Bryan Caplan  

Independence and Growth

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Garett interestingly builds on Lucas' fact that "with the exception of Hong Kong, no massive economic modernization has ever happened in a colony."  Still, I'm unimpressed on multiple levels.

1. How about Macao?  If you count so-called "settler societies," then you need to add Canada, Australia, and New Zealand to the list of counter-examples.  Or how about pre-independence Algeria?  If we're defining "modernization" and "colony" loosely, many of the Soviet republics - e.g. the Baltics - count, too.  Indeed, why doesn't U.S.-occupied Japan count?

2. More importantly, Lucas' argument neglects the severe lack of variation in the timing of decolonization.  Historians usually begin the decolonization era in 1945, and end it in the early 60s.  At the beginning of this era, many independent European countries had yet to undergo economic modernization.  It's hardly surprising that even well-governed colonies failed to develop right after World War II given domestic conditions that ranged from "extremely unstable" to "civil war."

3. We can easily invert Lucas' argument: Out of colonies that didn't gain their independence, what fraction enjoyed massive economic modernization?  By the 80s, the answer is arguably 100%.

4. Lucas' argument neglects all of Latin America, which gained independence over a century early, but developed poorly, with the arguable exceptions of the "settler societies" like Argentina and Uruguay.

5. Even if independence is as important as Garett claims, plenty of colonies got their independence fairly peacefully if they showed a little patience.  The right question, from his perspective, is not whether development is worth a horrific war, but whether starting development a few years earlier is worth a horrific war.  When you put the question that way, you'll notice that the most brutal wars of decolonization - e.g. Algeria, Indochina, Angola, Mozambique - were especially fruitless in terms of subsequent economic growth.

Last point: Isn't it bizarre to use the alleged failures of imperialism as an argument against pacifism?  What argument for unprovoked war could be more ex ante persuasive than, "The British Empire, beacon of capitalism and democracy, the scourge of the slave trade, should bring civilization to the backward, oppressed peoples of the world?"  Yet it didn't work out as Rudyard Kipling hoped.



COMMENTS (10 to date)
Daublin writes:

"Even if independence is as important as Garett claims, plenty of colonies got their independence fairly peacefully if they showed a little patience."

It's a powerful argument that bears repeating.

The exceptions are notable for how scarce they are. However, I would claim that the Communist movement is a possible counter-example. The Soviet expansions lingered on quasi-peacefully for decades, and they had miserable economic performance as a result.

Fighting for or against independence from England, France, or even the northern United States all look questionable, given your observation that a slower more peaceful route was probably available. With the USSR, however, the stable situation was misery. We're talking not about a few years of delayed development, but more like half a century.

Bob Knaus writes:

Brian, surely you must know that Kipling's poem is widely interpreted as satire. He was no pacifist, that is plain, but his contemporaneous poem "Recessional" contains the lines:

For heathen heart that puts her trust
In reeking tube and iron shard

Which pretty much sums up the horror of Victorian weaponry. The whole poem is worth reading:
http://en.wikipedia.org/wiki/Recessional_(poem)

Carl writes:

Any discussion of economic modernization in different countries that ignores IQ is unimpressive. No country with below average IQ has ever economically modernized on its own. This whole discussion is like looking for trees by staring at the forest floor with a magnifying glass. What's being ignored is much more important than what's being studied.

AS writes:

@Carl

How do we know that IQ is causative here? For instance, people in developed countries will typically have more education, making them score higher on IQ tests. It could be that economic modernization causes higher IQ or that something else causes both.

Carl writes:

@AS

Education does not make one score higher on IQ tests. That's one case where it is clear where causation lies, as tested IQ is stable with age and predictive of educational attainment.

There is no incontrovertible evidence that IQ directly causes economic modernization. However, countries like Hong Kong and Japan tested well on IQ before they modernized. Which is at least strongly suggestive that IQ is the cause.

There are counter-examples of high IQ countries that have not modernized. IQ is not the only answer, but is obviously important. In mathematical terms a high enough IQ is a necessary, but not sufficient condition.

Vipul Naik writes:

@Carl: The question here isn't about whether countries can modernize, but when. In other words, the question is whether a country that has already been colonized for some time would modernize more quickly if the colonizers left quickly.

Also, I don't know what your definition of "modernize" is and what your definition of "on its own" is. India has pretty low average measured IQ (compared to Europe and East Asia, though higher than some African countries), and it's growing pretty fast, though currently still quite poor. Presumably, it hasn't yet modernized by your definition, but I suspect that if we come back here in about 15 years, it would be in what's currently viewed as the middle income bracket (i.e., somewhere between where South Africa and South Korea are right now). Would you call that modernization? Or is the notion of modernization itself a comparative notion relative to the status of other countries at the time? And, if and when that happens, would you say that India achieved this modernization "on its own" -- whatever that means?

[btw, if you're absolutely sure that some specific countries will not reach the middle income threshold by some year X -- although I'm not sure you're saying that -- I'm willing to take suitably framed bets, as long as you offer me odds. For instance, if you claim that India won't reach per capita GDP of $10,000+ by 2030 in 2012 dollars, I'm willing to bet at even odds, and I'm willing to bet similarly for sub-Saharan African countries if the odds are somewhat more in my favor].

Carl writes:

We're dealing with many different fuzzy terms here, where the boundaries are not at all clear. Garett did not precisely define terms in his original post, so I feel no obligation to attempt a precise definition when the only certainty is that everyone will object to at least one part of it.

The point is that GDP/capita correlates very highly with measured average IQ. If that highly relevant factor in why certain former colonies have outperformed others is ignored then the discussion is lacking. Any example brought up to support a point needs to at least consider IQ as a potential confounding variable.

Vipul Naik writes:

Garett Jones is certainly aware of the relationship between IQ and GDP/capita -- he's one of the few economists who has written about it and made estimates of the correlation and possible causal mechanisms, as you are probably aware.

But I don't yet see how this affects the analysis of the "when" question that Garett Jones and Bryan Caplan are considering. The question is -- are economies more likely to take off economically only after independence? They're not trying to address the question of whether certain countries are more likely to grow faster than others. Obviously, any factor that correlates highly with economic growth rates and GDP/capita is potentially confounding, but you'd need to spell out more clearly just what part of the analysis done by Jones or Caplan is rendered suspect by consideration of IQ.

Jim Rose writes:

the successful settler societies were to far away places with few locals. the Colons were always on top in french algeria.

australia and NZ attracted free migrants from the UK by offering adult males the vote by the late 19th century, women the vote by 1890 and self-government by the mid-19th century

that ensured inclusive institutions.

Hadur writes:

Let's remember that Italy has the highest average IQ in Europe. Intelligence is probably helpful for economic development, but if you know a lot of high-IQ people you probably know that many of them end up going insane, burning out, being unable to function in normal society, etc.

Italy is that guy among nations.

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