Johan Fourie's blog

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Posts Tagged ‘colonisation

How do we build a prosperous, decolonized South Africa?

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I recently attended an academic conference at the University of the Free State on the topic ‘Decolonizing Africa’. Much of the debate was, understandably, about the past: about the lingering effects of the (Atlantic) slave trade, European colonization that included the imposition of largely artificial borders, and the post-colonial failures of independent Africa. But at the final keynote, delivered by Prof Alois Mlambo of the University of Pretoria, the discussion turned to the future. How do we build a prosperous, decolonized South Africa?

One unescapably emotive topic is land reform. The expropriation and dispossession of land in South Africa is the root, many agreed, of the severe levels of inequality that plague the region. But how to correct this past injustice was not so easy; in the audience, too, were several Zimbabwean scholars quite critical of that country’s land reform programme. Over lunch, one Zimbabwean student told me the tragic story of his grandfather, a former farm worker on a white farm turned successful tobacco farmer after land reform, only to lose his land because he was considered ‘too successful’ by the ruling ZANU-PF party. The farm is now dormant.

Getting land reform right is fraught with difficulty. Not everyone that suffered land expropriation wants to return to farming – by far the largest number of recipients of successful land claims in South Africa choose the cash instead of the land. (This is often ignored by politicians and commentators when simply taking the hectares transferred as measure of land reform success.)  And even when recipients choose to return to the land, they often struggle to support themselves because of the small size of land allocated, or a lack of capital investment, or a lack of technical or management skills. There are also political consequences: because land recipients, like those in Zimbabwe, often do not receive title deed to the land they are given, they become ensnared by the political party that gave them the land. Why do people still vote for ZANU-PF despite the state of the economy? Because they worry a vote for the opposition means that they might lose their land. Most worryingly, it is often the original farm workers who lose the most, like the Zimbabwean student’s grandfather.

This is not to say that some form of wealth redistribution is not imperative. But whereas land (and the minerals it contained) was clearly the most productive resource when it was expropriated in the nineteenth century (which is the reason it was expropriated), a valid question is whether it still is the most productive. Of course, people value land not only for its economic uses: there are a myriad of historic, cultural and religious reasons why the land of your ancestors are treasured. But as a redistributive policy aimed at creating a more equitable society, is land reform the best way to create prosperity for those who suffered historical injustice?

Think of the fastest growing companies globally: which of them still rely predominantly on land ownership? AirBnB is a great example: it is the world’s largest accommodation service, without owning any property! For AirBnB and the myriad other unicorns that have created incredible wealth for their founders and shareholders, it is not land or physical property that creates wealth, but science and technology. (Even farmers know this: that is why they are investing in science to improve their crops and in technology to mechanize production.)

In the twenty-first century, land is what you buy with your wealth, and not the reason for your wealth. A quip about Stellenbosch wine farmers summarize this well: How do you make R1 million farming in Stellenbosch? You spend R2 million.

Prof Mlambo remarked that India and China, both with a history of colonisation, is not growing at above 5% because they have redistributed land. They have prospered because they embraced science and technology. Consider this: in the 2015/2016 academic year, 328,547 Chinese students studied in the United States; only 1,813 South African students did. (If you account for population size, 7 times more Chinese than South Africans students study in the US.) Take South Korea, a country with roughly the same population size as South Africa: 61,007 South Koreans traveled to study in the US in 2015/2016, 33 times more than South Africa.

So how would a redistribution policy look that takes science and technology seriously? I don’t have the answers, but here are some suggestions. Most of us would agree that education is key, but the South African education system has not made much progress in the last decade and it is unlikely to do so in the next. Redistribution must start at the first year of life. Publicly funded but privately run nurseries will remove the gap between the rich and poor that has already emerged when kids arrive at school. For primary and secondary education, a voucher system that incentivize private schools for the poor is an option. At tertiary level, we need more and better-funded universities, notably in science and technology. (It would help to send more of our smartest students abroad to study at the frontiers of science – they will return with new ideas and networks to propel our industries forward.) Visas for and recruitment of skilled immigrants can boost research and entrepreneurship. Improve free wifi access and invest in renewable energies. The private sector, because that is where most innovation occur, can be incentivized through appropriate legislation to offer shares to workers – or to those living in communities where they operate. There are a myriad of innovative possibilities.

If Zimbabwe has taught us anything, it is that politics may triumph over economic logic. Land reform in Zimbabwe was not an economic strategy in as much as it was a strategy to keep the ruling party in power. It has had severe economic consequences, as anyone visiting Zimbabwe today can attest. The real radical economic transformations of our age – just in my lifetime, the Chinese has managed to reduce the share of people living in absolute poverty from 88% to less than 2% – have not come from redistributing an unproductive twenty-first century resource. It has instead been the result of investments in science and technology. Any attempt to redistribute with the purpose of building a more prosperous society should take this as the point of departure.

*An edited version of this first appeared in Finweek magazine of 29 June 2017.

European colonisation: good or bad?

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James Robinson at the World Economic History Congress 2012, Stellenbosch University. Photo by Reinhardt Germishuijs.

A major theme of the current World Economic History Congress (follow #wehc2012 on twitter) is the colonial impact of European settlement. James Robinson, in his plenary on Monday (here are the slides), argues that “there is a clear case for colonialism retarding development”, especially in “colonies which corresponded to a pre-colonial polity: there was the essentials of order and public goods provision which could have been the basis for development, colonialism stopped the existing dynamics of centralization and severed links of accountability (indirect rule) and in many cases created or intensified conflicts.” According to Robinson, “colonies of large scale white settlement: mass immizerization associated with land expropriation, creation of huge inequalities, institutionalized racism. These colonies were more successful on average during colonialism, but had worse problems to deal with afterwards (Zimbabwe).”

This position is somewhat surprising, given that this is the same Robinson of the now famous Acemoglu, Johnson and Robinson paper, which argues that settler institutions were conducive for economic development in contrast to the extractive institutions set up in areas where Europeans could not settle. Also, Easterly and Levine have a new paper which shows empirically that the more Europeans that settled, and the earlier they did so, the better for those countries today: “The results are consistent with the view that the proportion of Europeans during the early stages of colonization exerted an enduring, positive impact on economic development.”

So was colonisation good or bad? I guess it depends on who you ask. Ask the masses of native inhabitants who died because of settler diseases (or the settlers who died of native diseases), and they would be pretty sceptical about the benefits of colonisation. Ask the slaves and the indentured labourers who struggled to survive just above subsistence (although there is also heterogenous experiences here), and they would also be pretty pessimistic about the benefits. But the descendants of settlers, slaves and natives that now live in countries where European immigration was greater have attained higher living standards than regions where European settlement was low. Is it better to live in South Africa or the Congo? Ask the Congolese, Somali and Zimbabwean immigrants (settlers? refugees?) that arrive in South Africa every day.

But perhaps we are asking the wrong question. As I’ve argued before, showing that more white people is correlated with higher levels of income today explains very little about the mechanisms that cause this growth. If we want to learn from the histories of colonisation, we need to understand its causal mechanisms – property rights, human capital, trade, democracy, language, religion or culture, and its dynamic interactions with each other over time. Only by understanding these mechanisms can the experiences of colonisation have positive consequences for future generations.

Written by Johan Fourie

July 10, 2012 at 18:30