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I've always admired former Peace Corps volunteers who've returned to their posts for a visit.

I wouldn't be able to do it. I think about it, but I don't think I can.

I'm not sure if any of my friends, neighbors, or colleagues will be around. First off, my post is a major truck stop (last gas station on the road to Equatorial Guinea and Gabon) and I'm sure by now is a HIV/AIDS black hole. Secondly, Cameroon has deteriorated dramatically since I left in 1995. It's really too bad because Cameroon has everything needed to become a prosperous country.

I got this from a PC friend of mine who *has* gone back. Douala was actually my favorite city.


The clues lie on a bumpy road leading to the world’s
worst library.
Tim Harford


They call Douala the “armpit of Africa.” Lodged
beneath the bulging shoulder of West Africa, this
malaria-infested city in southwestern Cameroon is
humid, unattractive, and smelly. On a torrid evening
in late 2001, I was guided out of the chaotic Douala
International Airport by my friend Andrew and his
driver, Sam, who would have whisked us immediately to
the cooler hillside town of Buea if Douala were at all
conducive to being whisked anywhere. It isn’t. Douala,
a city of 2 million people, has no real roads.


A typical Douala street is 50 yards wide from shack to
shack. It’s packed with street vendors, slouched
beside a tray of peanuts or an impromptu plantain
barbecue, and with little clusters of people, standing
around a motorbike, drinking beer or palm wine, or
cooking on a small fire. Piles of rubble and vast
holes mark unfinished construction or demolition work.
Along the middle is a strip of potholes that 20 years
ago was a road.


Down that strip drive four streams of traffic, mostly
taxis. The streams on the outside are usually made up
of cabs picking up fares, while the taxis on the
inside weave in and out of the potholes and other cars
with all the predictability of ping pong balls in a
lottery machine. Douala used to have buses, but they
can no longer cope with the decaying roads. So the
taxis are all that’s left: beaten-up old Toyotas,
carrying four in the back and three in the front,
sprayed New York yellow, each with a unique slogan:
“God Is Great, ” “In God We Trust,” “Powered by God, ”
“Toss Man.”

Nobody who sees a Douala street scene can conclude
that Cameroon is poor because of a lack of
entrepreneurial spirit. But poor it is. The average
Cameroonian is eight times poorer than the average
citizen of the world and almost 50 times poorer than
the typical American. And Cameroon is getting poorer.
Can anything be done to reverse the decline and help
Cameroon grow richer instead?

That’s no small question. As the Nobel laureate
economist Robert Lucas put it, “The consequences for
human welfare involved in questions like these are
simply staggering: Once one starts to think about
them, it is hard to think about anything else.”


The Missing Jigsaw Piece

Economists used to think wealth came from a
combination of man-made resources (roads, factories,
telephone systems), human resources (hard work and
education), and technological resources (technical
know-how, or simply high-tech machinery). Obviously,
poor countries grew into rich countries by investing
money in physical resources and by improving human and
technological resources with education and technology
transfer programs.

Nothing is wrong with this picture as far as it goes.
Education, factories, infrastructure, and technical
know-how are indeed abundant in rich countries and
lacking in poor ones. But the picture is incomplete, a
puzzle with the most important piece missing.

The first clue that something is amiss with the
traditional story is its implication that poor
countries should have been catching up with rich ones
for the last century or so—and that the farther behind
they are, the faster the catch-up should be. In a
country that has very little in the way of
infrastructure or education, new investments have the
biggest rewards.

This expectation seems to be confirmed by the
experience of China, Taiwan, and South Korea—not to
mention Botswana, Chile, India, Mauritius, and
Singapore. Fifty years ago they were mired in poverty,
lacking man-made, human, technical, and sometimes
natural resources. Now these dynamic countries, not
Japan, the United States, or Switzerland, have become
the fastest-growing economies on the planet.

Since technology is widely available and increasingly
cheap, this is what economists should expect of every
developing country. In a world of diminishing returns,
the poorest countries gain the most from new
technology, infrastructure, and education. South
Korea, for example, acquired technology by encouraging
foreign companies to invest or by paying licensing
fees. In addition to the fees, the investing companies
sent profits back home. But the gains to Korean
workers and investors, in the form of economic growth,
were 50 times greater than the fees and profits that
left the country.

As for education and infrastructure, since the returns
seem to be so high, there should be no shortage of
investors willing to fund infrastructure projects or
lend money to students (or to governments that provide
education). Banks, domestic and foreign, should be
lining up to lend people the money to get through
school or to build a new road or a new power plant. In
turn, poor people, or poor countries, should be very
happy to take out such loans, confident that
investment returns are so high that the repayments
will not be difficult. Even if, for some reason, that
didn’t happen, the World Bank, established after World
War II with the express aim of providing loans to
countries for reconstruction and development, lends
billions of dollars a year to developing countries.
Investment money is clearly not the issue; either the
investments are not being made, or they are not
delivering the returns the traditional model predicts.



A Theory of Government Banditry

As our car slowly bumped and lurched through the
crowds, I tried to make sense of it all by asking Sam,
the driver, about the country.

“Sam, how long was it since the roads were last
fixed?”

“The roads, they have not been fixed for 19 years.”

President Paul Biya came to power in November 1982 and
had been in office for 19 years by the time I visited
Cameroon. Four years later, he is still in power. He
recently described his opponents as “political
amateurs”; they are certainly out of practice.

“Don’t people complain about the roads?”

“They complain, but nothing is done. The government
tells us there is no money. But there is plenty of
money coming from the World Bank and from France and
Britain and America—but they put it in their pockets.
They do not spend it on the roads. ”

“Are there elections in Cameroon?”

“Yes! There are elections. President Biya is always
re-elected with a 90 percent majority. ”

“Do 90 percent of people vote for President Biya?”

“No, they do not. He is very unpopular. But still
there is a 90 percent majority. ”

You do not have to spend a long time in Cameroon to
realize how much people resent the government. Much of
government activity appears to be designed expressly
to steal money from the people of Cameroon. According
to the global watchdog Transparency International,
Cameroon is one of the most corrupt countries in the
world. I was warned so starkly about government
corruption, and the likelihood that officials at the
airport would attempt to relieve me of my wad of West
African francs, that I was more nervous about that
than the risk of malaria or a gunpoint mugging in the
back streets of Douala.

Many people have an optimistic view of politicians and
civil servants—that they are all serving the people
and doing their best to look after the interests of
the country. Other people are more cynical, suggesting
that many politicians are incompetent and often trade
off the public interest against their own chances of
re-election. The economist Mancur Olson proposed a
working assumption that government’s motivations are
darker still, and from it theorized that stable
dictatorships should be worse for economic growth than
democracies, but better than sheer instability.

Olson supposed that governments are simply bandits,
people with the biggest guns who will turn up and take
everything. That’s the starting point of his
analysis—a starting point you will have no trouble
accepting if you spend five minutes looking around you
in Cameroon. As Sam said, “There is plenty of
money…but they put it in their pockets.”

Imagine a dictator with a tenure of one week—in
effect, a bandit with a roving army who sweeps in,
takes whatever he wishes, and leaves. Assuming he’s
neither malevolent nor kindhearted, but purely
self-interested, he has no incentive to leave
anything, unless he plans on coming back next year.
But imagine that the roaming bandit likes the climate
of a certain spot and decides to settle down, building
a palace and encouraging his army to avail themselves
of the locals. Desperately unfair though it is, the
locals are probably better off now that the dictator
has decided to stay. A purely self-
interested dictator will realize he cannot destroy the
economy and starve the people if he plans on sticking
around, because then he would exhaust all the
resources and have nothing to steal the following
year. So a dictator who lays claim to a land is a
preferable to one who moves around constantly in
search of new victims to plunder.

I cannot confirm that President Biya fits Olson’s
description of a self-interested dictator. But if he
did, it wouldn’t be in his interest to take too much
from the Cameroonian people, because then there would
be nothing to take next year. As long as he feels
secure in his tenure, he will not wish to kill the
golden goose. Like the virus whose very existence
relies on the bodies it afflicts, Biya would have to
keep the Cameroonian economy functioning in order to
keep stealing from it. This suggests that a leader who
confidently expects to be in power for 20 years will
do more to cultivate his economy than one who expects
to flee the country after 20 weeks. Twenty years of an
“elected dictator” is probably better than 20 years of
one coup after another.

Staying with the simplifying assumption that Biya has
absolute power over the distribution of Cameroon’s
income, he might decide to steal, say, half of it
every year in the form of “taxes” that go into his
personal bank account. That would be bad news for his
victims, of course, but also bad news for Cameroon’s
long-term growth. Think of a small business owner
considering an investment of $1,000 in a new power
generator for his workshop. The investment is expected
to generate income of $100 a year. That’s 10 percent,
a pretty good return. But since Biya might take half
of it, the return falls to a much less attractive 5
percent. The businessman decides not to make the
investment after all, so he misses out and so does
Biya.

Olson does not predict that stable dictatorships will
do good things for their countries, just that they’ll
damage the economy less than unstable ones. Of course,
Biya might make his own investments—for instance,
providing roads or bridges to encourage commerce.
While they would be expensive in the short term, they
would help the economy to prosper, leaving Biya with
more opportunities to steal later. But the flip side
of the businessman’s problem applies: Biya would be
stealing only half of the benefits, not nearly enough
to encourage him to provide the infrastructure that
Cameroon needs.

When Biya came to power in 1982, he inherited
colonial-era roads that had yet to fall apart
completely. If he had inherited a country without any
infrastructure, it would have been in his interest to
build it up to some extent. Because the infrastructure
was already in place, Biya needed to calculate whether
it was worth maintaining, or whether he could simply
live off the legacy of Cameroon’s colonial rulers. In
1982 he probably thought the roads would last into the
1990s, which was as long as he could reasonably have
expected to hold onto the reins of power. So he
decided to live off the capital of the past and never
bothered to invest in any type of infrastructure for
his people. As long as there was enough to get him
through his rule, why bother spending money that could
otherwise go right into his personal retirement fund?


Bandits, Bandits Everywhere

But perhaps Biya is not in control as much as it first
appears. A little traveling in Cameroon reveals that
whether or not Biya is the bandit-in-chief, there are
many petty bandits to satisfy.

If you want to drive from the town of Buea to Bamenda,
farther north, the most popular way to make the trip
is by bus; minibuses ply all long-distance routes in
Cameroon. Designed to seat 10 people in comfort, they
will depart as soon as 13 paying passengers have
boarded. The relatively capacious seat beside the
driver is worth fighting for. The vehicles are old
bone-shakers, but the system works pretty well. It
would work a lot better if not for all the roadblocks.

Bullying gendarmes, often drunk, stop every minibus
and try their best to extract bribes from the
passengers. They usually fail, but from time to time
they become determined. My friend Andrew was once
hauled off a bus and harassed for several hours. The
eventual pretext for the bribe was his lack of a
yellow-fever certificate, which you need when you
enter the country but not when riding a bus. The
gendarme explained patiently that Cameroon had to be
protected from disease. The price of two beers
convinced him that an epidemic had been prevented, and
Andrew caught the next bus, three hours later.

This is even less efficient than Mancur Olson’s model
predicts. Olson himself would have admitted that his
theory in its starkest form underestimates the damage
that bad governments inflict on their people. Biya
needs to keep hundreds of thousands of armed police
and army officers happy, as well as many civil
servants and other supporters. In a “perfect”
dictatorship, he would simply impose the least
damaging taxes possible in whatever quantity was
necessary and distribute the proceeds to his
supporters. This approach turns out to be
impracticable, because it requires far more
information about and control over the economy than a
poor government can possibly muster. The substitute is
government-tolerated corruption on a massive scale.

The corruption is not only unfair; it is also hugely
wasteful. Gendarmes spend their time harassing
travelers in return for modest returns. The costs are
enormous. An entire police force is too busy
extracting bribes to catch criminals. A four-hour trip
takes five hours. Travelers take costly steps to
protect themselves: carrying less money, traveling
less often or at busier times of the day, bringing
extra paperwork to help fend off attempts to extract
bribes.

The blockades and crooked police officers comprise a
particularly visible form of corruption, but there are
metaphorical roadblocks throughout the Cameroonian
economy. To set up a small business, an entrepreneur
must spend on official fees nearly as much as the
average Cameroonian makes in two years. To buy or sell
property costs nearly a fifth of the property’s value.
To get the courts to enforce an unpaid invoice takes
nearly two years, costs more than a third of the
invoice’s value, and requires 58 separate procedures.
These ridiculous regulations are good news for the
bureaucrats who enforce them. Every procedure is an
opportunity to extract a bribe. The slower the
standard processes, the greater the temptation to pay
“speed money.”

Inflexible labor regulations help ensure that only
experienced professional men are given formal
contracts; women and young people have to fend for
themselves in the gray market. Red tape discourages
new businesses. Slow courts mean that entrepreneurs
are forced to turn down attractive opportunities with
new customers, because they know they cannot protect
themselves if they are cheated. Poor countries have
the worst examples of such regulations, and that is
one of the major reasons they are poor. Officials in
rich countries perform these basic bureaucratic tasks
relatively quickly and cheaply, whereas officials in
poor countries draw out the process in hopes of
pocketing some extra cash themselves.



Institutions Matter

Government banditry, widespread waste, and oppressive
regulations are all elements in that missing piece of
the puzzle. During the last 10 years or so, economists
working on development issues have converged on the
mantra that “institutions matter.” Of course, it is
hard to describe what an “institution” really is. It
is even harder to convert a bad institution into a
good one.

But progress is being made. We’ve just seen one kind
of institution: business regulations. Sometimes, it
can be improved with simple publicity. After the World
Bank revealed that entrepreneurs in Ethiopia couldn’t
legally start a business without paying four years’
salary to publish an official notice in government
newspapers, the Ethiopian government scrapped the
rule. New business registrations jumped by almost 50
percent immediately.

Unfortunately, it is not always so easy to get corrupt
governments to change their ways. Although it is
becoming clearer and clearer that dysfunctional
institutions are a key explanation of poverty in
developing countries, most institutions cannot be
described with an elegant model like Mancur Olson’s,
or even with careful data-gathering by the World Bank.
Most unhappy institutions are unhappy in their own
way.

Such a uniquely backfiring setup was responsible for
the world’s worst library. A few days after I arrived
in Cameroon, I visited one of the country’s most
prestigious private schools—Cameroon’s equivalent of
Eton. The school boasted two separate library
buildings, but the librarian was very unhappy. I soon
understood why.

At first glance the new library was impressive. With
the exception of the principal’s palatial house, it
was the only two-story structure on campus. Its design
was adventurous: a poor man’s Sydney Opera House. The
sloped roof, rather than running down from a ridge,
soared up in a V from a central valley like the pages
of an open book on a stand.

When you’re standing in the blazing sunlight of the
Cameroonian dry season, it’s hard to see at first what
the problem is with a roof that looks like a giant
open book. But that’s only if you forget, as the
architect apparently did, that Cameroon also has a
rainy season. When it rains in Cameroon, it rains for
five solid months. It rains so hard that even the most
massive storm ditches quickly overflow. When that kind
of rain meets a roof that is, essentially, a gutter
that drains onto a flat-roofed entrance hall, you know
it’s time to laminate the books. The only reason the
school’s books still existed was that they’d never
been near the new building; the librarian had refused
repeated requests from the principal to transfer them
from the old library.

I was tempted to conclude that the principal was in an
advanced stage of denial when I stepped inside the new
library to see the devastation. It was in ruins. The
floor contained the stains of countless puddles. The
air carried the kind of musty smell associated with a
damp cave. The plaster was peeling off the walls. Yet
the library is only four years old.

This is a shocking waste. Instead of building the
library, the school could have bought 40,000 good
books, or acquired computers with Internet
connections, or funded scholarships for poor children.
Any of these alternatives would have been incomparably
better than an unusable new library. The school never
even needed a new library in the first place—the old
library works perfectly well, could easily hold three
times as many books as the school owns, and is
waterproof.

If the library was such a pointless endeavor, why was
it built at all? It’s all too tempting for the visitor
in Cameroon to shrug his shoulders and explain the
country’s poverty by presuming that Cameroonians are
idiots. Cameroonians are no smarter or dumber than the
rest of us. Seemingly stupid mistakes are so
ubiquitous in Cameroon that incompetence cannot be the
whole explanation. There is something more systematic
at work. We need to consider the incentives of the
decision makers.

First, most of the senior education officials in
northwest Cameroon come from the small town of Bafut.
Known as the Bafut Mafia, these officials control
considerable funds for the education system, which
they hand out based on personal connections rather
than necessity. Not surprisingly, the principal of
this prestigious private school was a senior member of
the Bafut Mafia. Wanting to convert her school into a
university, the principal needed to build a library of
university size and quality. It was irrelevant to the
principal that the current library was more than
sufficient, and that the taxpayers’ money could have
been better spent in other ways or by other schools.

Second, nobody was monitoring the principal or her
spending. Staff members are paid or promoted not on
merit but at the principal’s command. This is a
prestigious school with good conditions for teachers,
so staff members would be particularly eager to keep
their jobs, which meant keeping in good favor with the
principal. In fact, the only person able to defy the
principal was the librarian, who was accountable only
to the Voluntary Service Overseas office in London.
She turned up after the library was built but was at
least in time to prevent the book collection from
being transferred and destroyed.

Either the principal was so stupid that she did not
realize water ruins books, or she did not care very
much about the books and simply wanted to demonstrate
that the library had some books in it. The second
explanation seems more likely. With the money at her
fingertips and nobody to object to the wastefulness of
building a second library, the principal had full
control over the project. She appointed a former pupil
of the school to design the library, probably to
demonstrate the quality of education provided by the
school; she did prove a point, although perhaps not
the one she intended. But no matter how incompetent
the architect, the flaws in the design would have been
spotted if anybody concerned had a strong interest in
making sure the library functioned as a library. But
that was never the prime concern of anybody with
authority. The people in power simply cared about
putting up something that could qualify the school as
a university.

Consider the situation: money that was provided
because of social networks rather than need; a project
designed for prestige rather than use; a lack of
monitoring and accountability; and an architect
appointed for show by somebody with little interest in
the quality of the work. The outcome is hardly
surprising: A project that should never have been
built was built, and built badly. The lesson of the
story might appear to be that self-interested and
ambitious people in power are often the cause of
wastefulness in developing countries. But
self-interested and ambitious people are in positions
of power, great and small, all over the world. In many
places, they are restrained by the law, the press, and
democratic opposition. Cameroon’s tragedy is that
there is nothing to hold self-interest in check.


Does Development Have a Chance?

Development specialists often focus on helping poor
countries become richer by improving primary education
and infrastructure such as roads and telephones.
That’s surely sensible. Unfortunately, it’s only a
small part of the problem. Economists who have pulled
apart the statistics, or studied unusual data such as
the earnings of Cameroonians in Cameroon and the
earnings of Cameroonians who immigrate to the United
States, have found that education, infrastructure, and
factories only begin to explain the gap between rich
and poor. Because of its lousy education system,
Cameroon is perhaps twice as poor as it could be.
Because of its terrible infrastructure, it’s roughly
twice as poor again. So we would expect Cameroon to be
four times poorer than the United States. But it is 50
times poorer.

More important, why can’t the Cameroonian people seem
to do anything about it? Couldn’t Cameroonian
communities improve their schools? Wouldn’t the
benefits easily outweigh the costs? Couldn’t
Cameroonian businessmen build factories, license
technology, seek foreign partners, and make a fortune?

Evidently not. Mancur Olson showed that kleptocracy at
the top stunts the growth of poor countries. Having a
thief for president doesn’t necessarily spell doom;
the president might prefer to boost the economy and
then take a slice of a bigger pie. But in general,
looting will be widespread either because the dictator
is not confident of his tenure or because he needs to
allow others to steal in order to keep their support.

The rot starts with government, but it afflicts the
entire society. There’s no point investing in a
business because the government will not protect you
against thieves. (So you might as well become a thief
yourself.) There’s no point in paying your phone bill
because no court can make you pay. (So there’s no
point being a phone company.) There’s no point setting
up an import business because the customs officers
will be the ones to benefit. (So the customs office is
underfunded and looks even harder for bribes.) There’s
no point getting an education because jobs are not
handed out on merit. (And in any case, you can’t
borrow money for school fees because the bank can’t
collect on the loan.)

It is not news that corruption and perverse incentives
matter. But perhaps it is news that the problem of
twisted rules and institutions explains not just a
little bit of the gap between Cameroon and rich
countries but almost all of the gap. Countries like
Cameroon fall far below their potential even
considering their poor infrastructure, low investment,
and minimal education. Worse, the web of corruption
foils every effort to improve the infrastructure,
attract investment, and raise educational standards.

We still don’t have a good word to describe what is
missing in Cameroon and in poor countries across the
world. But we are starting to understand what it is.
Some people call it “social capital,” or maybe
“trust.” Others call it “the rule of law,” or
“institutions.” But these are just labels. The problem
is that Cameroon, like other poor countries, is a
topsy-turvy place where it’s in most people’s interest
to take actions that directly or indirectly damage
everyone else. The incentives to create wealth are
turned on their heads like the roof of the school
library.






Tim Harford, a columnist for the Financial Times, is
the author of The Undercover Economist: Exposing Why
the Rich Are Rich, the Poor Are Poor—and Why You Can
Never Buy a Decent Used Car! (Oxford University
Press), from which this article is adapted.

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On March 21st, 2006 04:48 pm (UTC), (Anonymous) commented:
Sad
Man, this is so depressing.

Mandy
[User Picture]
On March 25th, 2006 11:54 am (UTC), vengal replied:
Re: Sad
Insightful though. Once we understand the problems a bit better, perhaps we can do something to fix them?
[User Picture]
On March 27th, 2006 01:39 pm (UTC), ticklethepear replied:
Re: Sad
Unfortunately there's a real lack of consensus on what problems to address...and not enough political will/resources to address them.
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[User Picture]
On March 28th, 2006 07:45 pm (UTC), vodun commented:
Absolutely fascinating.

I just wrote a bunch of stuff about the economics of Egypt and "Eat the Rich" by P.J O'Rourke, but then LJ and my browser threw it all away, and I hate repeating myself. Humph.
[User Picture]
On March 29th, 2006 10:34 am (UTC), ticklethepear replied:
I'd be interested to read that. Phooey on LJ!
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