During my sophomore year of economics at Harvard, I was required to take economics 1010b, Intermediate Macroeconomics. In this course, we were required to learn three schools of thought on so-called development economics: the Geography School (Sachs), the Institutions School (Acemoglu, Robinson), and the Culture School (Alesina, Nunn, Clark). Each day, I sat in class, dumbfounded at the refusal to recognize and center colonialism and neocolonialism as the cause of lower average financial well-being in African nations. Instead, I was required to regurgitate that “[t]here is still a raging debate as to whether colonial possessions contributed to economic growth of the metropole or economic stagnation of the colonized areas” (Sachs 2001). Below, I present and refute claims from the Geography and Institutions Schools. The Culture School has similar claims to the other Schools, so I do not directly address it.     

Sachs and the Geography School

Paper: Tropical Underdevelopment (Sachs 2001) 

Instead of centering neocolonialism, Sachs claims that “[p]erhaps the strongest empirical relationship in wealth and poverty of nations is […] ecological zones and per capita income” (1). Sachs argues that Africa’s “north-south orientation frustrated technological diffusion by cutting across a swath of distinct ecological zones” (2). Sachs states that the geography of the continent of Africa is the reason they have lower average financial well-being today. This is a complete denial of the centuries of African countries’ domination of economic development and of technological neocolonialism, explained below. 

Sachs argues that “[b]y the start of the era of modern economic growth, if not much earlier, temperate-zone technologies were more productive than tropical-zone technologies in crucial areas of health, agriculture, and energy utilization, not to mention military technology” (2). But these temperate countries, like the U.S. and Western Europe, are also the countries that were able to develop technology through slave labor and continue to do so (Blood and Earth: Modern Slavery, Ecocide, and the Secret to Saving the World by Kevin Bales). The cassiterite and coltan used by American companies in iPhones and laptops is often mined by people in debt slavery in Western African countries. So although rich countries do have temperate climates, the much more relevant differentiating factor is their control of African countries’ economies.  

Sachs says the fact that countries like the U.S. are richer on average is because “[t]echnological innovation is […] limited by the extent of the market;'' temperate countries have just “been favored by a larger and richer population” (3). Favored implies random chance, when in fact these countries have larger and richer populations because they violently control African countries’ economic resources (How Europe Underdeveloped Africa by Walter Rodney). Sachs recognizes neocolonialism, conceding that “[t]emperate-zone imperial domination of tropical regions […] and rich-country control of the institutions of globalization are further amplifiers” of income disparities across countries (3). However, he argues that the role of rich-country control “is often exaggerated when not considered alongside the underlying technological, demographic, and urbanization processes” (3). In contrast, it is actually neocolonialism that controls the technological, demographic, and urbanization processes, not the other way around (Capitalism and Slavery by Eric Williams; How Europe Underdeveloped Africa by Walter Rodney). When rich countries own the businesses, natural resources, political leaders, and global markets that determine interest rates, loans, and aid, these countries use this control to increase their profits at the expense of African countries (“Paradoxes of Predation in Francophone Africa by Douglas A. Yates). As such, technological, demographic, and urban growth do not occur.

Sachs argues the solution to lower average financial well-being in African countries is “national and international focus on technical innovation directed at the problems of tropical ecology” (3). However, because the problem is that financially rich-countries own African countries’ economies, the solution is for African countries to own their own economic resources—like every rich country does. As a thought experiment, consider if African countries owned Google, or Goldman Sachs, or Boeing; by owning the economic resources of the U.S., African countries would be rich. They would make decisions that grew their wealth, not that developed the well-being of Americans. This is exactly what is occurring in African countries (Yates). Rich countries are rich because they own their own resources and the resources of other countries. If instead every country primarily owned their own resources, they would have the means to provide for their citizens.     

Like each of the Schools, Sachs mentions the detrimental effects of colonialism and neocolonialism—then promptly returns to the main paper, which ignores neocolonialism, and thus ignores the root of African countries’ economies. Sachs recognizes that colonization hurt African countries’ economies through “the relative neglect of key public goods, especially primary education and primary health of the indigenous populations; the suppression of higher education among the colonized population; the creation of oppressive political mechanisms such as forced labor and head taxes to extract resources from the local population; and the active suppression of local industry in favor of cash crops and extractive industry” (25). Sachs recognizes neocolonialism, stating that “[m]any of the poorest tropical countries have had insolvent governments, burdened by unplayable external debts, and yet the international system has delayed or blocked the obvious solution of debt cancellation” (26). He calls for the solution to emphasize institutions, not just “market liberalization and privatization as now advocated by the international financial institutions” (3). Yet, instead of centering his paper on the fact that African countries cannot develop economically until they have ownership of these institutions to correct the wrongs of colonialism—i.e., ending neocolonialism—Sachs merely states colonialism and neocolonialism’s detrimental effects, then centers his paper on symptoms of neocolonialism while ignoring the root. 

Acemoglu, Robinson and the Institutions School

Paper: The Colonial Origins of Comparative Development: An Empirical Investigation (Acemoglu et al. 2001)

Acemoglu et al. center their paper on colonialism, but fail to recognize neocolonialism as the reason colonial extractive institutions remain. The authors central claims quoted directly from the paper are as follows:

(1) Europeans adopted very different colonization strategies, with different associated institutions. In one extreme, as in the case of the United States, Australia, and New Zealand, they went and settled in the colonies and set up institutions that enforced the rule of law and encouraged investment. In the other extreme, as in the Congo or the Gold Coast, they set up extractive states with the intention of transferring resources rapidly to the metropole. These institutions were detrimental to investment and economic progress. 

(2) The colonization strategy was in part determined by the feasibility of European settlement. In places where Europeans faced very high mortality rates, they could not go and settle, and they were more likely to set up extractive states. 

(3) Finally, we argue that these early institutions persisted to the present. (1395) 

I refute each of these claims below:

(1) Europeans did not enforce rule of law and encourage investment anywhere, especially the U.S.—they killed the Native peoples and destroyed natural resources. 

(2) Europeans killed and destroyed on the African continent, too—but they chose to use the continent primarily for slavery export rather than slavery import. Europeans saw the world as it is—interconnected systems, not isolated countries—and chose one interconnected colonization strategy: maximize profit at the expense of people. This strategy requires using continents differently. This is distinctly different from using multiple colonization strategies. 

(3) When researchers recognize Europeans’ practices as one strategy, they see the through line from colonization to neocolonialism: maximizing profit. Neocolonialism enables rich countries to maximize profit through extractive institutions and foreign ownership of African countries’ economies; extractive institutions persist because colonialism persists.

Takeaways: 

1. The problem is that financially rich-countries own African countries’ economies; the solution is for African countries to own their own economic resources—like every rich country does. 

   1. As a thought experiment, consider if African countries owned Google, or Goldman Sachs, or Boeing; by owning the economic resources of the U.S., African countries would be rich. They would make decisions that grew their wealth, not that developed the well-being of Americans. This is exactly what is occurring in African countries (Yates). 

2. Extractive institutions persist because colonialism persists. 

   1. When researchers recognize Europeans’ colonization practices as one strategy—maximizing profit—that required using continents differently, they see the through line from colonialism to neocolonialism. Neocolonialism enables rich countries to continue maximizing profit through extractive institutions and foreign ownership of African countries’ economies.