Author’s book cover: Gambling on Development
“I fought the good fight”, is the biblical quote on Professor Benno Ndulu’s gravestone in the packed cemetery in the centre of Dar es Salaam (2 Timothy 4:7-8). Nothing is more apt to honour this academic, former Governor of the Bank of Tanzania and stalwart of sensible economics in Tanzania. He passed away in 2021.
In my new book, Gambling on Development: why some countries win and others lose, I highlight that in recent decades, more of the poorer developing countries but by no means all have made strides in their take-off in development. By no means perfectly, and economies, politics and institutions definitely have their imperfections, but they appear to have embarked on progress. The book documents how Ghana, Ethiopia, at times Uganda and Kenya, and even Somaliland have shown signs of this, with variable success – while others such as South Sudan, Nigeria, DRC or Malawi seem to go nowhere.
My thesis is that the more successful places have found a political and economic deal, an elite bargain, among the key players in their countries that is favourable to progress in growth and development. The elite are those that can make things happen in countries – those with power and influence – and not just in politics or state bureaucrats, but also in the economy, maybe the military, public intellectuals or civil society. In itself that may not be a new idea, but one of the book’s main aim is to communicate to a wider audience, not least those working in international development, some of the thinking in political science and in economics that emphasises the connections between politics and the economy – including the writing about political settlements, but also about elite bargains and economic outcomes.
An elite bargain is the minimal condition for peace and stability; it can be seen as a defining feature of a state. It is a deal on politics – on who controls the state, but also on the economy – of who has access to resources and how rents and profits are distributed. Elite bargains may take various forms – for example they may be clientelist, where benefits of the state are mainly used to buy off supporters, or kleptocratic, where the state is simply an instrument to enrich a small cabal in power. My key argument is that this is a choice elite players can make, even if it is a gamble – there is no ‘single’ elite bargain or political settlement plausible at any moment in time: it is shaped by people, typically the elites in business, politics, bureaucracy, military and, when there is space, civil society.
An elite bargain favourable to growth and development is one (and only one) of many possible ones. And when that is the bargain elite players settle on, I call this a development bargain. It requires some courage: there is no guarantee of success, while it may also undermine some of the existing power dynamics, threatening the elite. It is a gamble.
I argue that a development bargain, however imperfect, is an essential condition for developmental progress. For states to begin to kickstart economic growth and broad development there should be a shared commitment underlying the elite bargain that these should be pursued, and actions in line with this. It does not mean that there won’t be corruption, or that all economic policies are the best possible, but more that seeking progress is highly valued by the elite, and they are willing to make the state serve this objective. This could be part of a narrative when coming out of conflict and ethnic division, as in Rwanda, or seeking legitimacy as regimes, as in Ethiopia, or from sensible leadership given economic interests, as in Botswana.
The state matters, but not in terms of expecting it to be a developmental state everywhere. The developmental state does not travel well: it asks a lot of states with limited state capability or with histories of clientelism. In East-Asia, there were strong states to build on. In Ethiopia, with centralised taxation since Menelik and a more meritocratic bureaucracy than in many other African countries, I understand it could try to go via the state. But in Ghana (as in South Asia in Bangladesh), progress was made sensibly by not expecting too much from the state.
Often it is more pragmatic than some grand ideological or national project – it is not inconsistent with it, but words are less important than actions. And that means than in a development bargain, as part of the implicit agreement for pursuing growth and better development outcomes for their populations, they are willing to correct errors, bring back economic stability and overall learn how to keep this progress on track, as Yuen Yuen Ang aptly analysed for China.
The relative success of some African countries on the list is not at all of the scale of the Chinese success; sustained productive growth of 2-3 percent per capita, not simply driven by natural resources, and with falling poverty would be a success for me. And within the own complicated history and politics of many African countries, it is remarkable that some achieved this. It did require a political class to be willing to embark on that journey, taking the military and business along that journey. When Jerry Rawlings allowed multiparty democracy to emerge again in the 1990s in Ghana, the political class, despite their divisions, found a way to make it work, with repeated broadly accepted peaceful power transitions. In short, they struck an implicit elite bargain first for stability and then gradually, this has now evolved to a politics with more scope for attention to long-term outcomes. Nothing perfect about this country – corruption, for example is still widespread – but progress is there.
Over the last 10 years, when working as Chief Economist at DFID, I have seen this process in action across many countries. To understand progress, I had to learn to get much deeper involved in understanding the local politics. But one group of people stood out for me: those technocrats who in really difficult political and economic circumstances tried to work with the grain while attempting to keep the economy and broader development on track. They are the key economic advisors of presidents and prime ministers.
Benno Ndulu is on top of my list. He can be credited to have been a key adviser that encouraged President Nyerere in the early 1980s to drop ideology and try to steer the macroeconomy with home grown policies back to some kind of stability, even when donors were pushing for ‘big bang’ reforms. He wisely knew that politics could not have sustained that. For decades he perfected that art in Tanzania but also elsewhere – for example, helping Trevor Manuel and others in South Africa with their own transition in the early 1990s and then returning to Tanzania as governor of the Bank of Tanzania for two terms from 2008, bringing macroeconomic stability, championing financial inclusion, but especially quietly and wisely advising the president to keep progress on track.
Deep understanding of politics is their key quality as well: the networks of power in politics, and how they link with business interests at home and from overseas, and how economic policies may strengthen or weaken influential groups. Theirs is not first best technical advice that IMF or World Bank like to give, but always looking for the best route that is possible given politics. My heroes, like Benno, were those who within these constraints had a real vision and understanding how growth and development could be achieved in their countries.
Ato Newai Gebreab, from 1992 the long-serving economic advisor to Prime Minister Meles Zenawi was one too – he passed away in 2019. Newai had a growth strategy through the structural transformation from an agricultural to a more industrial economy, with a clear long-term vision and with reasonable realism. Meles was not an easy boss. “One of the smartest people I know”, I was told not by one but by two former chief economists of the World Bank. But ideology and politics dominated all. Newai manoeuvred around that. He also understood, given a hugely ambitious and ideological Prime Minister, the importance of macroeconomic stability, and until Meles’ death, the country managed to avoid macroeconomic derailment during fast growth.
This supportive but sensibly constraining role was also played by Emmanuel Tumusiime-Mutebile in Uganda ever since President Museveni came to power. He died in office as governor of the central bank earlier this year, praised at home and abroad. In a country where politics is becoming ever more expensive, he had quite a lot of influence over the President, for the better. In the 1990s, in the crucial period to restore economic stability and get some recovery and development after conflict, he played a massive role. And in more recent years, he was one of the few people that could tell the President off.
All of them can be credited with much integrity, working with the grain of politics but always looking for ways to stimulate development. Development bargains need to have mechanisms to make sure that errors are corrected, that economies and development are kept on track as much as possible. These three spoke truth to power on economic matters within their political systems, and importantly, they found ways to be listened to. And I really think these African technocrats were fighting the good fight.
Stefan Dercon is Professor of Economic Policy at the Blavatnik School of Government and the Economics Department at Oxford University. He is also Director of the Centre for the Study of African Economies. He combines his academic career with work as a policy advisor, providing strategic economic and development advice, and promoting the use of evidence in decision making. Between 2011 and 2017, he was Chief Economist of the Department of International Development (DFID), the government department in charge with the UK’s aid policy and spending. Between 2020 and 2022, he was the Development Policy Advisor to successive Foreign Secretaries at the UK’s Foreign, Commonwealth and Development Office. His research interests concern what keeps some people and countries poor: the failures of markets, governments and politics, mainly in Africa, and how to achieve change.
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