic class are a special subset of bourgeoisie: bourgeoisie that happen to have interests that align with the poor. It is a happy accident that they benefit from the same public goods. It is a happy accident that their source of wealth increases demand for labor from the poor. To call them simply capitalists is to lump them with the bourgeoisie that make a fine living virtually detached from the poor.

Emphasis mine. Much of this criticism stems from confusion of terms. A capitalist, according to the classical definition, is a very special case of the middle class: a person who holds a large volume of capital and extracts value from wage-labour by using this capital. This is very important. It’s not sufficient that he is middle class, or bourgeois, or that he is rich. What is necessary that the source of the profits he makes is the use of wage-labour and capital together, to increase the value of the goods he or she produces over and above the cost of the labour he hires. It’s for this reason I highlight the sentence above: using the term capitalists is therefore serving to do the exact opposite of what has been suggested: it isolates those members of the economically powerful classes who employ the poor. People whose livings are made through feudal structures of landholding, or through speculation are not in the classical sense capitalists.

The middle classes more generally are those with means in the middle range of society – not the very rich (be they capitalist or the hereditary rich who employ few) nor very poor. They are defined by their capacity to consume. This is the crucial distinction: the middle classes are such because of their consumption (and their cultural and social norms), while capitalists are defined by their productive relationships. Both are important in the transformation to a dynamic economy, but it’s only the latter that truly catalyse the economic transformation and with it, the fortunes of the poor.

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I’m thinking of a word. Can anyone guess what it is?

"Watcha gonna do when Aid Thoughts runs wild on YOU?!"

Nancy Birdsall has put up a post about the need to research a hitherto undiscovered class of people who may be crucial for development in poor countries, which they call ‘The Catalytic Class’. Key excerpt:

[There has been a] recent round of analyses by development economists on who and where the world’s middle class members are and why they matter too, including for the poor… Now Andy and I are thinking about trying to define and “find” the … the catalytic class. They are not necessarily comfortably middle class – but they want and benefit from clear rules of the game.

I’m afraid that the catalytic class may already be studied under a different name. In fact, this guy might argue that this research might be coming some 144 years after the definitive study of this group. I’ve been talking for a while about how they’re a crucial but neglected part of the development process.

Still, rebranding aside, I’m glad to see interest from such smart and influential people on this topic. Really looking forward to see how it turns out.

(As an aside my brother-in-law, a historian teaching at Cambridge, once pointed out to me that Robert Puttnam’s much touted concept of Social Capital was nothing more than an inversion of Emile Durkheim’s concept of anomie. Still, the rebranding worked – it became the must-have variable in a thousand regressions after the publication of Bowling Alone).

A Little More on Transformation

For many economists, transformation doesn't mean much more than Optimus Prime turning into a truck.

In my last post, I spoke about wanting transformation to take a more central role in development thinking and policy. My argument was that large swathes of developing countries remain pre-capitalist, and as such are fundamentally less dynamic than the (varied) capitalist structures that have been adopted by the developed world in its pursuit of economic development.

This is a point that is more commonly noted by historians than economists, but in an excellent article for Project Syndicate Dani Rodrik points out that it isn’t entirely foreign to economists:

In fact, this “dualism” is one of the oldest and most fundamental concepts in economic development, first articulated in the 1950’s by the Dutch economist J.H. Boeke, who was inspired by his experiences in Indonesia. Boeke believed in a stark separation between the modern, capitalist style of economic organization that prevailed in the West and the pre-capitalist, traditional mode that predominated in what were then called “underdeveloped areas.” Although modern industrial practices had penetrated underdeveloped societies, he thought it unlikely that they could make substantial inroads and transform such societies wholesale.

Rodrik goes in a different direction to how I would from here, though.  He starts looking at the possibilities for productivity gains from movement from the less productive section of the economy to the more productive section. He has been preoccupied of late with trying to understand the apparent failure of African economies to pursue this Lewisian path of economic development, pointing out that Asian economies have found great success by shifting workers from low to high-productivity sectors.

His explanation is, in part, that many of the high productivity areas in many African economies are technology-intensive, rather than labour-intensive; as such, growth in these sectors may generate wealth, but will not contribute directly to the economic position of many workers. It’s a very good and interesting point. It also goes some way to explaining why some African countries are growing fast without correspondingly reducing poverty. Coincidentally, I was in a meeting with an IMF official here who made precisely this point: Tanzania has experienced very impressive economic growth in the last ten years, but this has barely put a dent in poverty rates.

While Rodrik’s arguments and explanations are all very sound (particularly his statement that natural resource-rich countries can be victims of specialisation in an industry with limited absorptive capacity), I feel that there’s a big chunk of analysis that’s missing, one that looks at why the unproductive sectors of the economy stay that way. In other words, where Boeke suggest modern economic structures cannot fully penetrate developing economies, I believe they can and must and we need to explore how.

In the developed world, there was a lot of movement of labour towards highly productive industry during various industrial revolutions. But one of the important characteristics of the other main sector, agriculture, was that this became heavily capitalist as well, and was able to increase production and let labour go relatively quickly. One large reason for this was a change in ownership patterns of land, stimulating large-scale agricultural production – something that remains elusive in most of Africa, and which neither donors nor Government want to touch, as it’s a political landmine. In the developed world, this process was completed through land-grabs (such as the enclosures movement) and a reimagining of property rights based on improvement and ‘tomahawk’ claims (as in the US) – both of which prompted bitter struggle. I’m not saying either of these things are to be sought in the developing world, but that we need to address the question head-on and establish how it can occur without the strife that has historically accompanied it.

Ultimately looking at productivity gains can tell us a lot, as Rodrik shows, but understanding why dynamism emerges or doesn’t emerge in different sectors is just as important.

Some thoughts on and from `The Crisis Caravan’

I picked up The Crisis Caravan recently (War Games in the UK), Linda Polman’s full-on assault on the neutrality of the humanitarian aid industry.

Polman’s basic thesis is that even if humanitarian aid workers and other NGOs adhere to the basic tenants of neutrality (noting that they often don’t, their lack of selectivity often leads to:

  • The direct prolongment of conflict, by keeping the `losing’ side in the game long (Biafra, the old Ethiopian government, the remnants of the Hutu regime in Goma)
  • The indirect prolongment and  exacerbation of conflict, inducing the players to make war nastier in order to raise their profile and bring more aid during the cease-fire cash in (Sierra Leone).
  • Their association with other parties which inevitably damage their claims of neutrality (e.g. being directly or indirectly controlled by coalition forces in Afghanistan).
  • Nasty situations in which the people they are helping aren’t really victims in the traditional sense (the heavy, heavy NGO presence in the Goma refugee camps after the Rwandan conflict, where the genocidier regime had relocated after being driven out by the RPF).

For the aid critic, Polman’s book is a pretty entertaining read and I find many of her arguments convincing. That said, the book is rife with anecdote – much of the information she presents is gleaned either from first-hand observation or discussions with (often anonymous) members of the humanitarian aid industry.

This opaqueness is amplified by imprecise and unsubstantial remarks: she often makes statements like “Most of the NGOs in the world do this” or “the majority of the money went here.” These statements not only often lack quantification, but they also lack footnotes, which brings us dangerously close to Dambisa Moyo territory. There’s also an odd focus on Dutch-based aid (Polman is based in the Netherlands), so often the viewpoints isn’t entirely representative of the average donor.

There’s some pretty damning stuff on food aid during the war in Ethiopia. This isn’t to be confused with the Bono-BBC punch-up, that was over direct diversion of food aid for other (war-related purposes). What Polman is suggesting is that the government used the distribution of aid for its own means, to help drive people out of the rebel-contested north:

Thousands of Western aid workers and journalists flew in along with the money. They were forced to change their dollars for local currency at rates favorable to the regime, and this alone helped to keep the Ethiopian war machine running. Food aid from INGOs was used as bait to lure starving villagers into camps. They were held there awaiting deportation to the state farms in the south. A life of forced labor lay ahead. They government army that guarded the camps took a share of the food aid and even requisitioned trucks from aid organizations to move people out.

The compulsory trip southward took an average of five days. About six hundred thousand people were moved, and an estimated one hundred thousand of them perished on the way. In November 1985, the Irish Times put that figure to the initiator of Live Aid, Bob Geldof. The singer shrugged. “In the context [of the famine], these numbers don’t shock me,” he told the reporter……

In some camps where deportations met with resistance, government troops shut the INGOs’ food distribution centers, so that people became hungry again and changed their minds. In other camps, INGOs were forbidden to feed the starving children of parents who put up a struggle. When around six thousand children died of starvation in one camp in late 1985 even though there was enough food for them, MSF France could bear it no longer. Comparing Ethiopia to Cambodia under the Khmer Rouge, the organization left the country.

Also, less surprising but still pretty grim are the dire inefficiencies of aid in Afghanistan:

Another example was given by Clare Lockhart, adviser to the United Nations in Afghanistan from 2001 to 2005. She investigated a house-building project in Bamiyan Providence. It began in the summer of 2002 with $150 million in the kitty. First the money was transferred by donor governments to an aid agency in Geneva, which allocated 20 percent to its own organization and then handed over implementation of the project to an organization in Washington, D.C. That agency also kept 20 percent for itself and passed the job on to another organization, which kept 20 percent and subcontracted the task of implementation once more. With the money that was left, the final organization in the sequence bought a consignment of wooden beams in neighboring Iran. It was delivered to Afghanistan by a transport company owner by the governor of Bamiyan Province for five times the normal freighting fee. When at last the beams arrived in the villages selected to receive the aid, they turned out to be too heavy for the loam walls of Afghan houses. The villages decided the best thing to do with the timber was to chop it up and use it to fuel their cooking fires.

Despite the lack of bibliographical rigor, I’d still recommend picking up the Crisis Caravan if you are interested in this sort of thing – just be wary of some of the claims being made here. It would be better if there was an open debate about Poleman’s assertions (some of them are even empirically testable). Thoughts from others?