Michael Trebilcock a law professor at the University of Toronto.
Over the past 25 to 30 years, a substantial consensus has emerged in development circles about the reason why some countries are rich and others poor: Their economic status is thought to be a reflection of the quality of their institutions – political, bureaucratic and legal. The thinking goes that countries with seriously dysfunctional institutions cannot expect to pursue a successful long-term trajectory of economic and social development. But where do they look for role models?
Developing countries with seriously dysfunctional institutions are often referred to as banana republics, or more extremely as failed states. While the mantra that governance matters is intuitively appealing and empirically supported by many studies, institutional reform efforts directed at developing countries by the international community have led to disappointingly mixed to weak results.
Despite the emergence of a veritable reform industry among multilateral and bilateral agencies, NGOs and professional associations in developed countries, one inference from this record of mixed to weak success is that institutions do not travel well. Rather they are the accretions of the particularities of given countries’ histories, cultures, politics, ethnic and religious makeup and geography – often referred to as path dependence – leaving each country, for the most part, in the words of H.W. Arndt, “to write its own history.”
Another reason for the weak results in institutional reform is that the agencies attempting to promote change are typically based in developed countries. They often have little to offer than they presume as part of their so-called civilizing missions.
The current dysfunctional state of political institutions in the United States would be laughable in its more bizarre soap-opera manifestations, if it were not for the potentially serious consequences for the long-term economic and social development trajectory of the United States. Similarly, Britain’s attempts to negotiate an exit from the European Union are again laughable in their ineptitude and dysfunctionality, but for the likely serious long-term consequences of this current state of political disorder.
The current political regime in Russia, whose president has proclaimed the dissolution of the Soviet empire the greatest calamity of the 20th century, jails political opponents or critics and suppresses dissent, while meddling in elections in the United States and other countries, unilaterally appropriating a part of the territory of a neighbouring state and propping up a murderous dictatorship in Syria.
The three empires of yesterday that people of an older generation have known in their lifetimes are scarcely a model for institutional emulation anywhere else in the world.
If, on the other hand, one turns to rising powers such as China, it is difficult to imagine how its unique configuration of institutions could either feasibly or desirably be transplanted to other countries – with its unusual intertwining of state and the Communist Party; the suppression of political criticism or dissent; highly intrusive and restrictive public censorship of the media and communication; and a supine judicial system. The contemporary quandary in promoting good governance around the world.
Perhaps the principal – albeit modest and salutary – lesson to be learned from the institutions-matter mantra that has dominated development discourse around the world is that institutional reformers, especially those based in developed countries, should spend less of their energies preaching good governance abroad and more of those energies both preaching and practising good governance at home.
For the time being, this seems a sufficiently serious challenge.
Developing countries may find more useful guidance from successful institutional reform initiatives in other developing countries that share many of their background characteristics than developed countries that share few of their characteristics.
Cautious mid-level generalizations may be possible, but universal prescriptions predicated on idealized institutional paradigms are more unhelpful articles of faith than strategies for effective development.