Political Institutions, Conflict, Entrepreneurship and Economic Development in Sub-Saharan Africa

Abstract

Sub-Saharan African countries have undergone fundamental changes in political regime type, but political institutions which allocate power and determine how it is transferred have not witnessed any fundamental change. This has resulted in what we term adverse political selection; a mismatch between the skills of political leaders and the fundamental requirements of nation-building. The first-order effect of this is growth-retarding conflict which runs through different regime type but is exacerbated in multi-party democracy where de facto groups compete for political power and rents. The second order effect comes from the interaction of political and economic institutions. The rules of game which emerge from this interaction process create attractive payoffs for unproductive and destructive entrepreneurship. This entrepreneurship type reinforces inefficient political institutions. This is what has created a development trap for most countries of Sub-Saharan Africa. One important way of promoting development is to effectively transfer de facto power from a small group of political elites to the larger society, organized into optimal political units. If not a sufficient condition, it is at least a necessary condition for the attainment of economic development.