(Failed) White Man's Burden, Madagascar Edition

♠ Posted by Emmanuel in , at 7/02/2010 12:19:00 PM
There's an interesting article in the Atlantic about the hubris of yet another American would-be social engineer, economist Paul Romer of New Growth Theory fame. In a very politically incorrect manner, he set out to demonstrate the theory that establishing rules of the game or institutions along Western standards is a key foundation for economic growth. In this respect he cites the well-known example of Hong Kong as a British colony.

As you will read below, he tried to apply his ideas in Madagascar, but political realities your typical economists fail to deal with eventually overwhelmed this would-be whiteocracy. Not only was Madagascar's then-ruler deposed, but the whole project fell into disrepair and, needless to say, disrepute.

Given the chance, there are a number of things I'd like to ask Romer about this White Man's Burden-ish enterprise:
  1. Yes Hong Kong was a British colony, but is that the main contributing factor to its success? Were the other Asian Tigers Singapore, South Korea, and Taiwan still benefiting from the fruits of colonization?
  2. Several generations of developing country elites who have studied economics at the most prestigious Western institutions--Stanford, Oxford, and what else have you--have failed to promote meaningful development in their home countries. What reason is there to believe that bringing over rich, white people to run poor peoples' countries will succeed where trying to transplant technoratic ideas drawn from the selfsame experts to the Third World have failed?
  3. Given their current state of economic malaise, why would the UK and US be shining examples of progress and enlightenment for the developing world?
Contrary to Romer and similar to William Easterly, my inclination is to believe that other nations work things out for themselves and should not wait for manna from heaven to trickle down, whether it be from ostensibly well-meaning economists, multilateral institutions, or aid agencies. Anyway, to the key snippets of the article:
In the 1990s, Paul Romer revolutionized economics. In the aughts, he became rich as a software entrepreneur. Now he’s trying to help the poorest countries grow rich—by convincing them to establish foreign-run “charter cities” within their borders. Romer’s idea is unconventional, even neo-colonial—the best analogy is Britain’s historic lease of Hong Kong. And against all odds, he just might make it happen...

Fast-forward several centuries, and Henry the Lion’s would-be heir is Paul Romer, a gentle economist at Stanford University. Elegant, bespectacled, geekishly curious in a boyish way, Romer is not the kind of person you might picture armed with a two-handed flanged mace, cutting down Slavic marauders. But he is bent on cutting down an adversary almost as resistant: the conventional approach to development in poor countries. Rather than betting that aid dollars can beat poverty, Romer is peddling a radical vision: that dysfunctional nations can kick-start their own development by creating new cities with new rules—L├╝beck-style centers of progress that Romer calls “charter cities.”

By building urban oases of technocratic sanity, struggling nations could attract investment and jobs; private capital would flood in and foreign aid would not be needed. And since Henry the Lion is not on hand to establish these new cities, Romer looks to the chief source of legitimate coercion that exists today—the governments that preside over the world’s more successful countries. To launch new charter cities, he says, poor countries should lease chunks of territory to enlightened foreign powers, which would take charge as though presiding over some imperial protectorate. Romer’s prescription is not merely neo-medieval, in other words. It is also neo-colonial...Romer’s New Growth Theory opened the window onto a sunnier worldview: a larger number of affluent people means more ideas, so prosperity and population expansion might cause growth to speed up.
So that's the theory. How did it work out in practice?
In July 2008, Romer made his first trip to Madagascar’s bustling capital, Antananarivo. Madagascar’s government was anxious to attract foreign investment, and it understood that a credibility deficit held it back. In an earlier bout of openness, the island had lured in foreign garment firms, but then the political climate turned hostile and the firms fled; now the government was having trouble enticing them to come back. Faced with this obstacle, the Malagasy authorities were open to unconventional arrangements. To boost investment in agriculture, they were ready to lease a Connecticut-size tract of land to Daewoo, a South Korean corporation, for 99 years...

Even as Romer was meeting with Ravalomanana, the president’s main political opponent was sniping at the proposed lease of farmland to Daewoo, and the idea of giving up vast swaths of territory to foreigners was growing increasingly unpopular. The arrangement was denounced as treason, and public protests gathered momentum, eventually turning violent. In late January 2009, protesters tossed homemade grenades at radio and TV stations that Ravalomanana owned; looters ransacked his chain of supermarkets. In February, guards opened fire on marchers in front of the presidential palace, killing 28 civilians. At this, units of the army mutinied. Soon, Ravalomanana was forced out of office.

The first action of the new government was to cancel the Daewoo project, and Romer’s plans in Madagascar were put on hold indefinitely. But the larger question was what, if anything, this disappointment signified for Romer’s whole approach. The riots appeared to demonstrate the explosive sensitivities surrounding sovereignty and land—sensitivities that are not confined to Madagascar. Indeed, versions of the Daewoo story have played out elsewhere. In the late 1990s, for example, Fiji’s government decided to bring in a British nonprofit to manage its mahogany forests, and an indigenous leader launched a revolt under the slogan “Fiji for the Fijians.” The rebellion was hypocritical: as the Oxford economist Paul Collier recounts in his book The Bottom Billion, the indigenous leader had himself backed a rival foreign bid to manage the mahogany. But the venality of the rebels’ motivation didn’t change the fact that a demagogue could easily attract support by railing against territorial concessions to foreigners.
It would be funny if it weren't for the highly deleterious consequences. What did they say was paved with good intentions?