Interesting people writing interesting things: we’ve read some papers, so you don’t have to

There are lots of interesting things written by academics. But who has the time to read them all?!

Exports are good for growth, and exporting more complex things is better. Well, maybe.

Globalization and the Ladder of Development: Pushed to the Top or Held at the Bottom?; Atkin, Costinot, Fukui; 2021.

The GPI is not alone when writing that trade and productivity reinforce each other. Once a firm starts exporting, they become more competitive, which in turn increases their productivity and off they go up the value chain exporting more and building firm level capability. Or so the theory goes. But what if opening up to trade actually diminishes firm level, and by extension country wide, capabilities?

High capability countries have higher incomes. But how to build those capabilities...?

The authors of the paper create a model to isolate the impact of trade liberalisation on capabilities within economies. Using the UN Comtrade database of more than 3 billion records of annual imports and exports by detailed product code going back as far as 1962, the authors show that more complex goods (such as medicines) tend to be produced by more countries than low complexity goods (such as underwear). This means more complex goods actually face more global competition that less complex goods.

So when, say, Malawi liberalises its trade policies, their local medicine firms have to compete not just with Switzerland and the US but also India and Kenya. When this happens, the share of the Malawian economy producing complex goods actually shrinks, as faced with the expanded range of competition these firms grow more slowly, if at all; in effect the country loses capability. The authors’ model shows that these negative capability effects are modest to minimal for middle income countries but substantial for the low-income countries of sub-Saharan Africa. If true, while this might seem like another tick for the ‘Garments as the Gateway to Development’ theory, the long run development consequences for low-income countries are much more concerning.

Of course, this is just a model. But economists build models to test theories, in this case the theory that trade benefits poorer countries by forcing firms to compete globally and develop the skills required to do this. Development practitioners have been telling African countries for years that they need to stop exporting raw goods and move up the value chain; yet African countries still largely export raw commodities. The Comtrade database shows that with more complex goods, comes more competition. Perhaps this model goes part of the way to showing why pulling yourself up the value chain by your own shoelaces is just so hard.

Africa’s next resource boom; it’s people

Africa's Latent Assets; Henn and Robinson; 2021.

From the oil of the Niger delta, to the copper of Zambia, and the contested miles of the Eastern Congo, Africa is known as a continent rich in natural resources. But Henn and Robinson, the authors, see another resource which will power Africa through the 21^st century; the latent assets within its very people.

China in 1978, which as the authors wryly note, had “had a very bad 200 years”. Yet the authors posit that a belief in meritocracy combined with high levels of social mobility helped China boom over the next 50 years. This first latent asset is more present in Africans than people in other parts of the world.

Next, Africans are “highly skeptical of authority and attuned to the abuse of power”. Taking the sentiment in the US around the time of the drafting of the US constitution as their parallel, the authors suggest that these traits are particularly useful for building accountable political institutions. Unsurprisingly from one of the authors of Why Nations Fail, an ode to building inclusive institutions, the authors think this is pretty important too.

Finally, an asset class without a historical allegory attached; Africa’s “cosmopolitanism”. The most linguistically diverse continent on the planet with a history of small and heterogeneous societies, Africans are well used to dealing with differences; cultural, religious, historical. Using a neat merging of linguistics and statistics, they show that it is “significantly more likely that the word ‘guest’ will be the same as the word for ‘stranger’ in an African language compared to the languages of any other part of the world”. In our increasingly globalised world, this openness and cosmopolitanism will serve Africans well in the 21^st century.

Latent assets are by their very nature, unrealised. Like so much of Africa’s physical assets. The authors write that for the potential of these latent assets to be released, “some basic institutional problems have to be solved” across Africa. As half of the duo that literally wrote the book on institutions, James A. Robinson will know that this is easier said than done.

Anachronism or persistent force; the legacy of missionaries

The Mission: Human Capital Transmission, Economic Persistence, and Culture in South America; Valencia Caicedo; 2019.

Missionary Activity, Education, and Long-run Political Development: Evidence from Africa; Henn, Larreguy, Schimdt-Padilla; 2023.

David Livingstone, the archetypal 19^th century missionary, is said to have only converted one person. And his convert possibly lapsed after poor Dr Livingstone died. In 1900, Christians made up ~5% of the African population yet, despite Livingstone’s lackluster results, that figure is ~57% today. But it was not just in the spiritual realm where missionaries made their mark. Many set up schools and education was a key element of many missionaries’ purpose; not least the Jesuit order. Showing some remarkably long-lived effects, Valencia Caicedo documents that areas with higher Jesuit missionary activity across Paraguay, Argentina, and Brazil have education levels 10-15% higher and income levels 10% higher than other comparable areas. What’s remarkable about this result is that the Jesuits were forcibly evicted from all the areas in 1768. No Jesuit missionaries ever returned. Yet 250 years later their impacts are still seen.

If, as Daron Acemoglu and James Robinson would have you believe, inclusive institutions are a key element of economic development, having politically engaged citizens would presumably be a positive. Again, here long forgotten missionaries may have a hand in the future of Africa. For countries who labour under an ‘open anocracy’, academic speak for “a not-quite-ideal democracy but thankfully a good distance away from a dictatorship”, citizens who have greater exposure to historical missionary activity tend to be more politically engaged. These citizens are “more sophisticated, supportive of democratic institutions, and disenchanted with the state of democracy and incumbent in their countries.” These sound like useful traits to turn that open anocracy into a fully-fledged democracy.

Missionaries and their ilk are rarely the subject of discussion by development economists, policymakers, or the private sector. Yet perhaps by understanding the impacts of 19^th and 20^th century missions better, both the positive and negative impacts, we could all do a better job of helping economies and societies flourish in the 21^st.