As part of the Global Development Institute Lecture Series and in collaboration with the Post-Crash Economics Society Dr Ha-Joon Chang, University of Cambridge, delivered a lecture entitled: Are some countries destined for under-development?

1. Are Some Countries Destined for
Under-Development?
Ha-Joon Chang
University of Cambridge
hjc1001@cam.ac.uk
Website: www.hajoonchang.net

2. Table 1. Per capita GNP Growth Rates, 1955-80
1955-70
(%)
1970-80
(%)
1955-80
(%)
All developing
countries
3.1 3.1 3.1
High-income
oil exporters
4.7 1.3 3.3
Industrial non-
market
economies
5.8 2.8 4.6
Industrial
market
economies
3.6 2.4 3.1
World 3.1 1.9 2.6

3. Table 2. Per capita GDP Growth Rates, 1980-2016
1980-1990
(%)
1990-2000
(%)
1980-2000
(%)
2000-2010
(%)
2010-2016
(%)
2000-2016
(%)
1980-2016
(%)
Low & middle
income 1.1 1.4 1.2 4.6 3.4 4.2 2.5
East Asia &
Pacific 5.5 6.8 6.2 8.2 6.4 7.5 6.8
Europe &
Central Asia n/a -2.3 -2.3 4.8 2.3 3.8 1.3
Latin America
& Caribbean -0.6 1.3 0.3 2.0 0.6 1.4 0.8
Middle East &
North Africa 0.2 1.3 0.8 2.8 -0.6 1.7 1.2
South Asia 3.1 3.2 3.1 5.3 5.1 5.2 4.1
Sub-Saharan
Africa -1.6 -0.6 -1.1 2.9 0.8 2.1 0.3
High income 2.4 2.0 2.2 0.9 1.1 1.0 1.7
World 1.4 1.3 1.3 1.6 1.5 1.5 1.4

4. ‘Bad Old Days’
1960-80
(%)
‘Brave New World’
1980-2010
(%)
All Developing Countries 3.0 2.7
Latin America and the Caribbean 3.1 0.8
Sub-Saharan Africa 1.6 0.2
Table 3. Annual per capita GDP growth
rates
Source: World Bank, United Nation, the IMFs
Bad old days & Brave new world

5. Meta-structural explanations I
• Tropical Climate
– tropical diseases reduce labour productivity, raise
healthcare costs, and reduce animal husbandry yields
– tropical soil leads to low agricultural yields
– even links to low-quality institutions (Acemoglu)
• Geography
– landlockedness restricts trade
– ‘bad neighbourhood effects’ of being surrounded by poor
and conflict-ridden neighbours
• Natural Resource Curse
– corruption and conflicts
– over-valuation of currency
– have weak linkages

6. Meta-structural explanations
• Ethnic Diversity
– Makes people distrust each other, raising transaction costs
– Encourages violent conflicts, especially when there is a
medium degrees of ethnic diversity
• Low-quality Institutions
– favourite explanation for the World Bank and the IMF for
their policy failures (‘Governance matters’)
– ‘extractive’ institutions from non-settler colonial legacy
(Acemoglu)
• Bad Culture
– Especially the African or the Muslim ones
– poor work ethic, profligacy, lack of cooperation, low value
put on education, lack of planning

7. “Undoubtedly, many factors played a role, but
… culture had to be a large part of the
explanation. South Koreans valued thrift,
investment, hard work, education,
organisation, and discipline. Ghanaians had
different values. In short, cultures count.”
Samuel Huntington, the author of Clash of
Civilizations, comparing Ghana and South Korea

8. “The African, anchored in his ancestral culture,
is so convinced that the past can only repeat
itself that he worries only superficially about the
future. However, without a dynamic perception
of the future, there is no planning, no foresight,
no scenario building; in other words, no policy
to affect the course of events.”
Daniel Etounga-Manguelle, a Cameroonian
businessman, on the Africans in L.
Harrison & S. Huntington, Culture Matters
(2000)

9. “African societies are like a football team in
which, as a result of personal rivalries and a
lack of team spirit, one player will not pass
the ball to another out of fear that the latter
might score a goal”
Daniel Etounga-Manguelle, a Cameroonian
businessman, on the Africans in L. Harrison &
S. Huntington, Culture Matters (2000)

10. Meta-structural explanations - criticisms I
• Tropical Climate
– Frigid, arctic climate as bad as tropical climate
– Many rich countries have tropical diseases
– The advocates of the climate argument are
confusing the cause of underdevelopment with its
symptoms
• a country’s inability to overcome the constraints
imposed by its poor climate is a symptom of
under-development.

11. Is Cold Climate Better?
“Those who live in a cold climate and in Europe are full
of spirit, but wanting in intelligence and skill; and
therefore they retain comparative freedom, but have no
political organization, and are incapable of ruling over
others. Whereas the natives of Asia are intelligent and
inventive, but they are wanting in spirit, and therefore
they are always in a state of subjugation and slavery. But
the Hellenic race, which is situated between them, is
likewise intermediate in character, being high-spirited
and also intelligent. Hence it continues free, and is the
best governed of any nation, and if it could be formed
into one state, would be able to rule the world.”
(Aristotle, Politics, Book VII, chapter 7).

12. Meta-structural explanations - criticisms II
• Geography
– several rich countries are landlocked (Switzerland, Austria)
or seasonally landlocked (Scandinavian countries)
– Ethiopia, Rwanda, and Uzbekistan
– Once again, confusion between the cause and the symptom
• it is the lack of investment in the alternative transport systems,
rather than the geography itself, that is the problem
– ‘bad neighbourhood effects’ can be overcome by exports
(East Asia)
– India and Bangladesh also in a ‘bad neighbourhood’.

13. Meta-structural explanations - criticisms III
• Natural Resource Curse
– ‘wrong’ measures (share in export or GDP)
– ‘endowment’ statistics gives a different picture
– Many rich countries have successfully used natural
resource abundance as springboards for their
economic development (US, Canada, Australia, the
Scandinavian countries).
– In the late 19th
and early 20th
century the fastest
growing regions of the world were resource-rich
areas like North America, Latin America, and
Scandinavia.

14. Meta-structural explanations - criticisms IV
• Ethnic Diversity
– Many of today’s rich countries in Europe have suffered
from ethnic and other (linguistic, religious, and ideological)
divides, especially of the ‘medium-degree’ ones (Belgium,
Switzerland, Spain, etc.)
– East Asia not as homogenous as often thought
– Rwanda vs. Tanzania
– Rich countries do not suffer from ethnic heterogeneity not
because they do not have it but because they have
succeeded in building a nation out of a heterogeneous
population (which, we should note, was often an
unpleasant and even violent process)

15. Meta-structural explanations – criticisms V
• Low-quality Institutions
– Institutions – economic development two way causation
(the latter stronger in influence: economic development
brings about greater demand for higher quality institutions,
greater affordability of them, and the agents of change)
• Bad Culture
– many of today’s rich countries used to be criticized for
having those ‘negative’ cultural traits that are supposed to
characterise poorly-performing economies today
– cultural arguments fail to recognize that the relationship
between culture and economic development is complex and
that, in the long run, the causality runs far more strongly
from economic development to culture

16. The Germans are a “plodding, easily
contented people … endowed neither with
great acuteness of perception nor quickness of
feeling … It is long before [a German] can be
brought to comprehend the bearings of what
is new to him, and it is difficult to rouse him
to ardour in its pursuit.”
John Russell, an English traveller, on the
Germans in 1828.

17. “My impression as to your cheap labour was
soon disillusioned when I saw your people at
work. No doubt they are lowly paid, but the
return is equally so; to see your men at work
made me feel that you are a very satisfied
easy-going race who reckon time is no object.
When I spoke to some managers they
informed me that it was impossible to change
the habits of national heritage.”
An Australian engineer after visiting Japan in
1915

18. The Koreans are “12 millions of dirty,
degraded, sullen, lazy and religionless
savages who slouch about in dirty white
garments of the most inept kind and who live
in filthy mud huts”.
Beatrice Webb on the Japanese and the
Koreans during her 1911-12 tour of East
Asia

19. Concluding Remarks I
• Arguments citing non-policy factors that do not change
over time, such as climate and geography (except for rare
things like Ethiopia becoming landlocked due to the
secession of Eritrea) cannot explain how the economic
performances of the countries in question have fluctuated
a lot since the Second World War.
• The effects of these factors are often characterized in a
biased way; for example, only the negative effects of
natural resources are discussed, when they can have
positive impacts too.

20. Concluding Remarks II
• In the long run, some of the allegedly unalterable
‘meta-structural’ factors are subject to change through
human intervention, both directly (nation-building or
cultural reform) and indirectly (through economic
development, which is subject to policy intervention).
• Many of those factors were (and some still are) present
in the rich countries – for example, things like hostile
climate or disadvantageous geography – but do not
matter much any more because those countries have
acquired the abilities to deal with them, largely thanks to
economic development.