The view from New Delhi: Pakistan and the coronavirus

Introduction

The number of cases arising out of coronavirus in Pakistan continues to rise steadily. As of April 14, 2020, there were well over 5,000 cases (5,716) and deaths due to the virus totaled 96. China is providing assistance to Pakistan in dealing with the virus, and apart from medical assistance in the form of materials (including ventilators, masks, test kits, protective clothes), a team of medical experts reached Pakistan on March 28 for a period of two weeks. The team of Chinese medical experts argued for the extension of the lockdown in Pakistan (especially the province of Punjab, which has been hardest hit by the epidemic), arguing that one of the factors which helped China in controlling the further spread of the outbreak was the lockdown.

While the Chinese delegation laid great emphasis on extending the lockdown, and greater ‘social distancing’, one of the major challenges for the Pakistan PM, Imran Khan, has been the state of Pakistan’s economy. It is for this reason that he was reluctant to go in for a lockdown, but eventually pressure from opposition parties (the province of Sindh went for a lockdown even before the Federal Government) and, more importantly according to some, from the Army was what finally compelled Khan to go in for the lockdown.

On April 12, in an appeal on social media to the international community, the United Nations Secretary General, and the world’s international financial institutions, Khan appealed for ‘debt relief’ to developing countries.

Khan also pointed to the fact that the challenges faced by developing and developed countries were markedly different. Said the Pakistan PM:

While in the developed world, the main dilemma is containing with the coronavirus through lockdowns and then dealing with the economic impact, in the developing world, apart from containing the virus and dealing with the economic crisis, our biggest worry now is people dying of hunger.

He also pointed to the need for an initiative with a thrust on ‘Global Debt Relief’, one where all stakeholders are brought on board for coming up with a well-thought out economic and health response to the pandemic.

Welfare measures by the government

As the number of cases has been rising continuously, Khan has warned people to take the necessary precautions, saying that the country’s hospitals may not be able to cope with the rising number of cases. The Pakistan PM – who had earlier announced a stimulus package (to the tune of Rupees 1.2 Trillion Pakistan) to provide relief to labourers, businessmen, as well as the middle class – also stated that the government would start distributing cash to poor families through a program: ‘Ehsas Emergency Cash Program’. According to this program, Rs. 144 billion (Pakistani) would be distributed amongst 12 million low income families.

Chinese Assistance

While Chinese assistance to Pakistan has been drawing attention, with both countries laying emphasis on the point that the bilateral relationship is an all weather one and that the ‘Pakistan-China All-weather Strategic Cooperative Partnership’ has grown under the leadership of Chinese President Xi Jinping and Khan. Pakistan Foreign Minister, Shah Mehmood Qureshi, while receiving the team of Chinese medical doctors which arrived in Pakistan on March 28 stated:

Chinese have once again shown to the world that they are friends of Pakistan. They care for us. We stand with each other in difficult times. This is a unique relationship and such testing times tell us how close we are to each other.

China on more than one occasion has thanked Pakistan for the assistance, which it had provided when the coronavirus outbreak had begun and has assured full support to Pakistan. Pakistan’s President, Arif Alvi, had also undertaken a trip to China in March, in order to show solidarity with it’s ‘all weather’ ally (he was the first head of state to visit China after the outbreak of the deadly epidemic). Alvi’s China visit took place days before the lockdown was initiated in Pakistan, and a number of MOU’s were signed between both sides to counter the deadly epidemic. While Pakistan wanted to extend its solidarity with China, something which was acknowledged by Beijing, it also got assurance regarding its own fight against the coronavirus.

Commenting on his China visit, Alvi said:

China trip was very beneficial to show support & counter propaganda. We also need to get technical help from them for biggest health crisis Pakistan is going to face. Their experience is unique. Six hours of exhaustive meetings took place. Signed many MOUs for #iFightCorona.

Assistance from other quarters

While it is true that Beijing has been quick to provide logical assistance to Pakistan, China’s financial assistance would not have been sufficient for Pakistan to provide much-needed relief to the not-so-privileged in Pakistan. In this context, the International Monetary Fund has acceded to Pakistan’s request of $1.4 billion (under the Rapid Finance Instrument for fighting the coronavirus) according to sources. This amount would help Pakistan to increase it’s foreign exchange reserves as well as provide budgetary support at a time when the country faces a serious economic slowdown. The World Bank and Asian Development Bank (ADB) have also provided Pakistan aid – to the tune of $1 billion and $1.5 billion, respectively. The Pakistan PM had referred to the assistance provided by international financial institutions in his social media recording on Sunday.

It would be pertinent to point out that Pakistan is already working with the IMF on a three year program called the Extended Fund Facility Program (EFF). The organization had sanctioned $6 billion and, according to analysts and rating agencies, it is the reform program of the IMF, which had played a key role in Pakistan being able to stabilize its economy (in December 2019, Moody’s Investors Services had raised Pakistan’s credit rating to ‘stable’ from negative). Pakistan has reiterated its commitment to the EFF (due to the current crisis, the IMF will be unable to release the third trance, $450 million, of the $6 billion total loan).

Not only has the assistance from IMF, ADB, and World Bank come as a major relief for Pakistan as it battles the coronavirus, Islamabad will also be heaving a sigh of relief after the review of Pakistan’s greylisting by the  FATF (Financial Action Task Force) has been pushed from June to August/September 2020. Pakistan, which was put on the watchdog’s greylist in 2018, was given 27 points to comply with, and it has only been given two extensions after failing to convince FATF on 13 of the 27 points (Beijing has been extending support to Pakistan). While Islamabad was supposed to submit its progress in April 2020, it has now got time till July 2020 to address the points it needs to comply with. In the long run, it will need to address the points raised by FATF if it wants access to international financial institutions and needs to carry out transactions without any problem.

Imran Khan’s dilemma with regard to the lockdown

In the last few months, Pakistan’s economy was beginning to show some signs of a revival, and this was acknowledged by international agencies and a number of countries who had begun to show interest in investing in the country. There is no doubt whatsoever that the coronavirus has come as a sudden setback. With the number of cases steadily rising, Khan’s challenges are only going to increase and the dilemma for the Khan administration will be the length of time of the lockdown. Businesses have been opposed to the lockdown and sooner or later are likely to pressure Khan to lift lockdown orders (a decision has already been taken to open some companies, which supply to brands like Puma and Nike, with only essential employees, while taking key precautions such as ensuring regular disinfection), as well as a more comprehensive package which Khan’s government may not be able to provide. Opposition parties, the Pakistan army (which has not been on the same page as Khan on a number of issues, including the handling of the coronavirus), and China, upon whom Pakistan is dependent, have of course been backing the lockdown. Given the lack of medical facilities, there may not be any other option but to lockdown.

Conclusion

In the midst of all these challenges, there is some relief for Pakistan:

First, while Islamabad may publicly hail China for its assistance, the assistance from multilateral bodies like the IMF, World Bank, and ADB has been what’s helped Pakistan deal with the coronavirus crisis. The assistance provided by these institutions also raises the point of whether the obituary of ‘internationalism’ and ‘multilateralism’ and the relevance of international institutions, with all their flaws, was rather premature.

Second, the delay in the FATF gives Pakistan some more time, though it will have to address the remaining points and can not be evasive in the long run. Turning a blind eye to the activities of terror groups and their financing is not likely to benefit Pakistan in any way.

Islamabad’s task is cut out however, and it remains to be seen how the government deals with the multiple problems arising out of the coronavirus (Pakistan’s growth forecast for 2020 has been reduced from 2.6% to 0.8% for the current fiscal year). In the short run, it may be able to weather the storm, albeit with great difficulty, but in the longer run it is in for some serious problems. Pakistan’s government would however be relieved with the above two developments at this point of time.

Coronavirus and the spirit of internationalism

Introduction

Iran has asked the International Monetary Fund (IMF) for emergency funding (it is for the first time since 1962 that Iran has sought IMF assistance) to fight the deadly Corona Virus outbreak (COVID19).

As of Saturday, March 14, 2020, Iran reported over 600 deaths (611) and over 12,000 cases arising out of the deadly virus. That makes Iran the third most affected country in the world after China and Italy. A number of prominent personalities, including the country’s Vice President (Eshaq Jahangari) and two other senior cabinet members, have contracted the virus.

On Wednesday, March 4, 2020, the IMF’s managing director, Kristilina Georgieva, stated that developing countries will be supported in their efforts to take on the Corona Virus through the Fund’s Rapid Financial Instrument. The IMF announced a $50 billion aid package with the aim of specifically assisting ‘low income’ and ‘emerging market’ economies. (On Monday, the World Bank had announced a $12 billion package to deal with the epidemic.)

Iran’s Central Bank chief, Abdolnaser Hemmati, said on Thursday that he had written to the IMF requesting $5 billion in emergency funding via the latter’s Rapid Financing Instrument. In a tweet on Thursday, the Iran’s Foreign Minister, Javad Zarif, urged the IMF to release this amount immediately. The Iranian Foreign Minister also said that Iran was facing a severe shortage of medicines and equipment. US sanctions on Iran, which have prevented it from selling oil or participating fully in the world’s financial ecosystem, have had a detrimental impact on the country’s economy. Iran, in a letter to the UN Secretary General Antonio Guerres, stated that US sanctions should be suspended keeping in mind the current crisis.

Iran’s apprehensions

Even if the IMF were to agree to releasing $5 billion for Iran, there are a number of obstacles that may result in Iran not being able to get the money from the IMF. First, the US is part of the IMF’s decision-making board (interestingly, in his tweet Zarif had stated that the IMF/IMF board should act responsibly) and even if the IMF agrees to disburse the amount, given the strains between Washington and Tehran it is quite possible that the US will veto such a move by the IMF. If Trump is willing to annoy US allies like the EU (on Wednesday, Trump took a decision to suspend flights from 26 Schengen countries to US, for a period of 30 days without consulting the EU), there is no reason why he will adopt a nuanced approach towards Iran.

Second, the Financial Action Task Force (FATF) has blacklisted Iran, which means that even if IMF agrees to provide the loan, banks and financial institutions can block such transactions.

Corona Virus is an opportunity for the US to exhibit statesmanship and maturity, and also lower tensions with Iran. While Trump has claimed to being open towards engaging with the Iranians, and seems to have changed his approach towards Tehran, he has not really exhibited much statesmanship in dealing with Tehran. Ever since the killing of Iranian General Qasem Soleiman (a major general in the Islamic Revolutionary Guard Corps) in a drone attack, in January 2020, ties went further downhill.

Opportunity for the US

This is an opportunity for the US to send a positive message to the international community, and to also distinguish between the Iranian public and its political class. China’s messaging with regard to helping the international community has been far better. On March 12, 2020, a team of Chinese doctors reached Italy (Italy, which is the most worst hit nation after China, had requested assistance from the latter). A number of Italian leaders have also criticised EU countries for being slow in reacting to Italy’s call for assistance.

Positive steps taken by China

What is also significant is that at a time when Washington and Beijing have been engaged in unnecessary mud-slinging with regard to the virus, with the US Secretary of State Mike Pompeo dubbing the Corona Virus as ‘Wuhan Virus’, and a senior Chinese diplomat responding by calling it a ‘conspiracy’ by the US army, on Friday March 13, 2020, Chinese billionaire Jack Ma stated in a tweet that he would donate one million face masks and 500,000 corona virus testing kits to the US. Earlier, Jack Ma’s charitable foundation, and his China-based company’s foundation, the Alibaba Foundation, had already donated supplies to a number of countries including  Japan, Korea, Italy, Iran, and Spain.

Conclusion

In case, the US does not agree to provide immediate assistance to Iran, other countries should step in including US allies like the UK, EU member states, and Japan. It is also important for multilateral organizations to show their teeth and not allow petty politics to come in the way of the fight against COVID 19. The Corona Virus is a clear reiteration of the point that while there may be numerous problems with economic globalization, we live in a truly interconnected world however much we may try to obliterate this fact. Humanity should trump petty politics and bickering, and this is an opportunity to revive the true spirit of internationalism.

Nightcap

  1. Why don’t Japanese and Taiwanese militaries talk to each other? Katsuya Yamamoto, National Interest
  2. The fraud of foreign aid Kenan Malik, Guardian
  3. What V. S. Naipaul taught me about posturing P. Kishore Saval, American Affairs
  4. India’s stealth war on liberal democracy Shikha Dalmia, the Week

Pakistan’s long struggle for democracy could get a boost from Trump, Rand Paul, and …the Saudis

In recent days, all eyes have been on President Trump’s January 1 tweet, which sent out an unequivocal message that it cannot be business as usual with Pakistan unless the latter takes concrete action against terror groups like the Haqqani Network.  Said Trump in his tweet:

The United States has foolishly given Pakistan more than 33 billion dollars in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools. They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!

Trump’s tweet was followed by the US decision to withhold Foreign Military Fund (FMF) aid (worth 255 million USD) due to Pakistan’s inaction against terror groups. The Department of Defense has also suspended Coalition Support Fund (CSF) money to Pakistan (worth 900 million USD). In all, over 1.1 Billion USD has been suspended. Kentucky Republican Senator Rand Paul will be introducing a bill for ending all US aid to Pakistan. Said Paul:

I’ve been fighting to end Pakistani aid for years. But now we have a breakthrough. President Trump has publicly called to end their aid, and is currently holding up over $200 million of it. I want to end all of it.

The Kentucky senator has argued that the money provided to Pakistan can be used for building infrastructure in the US.

Reactions in Pakistan to Trump’s tweets were predictable. While some opposition parties said that US President’s assertive attitude vis-à-vis Pakistan is a failure of the present Pakistan Muslim League (PML-N)-led government to put forward Pakistan’s view point effectively, the PML-N government criticized the US President’s remarks and said that it was ready to provide audits, and that it has been on the front line in the war against terror. Pakistan Foreign Minister, Khawaja Asif, in response to Trump’s tweets stated:

Pakistan is ready to publicly provide every detail of the US aid that it has received over the last 15 years.

In the midst of all this, a number of noteworthy developments have taken place.

First, both Nawaz Sharif, President of Pakistan Muslim League and former PM, and Shahbaz Sharif, Chief Minister of Punjab province and PML-N’s PM candidate, met with the Saudi Crown Prince Mohammad Bin Salman on the night of January 1, 2018. There were speculations of various kinds with regard to the meeting. The first was that an agreement was being worked out where Nawaz Sharif would be exiled to Saudi Arabia in order to avoid the corruption cases filed against him in Pakistan. This, however, was flatly denied by his daughter Maryam Nawaz Sharif. A spokesman for the former PM also issued a strong denial in a press release. Said the spokesman:

He has always utilised these relations for national interest and never for his personal benefits.

The other major speculation was that the Sharifs met with the Saudi Crown Prince in light of the recent statements made by President Donald Trump, and had gone as a result of an understanding with the Pakistan army. Irrespective of whatever the reality was, it clearly shows that the Sharifs are still extremely relevant, not just because of their political influence in the province of Punjab, but also their strong networks in Saudi Arabia.

Second, Nawaz Sharif, who has – in spite of considerable domestic constraints – made concerted efforts at improving ties with India, had according to some news stories met with Pakistan National Security Advisor (NSA) Lt Gen Nasser Khan Janjua on December 28th, at the former’s Raiwind residence in Lahore. During this meeting, Sharif spoke about the need for mending fences with neighboring countries. The meeting was however dismissed as a false report.

Third, most interestingly the former PM, while reacting to Donald Trump’s attack on Pakistan as regrettable, launched an all out attack on the army and dictatorships in a speech on January 3, 2018. While he blamed Pervez Musharraf for capitulating to the US in 2002, the former PM also accused the army of propping up leaders through secret deals. He was alluding to the leader of the Pakistan Tehreek-E-insaaf (PTI) Imran Khan. Sharif also called for self introspection, and that it was time for Pakistanis to “ask ourselves why the world does not take us seriously.”

A few points need to be kept in mind:

First, Nawaz Sharif – who has been written off – remains the tallest and most mature political leader who realises the importance of strong ties with neighbors, and realizes the pitfalls of excessive dependence upon one country. During his speech on January 3, 2018 he categorically stated:

I would like to advise Prime Minister Abbasi to develop a policy that ensures we don’t need US aid so that our image is not attacked in this manner.

Second, Sharif’s aggressive approach towards the army may not be appreciated by many in, or outside of, Pakistan. The Saudi Prince is supposed to have put forward his discomfort with Nawaz’s approach towards the army, saying it will destabilise Pakistan. Nawaz is not likely to cave in easily, and is likely to use every opportunity to attack the army, and will make attempts to restore civilian supremacy. This is clearly evident from his speech on January 3, 2018.

Third, post the 2018 Parliamentary elections which PML-N is likely to win, efforts will be made to reach out to India, since a better economic relationship with India will fit in with the overall goal of Pakistan becoming more self-reliant. PML-N would also like to send a clear message to Pakistan’s army about who the real boss is. The Pakistani army will off course continue to sabotage such efforts, but Nawaz Sharif seems determined to make one last ditch effort. This will off course require PML-N to take decisive action against terror groups targeting India.

External forces should stop treating the Pakistani army with kid gloves. While the US has taken the lead in taking a strong stand against the Pakistani army, China too needs to do a rethink of its short term goal of using Pakistan to contain India. Terrorism and instability will have an impact on China in the near run as well as long run. The outside world, while being firm with the Pakistani army, should continue to make efforts aimed at strengthening democratic forces within Pakistan.

Mid-Week Reader: The Justice of US Intervention in Syria

I’d like to announce a new weekly series of posts that I will be making: the Mid-Week Reader. Every Wednesday (hopefully), I will post a series of articles that I find interesting. Unlike most ventures in micro-blogging, though,  I will try to make all the articles focus on a specific topic rather than leave you with a random assortment of good articles (which Branden already does so well most weekends). This week’s topic: with Trump bombing Syria last week despite ostensibly being a dove (hate to say I told you so), I give you a series of articles on the justice, historical background, and press reaction to the bombing.

  • Fernando Terson and Bas van der Vossen, who are co-authoring on the topic of humanitarian intervention, each have interesting pieces at Bleeding Heart Libertarians debating the bombing of Syria from the perspective of Just War Theory. Terson argues that it was just, Vossen disagrees.
  • Over at The American Conservative, John Glasser of the Cato Institute has an article arguing that Trump’s invasion is neither legally authorized nor humanitarian.
  • Any discussion of foreign policy is incomplete without Chris Coyne’s classic paper “The Fatal Conceit of Foreign Intervention,” a political-economic analysis of foreign policy which concludes all sorts of foreign intervention are likely to fail for similar reasons that socialist economic intervention fails.
  • As perhaps a case study of Coyne’s analysis, Kelly Vee of the Center for a Stateless Society has an article summarizing the history of United States’ actions in Syria going back to World War II and how it’s gotten us into the current situation.
  • At Vox, Sean Illing interviews CUNY professor of journalism Eric Alterman on how the press fails to critically assess military intervention.

Ideology and the Alliance for Progress: Charting the Boundaries of the Welfare State

This Fall I took a course on the history of the Welfare State at Penn. I also used to work “in the system,” teaching English and job skills to Spanish-speaking TANF recipients at an NPO in North Philadelphia, so it was a nice complement to that experience. Overall the course was great given the volatility of the subject and the difficulty of understanding an abstraction like “welfare.”  I thought the course fell short in contextualizing the welfare state within the broader scope of government, so I wrote a paper about how the welfare state and foreign aid interacted in Kennedy’s policy and rhetoric.

The perils of globalization and modernization have largely been attributed to “neoliberalism” and neoliberal American global hegemony, which I think has some merit. The American welfare state has historically been such a strange beast that it’s really difficult to point fingers–few nations have seen a clash between principles of general welfare/security and personal liberty on the scale of the USA. Yet today it seems that “foreign development” (generally taking place under neoconservative, globalist institutions) and “domestic” or “community development” (generally taking place from the American “left”) are at odds with one another. The consensus on foreign aid at best rests on our duty to help the global have-nots and at worst is a less-risky way to build global security in the post-911 world. But both of these reflect a Bismarckian idea of State building to me… So is there a historical link?

My paper looks for answers in JFK and his Alliance for Progress. This project was a foreign analogue of the New Frontier that got Kennedy elected and seemed to be the future of the American Welfare State until his untimely assassination. Due to resistance at home, the Alliance for Progress was much further along than any New Frontier domestic reforms, despite complementary rhetoric and Kennedy’s constant comparison of the two. The Alliance provided millions in aid to Latin America in the name of developing economy and–as many historians neglect to mention–society. It died out by the mid-70s (largely due to neoliberal push-back and underfunding, or so the story goes) but what was the ideological basis of the reform? What did Kennedy want out of the millions he was lobbying to send abroad?

Overall, the Alliance was multifaceted: It sought to strengthen perceptions of America, grow international political ties, and generally create a buffer against the Cold War Communist threat. But these aspects were presented as international extensions of domestic policy by both outward rhetoric and by internal Congressional and diplomatic correspondence. Agrarian reform (ie, away from communal landholding, especially in Mexico), income redistribution, and a more just hemispherical society were also included as benchmarks.

The program eventually aimed to directly map Tennessee Valley Authority river basin development on top of Colombian valleys, hoping to make a Tupelo or Knoxville out of Cali or Buenaventura. The founder of the TVA, David Lilienthal, won a contract to develop Colombia under the Alliance for Progress after abortive plans to similarly shape the Mekong Delta and the Nile. And while big business was the engine running the machine, rubber met road with promises of social reform, workforce development, and increased social equality for the poor, uncivilized masses susceptible to Communist dogma.

While globalization’s detractors cry capitalist overreach, authoritarian power grab, or something in between, proponents of foreign aid still need to explain why hunger, malaria, and TB are so prevalent given global wealth–and be honest about the beginnings of these international institutions. I can’t make prescriptive calls to action, but I can say that the foundation of the current international aid regime was laid by the example of domestic welfare state-building, by ideals of a strong state guiding a “free” market to achieve affirmative social outcomes

If you want to read the paper: Here’s a full (18 pp. with references) and 10-page version.

Critical Junctures and Path Dependency in “Why Nations Fail”: Implications for U.S. Foreign Aid Policy

Greeted with wide acclaim, Why Nations Fail: The Origins of Power, Prosperity, and Povertyshould put to bed all debate on using foreign aid to promote economic development on a national level.

Authors Daron Acemoglu and James A. Robinson effectively deploy path dependency to explain the trajectories of the political institutions that form the core of their argument: Nations with “inclusive” political institutions succeed economically whereas those saddled with extractive” political institutions fail. Citing cases from myriad times and places, the authors demonstrate the relationship between political institutions and economic development. The authors tether their argument to Schumpeter’s idea of creative destruction in the marketplace: No creative destruction, no long-term development. Nations encumbered by extractive political institutions typically privilege monopoly. And so, over time, their economies atrophy.

So far, so good. In deploying path dependency to explain why institutions, once in place, tend to persist, authors add a solid piece of research to a literature that includes persuasive and important studies from Paul Krugman and Robert Higgs (and show that path dependency is an ideologically independent analytical tool). Notwithstanding their clear, concise, and compelling prose, however, the authors do less well in explaining the origins of divergent dependent paths. This is disappointing, because knowing and understanding the point of origin is crucial to understanding the dependent path. Because points of origin are often associated with cataclysmic events, however, one thing is clear: Development economics has no chance of establishing a new point of origin for nations encumbered by extractive political institutions.

Acemoglu and Robinson call their points of origin “critical junctures.” As they explain, critical junctures “are major events that disrupt the existing political and economic balance in one or many societies.” Critical junctures launch nations down their respective dependent paths. Because of small differences in initial conditions, the same critical juncture can send nations in radically different directions. But a lot is murky here in terms of understanding the historical foundation of a particular critical juncture. In many cases, I found myself accepting the facts that the authors present as the starting point and then going along for the narrative ride. Origins happen, and until another critical juncture occurs, a nation is pretty much locked in an institutional straightjacket.

What the authors do show is that we really have very little control over the initial conditions that propel nations down a particular path. And if paths are truly as dependent as the authors insist, it is extremely difficult—especially for outsiders—to get a nation to change course, that is, reform its political institutions. Whatever else they accomplish in elaborating the findings of their research, Acemoglu and Robinson bolster the argument, made by economists from P. T. Bauer to William Easterly, that foreign aid generally does nothing, and really can do nothing, to promote economic development.

Here’s my short list of the most important critical junctures in the book:

  • The Black Death
  • The French Revolution
  • The Glorious Revolution—a relatively peaceful resolution to decades of bloody civil war

If pestilence, famine, and war are requisites for institutional change, what chance do USAID, the World Bank, and the various UN agencies have to affect reform, armed only with dollars and expertise?

Less apocalyptic critical junctures described by Acemoglu and Robinson give no cause for cheer among aid advocates, either:

  • Of more than 50 African nations, only Botswana enjoys inclusive political institutions, and only because its leaders acted on their own initiative and in the face of conventional wisdom to break the institutional chains that have shackled all of the other nations on the continent.
  • Notwithstanding the arguments of the authors, the weight of the evidence suggests that America enjoys inclusive political institutions and Latin America does not above all because of climate, geology, geography topography, and differences in the demography of indigenous populations. (Score a point here for Jared Diamond.) English and Spanish colonists set out from Europe with similar intentions. In contrast to their Spanish counterparts, English colonists unhappily found no gold or silver, and in any case, encountered no large concentrations of peoples to enslave. The indentured servants that they imported in their stead proved to be a poor substitute. Paths diverged.

There is little in these stories to guide contemporary aid missionaries.

Why Nations Fail provides no justification for Washington maintaining its foreign aid apparatus. The general reader might close the book relieved to know that China, America’s greatest adversary in the international political economy, will inevitably falter because of its extractive political institutions. Policymakers and practitioners operating in the aid arena have no similar cause for relief. The authors leave some wiggle room in their conclusion, but in my reading, Why Nations Fail closes the door on using aid to foreign governments to foster economic development.

Around the Web

  1. Against Seriousness
  2. When Food Isn’t the Answer to Hunger
  3. Fiscal Consolidation in Earlier British History
  4. *Must Read* HAP vs. RR vs. the Pundits: Scoring the Reinhart, Rogoff Dispute

Sorry for the lack of posts lately. I’ve been busy.