Friday, September 3, 2010


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My previous post compared East Asia and Latin America in terms of their political economies using the online graphic tool developed by the Legatum Institute for its Prosperity Index. I am referring to the contrast between developmental states in East Asia and the laissez-faire democratic traditions in Latin America. The emphasis on individuals giving way to collective goals in the former contrasts with the ascendant place individual happiness is accorded in the latter.

A similar comparison can be drawn between two emerging markets: the Middle East and North Africa (MENA) and Sub-Saharan Africa (SSA). Both are endowed with rich natural and mineral resources, but within each region, distinct characteristics and patterns of development seem to emerge that distinguish one from the other. Similar themes as with the East Asian/LatAm comparison emerge in analyzing these two regions.

Firstly, with respect to MENA, there are some similarities in its socio-political and economic make-up with East Asia in that a greater emphasis is placed on economic fundamentals and security. There does not seem to be as much entrepreneurial and innovative activity though (the UAE being the lone exception) which is due to their dependence on minerals for propelling economic growth. Apart from East Asia, the Middle East is the only other region where poverty has been reduced to a great extent.

Secondly, on the part of Sub-Saharan Africa, there are shared traits with Latin America in terms of strong individual freedom and democratic institutions. While generally anaemic in terms of most social indicators, at least two countries, Nigeria and Mali rate well in terms of social capital. Perhaps their use of trust and community involvement is a way of coping with their impoverishment. Like Latin America, the resource curse seems to afflict SSA as evidenced by poor governance, health and education.

Thirdly, as a result of such comparisons, we might be tempted to think that democracy impedes economic development. Here we can find counterfactual examples that debunk such a claim. One is Turkey, a  democracy in MENA which is doing relatively well economically. Another is Zimbabwe, an autocracy in SSA that is at the bottom of most economic league tables.

While many lessons about growth and development can be learnt from East Asia, one has to be cautious about prescribing their model to other regions where the institutional fabric is different. Each region and nation within it has to work out a set of arrangements consistent with its socio-political make-up that would foster economic growth and development. Although the general principles may be the same, there is more than just one way for achieving prosperity and happiness.

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