The Slow Road to Wealth
Posted by fazeer on 15 July, 2008
The French Ambassador to Madagascar, Mr Gildas Le Lidec, announced yesterday that he was being recalled home, only five months after being appointed. Was he bad in his job? He was flawless, according to French officials. But, in 2001, while he was in post in Kinsasha (Congo), Laurent-Désiré Kabila was assassinated, and, in 2002, he was ambassador in Abidjan (Ivory Coast) during the attempted coup on Laurent Gbagbo. His “evil eye” costs him the job; his attempts to meet the Malagasy President fell on deaf ears, who, worried for his life, demanded his recall. This story captures an important difference that exists between nations with GDP per head of $600 and those with $30,000: the generalised ‘backwardness’ in the former (even among their so-called ‘elites’) that prevents growth-enhancing behaviours and policies. Is the situation hopeless? For many economists (these poor chaps who have been unable to foretell the subprime, food, oil, etc crises!), the answer is no. Economic forces are stronger than any other, they would say. For some, a poor country like Madagascar should simply open its economy to trade, provide guarantees to foreign investors that the rule of law will be respected, balance its budget and avoid printing money to service its debt and good things will come. For others, a subtle mix of industrial policy, protectionism and undervalued real exchange rates as well as good institutions are required. Nevertheless, both groups would agree that economic development gradually dilutes backwardness, triggering a virtuous cycle. It is happening, if only imperceptibly. And slowly, the people of Madagascar will worry more about working to buy a fridge or a motorbike than about killing the aye-ayes due to their malefic powers. On the slow but inexorable road to wealth, they will be more demanding towards their policy-makers, will have less children (and spend more time and resources educating them) and will want laws that better protect property rights, prevent corruption and discrimination, all of which are essential to development. The question is how long will all this take?
