Political Distortions, State Capture, and Economic Development in Africa

Aclassic question in economics is how to explain differences in economic growth and development across countries. For researchers focused on subSaharan Africa, the corresponding question has long been how to explain what Easterly and Levine (1997) memorably called the "African growth tragedy." A standard starting point to study these differences has been to look at disparities in the factors of production like human capital and physical capital, as well as technology. However, growth accounting exercises suggest that such explanations account for, at most, 50 percent of this variation in salient settings (for example, Hsieh and Klenow 2009). Thus, the question became why the economies of countries were performing so much better or worse than one might expect based on their factors of production. For much of the developing world, newly developed explanations over the past 20 years include frictions in transportation, market access and information, inefficient regulation, as well as in the disparity in the enforcement of the rule of law, to name a few. That is, politics, technology, and history might all be relevant in explaining such differences in growth through inducing suboptimal choices by firms and citizens. With such mechanisms, there is a clear scope for policy to improve welfare by alleviating these frictions.