I desperately would love to see more economic history of not-European former Soviet republics. One would think this could be economic history catnip; the Soviets loved cutoffs!
(I think the latter is partially responsible for the relative oversupply of economic history of eastern Europe - 1) reasonable historical data, 2) some natural experiments, 3) a relatively reasonable supply of economists of eastern European descent with useful language skills/cultural context.)
Likewise, Kenya now has a very high primary school completion rate, and has been above the education level of 1960 South Korea for a while, but has yet to see explosive growth
Location, location, location. It’s often more important than education or other abstract factors. Location is why wealthy families are willing to pay a premium to live in areas with better schools. It’s why people flock to regions with more job opportunities.
Poland benefits from being geographically situated right next to the economic powerhouse of Europe, giving it access to robust trade and growth opportunities. Meanwhile, Tajikistan, once a key stop along the Silk Road, now sits at the middle of nowhere after people learnt how to sail. Its location, which was once a major advantage, is now a challenge in a world connected by modern technology and global shipping.
yeah but Kenya has a good location - it has many neighbours, it is in theory the best port location for much of Central and East Africa, but they actually go via Tanzania.
Sure the penn tables show Ghana was above, but like you said you gotta look a level deeper. I like using the comparison of Qatar vs. Singapore or Saudi Arabia vs Italy. The Arab states have higher incomes, but by looking at exports or composition of the labor force, you can tell which economy is more productive/skilled. Same issue with Kenya/Ghana vs. South Korea.
Most African economies post independence were cash crop economies in terms of exports. For Ghana at independence, over half of its exports were cocoa beans while South Korea was already selling textiles.
Great article - Additional point - South Korea was still recovering from a devastating war (ended just 7 years earlier in 1953) with North Korea with est. 3 million & devastated war torn economy. May partly explain the low GDP per capita thus under-estimating its productive potential.
Pre-colonial Korea state was also pretty impressive with some notable achievements that have few parallels in Kenya or wider African continent 👇🏿
- Korean King constructed the first power generating plant in 1899.
- Korean Kingdom had an active navy ship building industry starting in the 11th Century. Some of the larger Korean Navy ships could carry 200 marines.
- About 900 Korean Navy ships participated in the ill-fated Mongol invasion of Japan in 1280!
- Amazingly, the world 1st Naval Artillery battle was won by Korea when 80 Korean Naval ships defeated a Japanese fleet of 500 naval ships in 1380!.
Wow Oliver, I don’t know where to start. Very interesting article indeed - I wish I’d known more about your work when I was doing my MSc. I find land reform fascinating and feel like it doesn’t get as much air time as it deserves in development. The work of Cristobal Kay was very interesting in offering an explanation for why East Asia overtook Latin America. Your family story resonates so much with me, as a British Korean, who now lives in London. There’s a novel in there somewhere if you ever start deciding to write an autobiography. I will look at your research too, once I’m in front of a computer. Mine focused on making a case for looking at economic growth / redistribution on a gendered basis during the time of Korean industrialisation.
This is a very interesting article, but I am not sure your evidence matches your original claim: “South Korea was not poorer than Kenya.”
I think that it would be more accurate to say that both South Korea and Kenya were extremely poor, but South Korea had some resources that later became valuable: capable administrators, industrial policy and export targeting and infrastructure-building.
I'm skeptical of the state capacity as the primary driver of economic development.
First, let's consider the digital revolution of the 2010s. If state capacity were truly the primary driver of economic development, we should have seen significant economic gains from digitalization's enhancement of state capabilities. Digital technologies have dramatically reduced the costs of tax compliance and enabled developing nations to better tax their informal sectors. Surveillance and monitoring have become remarkably cheaper and more effective – from digital cameras to satellite imaging. We see practical applications of this technology already: Brazil uses satellite data to fight deforestation, while environmental groups leverage similar technology to expose methane leaks in gas infrastructure.
Yet the evidence doesn't support the expected outcome. Take India, for example. Despite enthusiastically embracing digital technology in both public and private sectors, India's growth in the 2010s was notably slower compared to the liberalization-driven growth of the 1990s and 2000s. The digital dividend for state capacity hasn't translated into accelerated economic development.
Perhaps most damning to the state capacity argument is the historical puzzle of East Asia. If state capacity were truly fundamental to economic development, how do we explain East Asia falling behind Europe in the first place? For centuries, East Asian states were far more sophisticated in their administrative capabilities than their European counterparts. The gap between Asia and Europe actually grew for hundreds of years, only beginning to close in the latter part of the 20th century.
These observations suggest that while state capacity might play a role in economic development, its importance may be overstated. The relationship between state power, technological capability, and economic growth appears to be more complex than the state capacity theory suggests.
I assure you there is very robust evidence for the following and that this only very short and deeply limited amount of it: South Korea -- along with some other, perhaps most notably Germany and Japan -- benefited immensely from open secret (and likely domestically illegal) transference of the USA's domestic economy into theirs. The US Government literally paid for entire steel plants in South Korea, and parts suppliers they required, and the necessary electrical, water, etc infrastructure for them, all for free. And that is among other things. And a then newly emergent Global Center began semi-centrally planning the world economy in such a way as too boost South Korea. Over the decades these same forces were at on Kenya, and thats how've they treated it. In the 1830s, against the odds, powerful forces were defeated in the USA, their plans, which the most "authoritative" epistemological institutions in the country asserted were correct in the absolute, well those plans, the plans for the development of the mid western territories of the USA and eventually California, were almost interchangeable with the plans that have been imposed on Kenya for the past few decades, and at their core, in a fundamental way the governmental structures that they asserted California needed if it were to be successful, are also about the same as the governmental structures Kenya has had. The USA and each of states, instead embarked with completely different governmental structures that what either USA has today or what the Global Center has demanded that nations like Kenya have:
The United States once had genuinely democratic governance structures, however imperfect and limited, fundamentally based around decentralized and publicly accessible mass-member parties. The Democratic Party, as a small "d" democratic institution, and the Republican Party, as a small "r" republican institution, were honest in their naming and functioned within a semi-politically, semi-economically, and semi-scientifically decentralized system. These parties, while far from flawless, allowed for real representation, meaningful participation, and a level of public accountability in both economic and political decision-making.
However, due to the dirty deeds of an assortment of powerful special interest groups, our parties have transformed into centralized, exclusionary membership organizations. The so called Democratic Party has become a technocracy party, and the so called Republican Party became a conservative party. Neither really represents their original principles of democracy or republicanism, and they dont offer meaningful access or representation to the public. This shift has been accompanied by a broader centralization of political, economic, and scientific decision making, which has caused the effective loss of most democratic governance structures.
Great piece. Really like it. But, one query (my wife says I nitpick). The impact Tswana precolonial state is a primary example of the argument of Nobel Prize winners Acemglu, Johnson and Robinson's analysis of institutions and economic development. While one may not agree with the whole of the AJR argument, the centrality of the precolonial state formation to Botswana's post-colonial acheivements is uncontrovertable. But it does not appear on your map of precolonial states in Africa.
why don,t yu take a look at national Iq and gdp per capita ?
They are highly correlated and probably , single best indicator of potential gdp growth
i think Vietnam is BREAKOUT NATION and will join middle and developed nations soon . It,s students already perform at OECD level at PISA studies .
Even son of multi- millionaire Sheikh of Saudi Arabia score less than bottom 20 % Japnese kids . Saudi Kingdom is spending like 6% GDP on Education for last 40 years . how much of it is just (Genes) .
I think this argument would be stronger if it was a more specific claim about an exogenous shock to capital intensity reducing the per capita income of SK in 1960. If this were the case, then we should expect to see faster growth rates in SK for solow reasons, and this would give us some reason to think SK had a headstart over sub-Saharan Africa in growing per capita GDP.
On the other hand, if SK was consistently at the same income level as sub-Saharan Africa until 1960, this would imply that the advantages of higher education levels and deep roots of state capacity aren't sufficient to cause economic growth and need a specific set of policies to take advantages of this latent potential.
This seems like an importantly different argument from claiming that SK and Kenya had the same income levels in 1960 because it implies that the policy choices in SK were in fact very important, even if they wouldn't be as effective if implemented in Kenya.
In a handwavey fashion, I think this post argues that comparing the growth rates of SK and Kenya from 1960 identifies the ATT but not the ATE of the policies SK adopted, but claim that they didn't start from the same income level implies that not even the ATT is identified by the comparison.
Why did India significantly underperform economically for so long? While India was under British rule for approximately 200 years, the colonial administration was largely run by Indians themselves - around 90% of colonial officials were Indian. In fact, Indians were so integrated into the British colonial system that they formed significant portions of colonial administrations in Africa. This complicates the standard "extractive institutions" narrative.
Even more telling is the post-independence period. If we accept the theory that extractive colonial institutions were the primary barrier to development, we'd expect to see significant improvements after independence. Yet the Indian state struggled with basic governance functions that even authoritarian regimes typically manage - maintaining law and order, collecting taxes, ensuring utility bill payments, and containing ethnic conflicts. This suggests deeper institutional and structural challenges beyond the colonial legacy.
This is a lovely tribute to your grandfather.
However, because I am who I am, I am going to note that education is not destiny; I buy the pre-colonial state capacity argument more than education.
Let us consider the former Soviet Union as an example. Kyrgyzstan had no pre-colonial state to speak of, but has high education levels (about 30% of adults have a university degree: https://tradingeconomics.com/kyrgyzstan/uis-percentage-of-population-age-25-with-at-least-completed-post-secondary-education-isced-4-or-higher-female-wb-data.html). Its GDP/capita ($1969) looks much more like Kenya ($1949; 3.5% of the population with a university degree: https://www.statista.com/statistics/1135785/university-enrollment-in-kenya/#:~:text=The%20most%20recent%20census%20conducted,educational%20level%20completed%20in%202019.) than slightly-less-educated Georgia (GDP/capita $8120).
Indeed, in global context, all of the post-Soviet states had high overall education levels, but development outcomes have... varied. On one hand, you have Poland (GDP/capita $22,112; also sufficiently Westernized that I saw Taylor Swift there); on the other, you have Tajikistan (GDP/capita $1188). But all the post-Soviet states have relatively high levels of education. Even poor Tajikistan* has roughly the same percentage of university-educated adults as Italy (https://en.wikipedia.org/wiki/List_of_countries_by_tertiary_education_attainment, https://www.ceicdata.com/en/tajikistan/education-statistics/tj-educational-attainment-at-least-bachelors-or-equivalent-population-25-years--cumulative-male). The difference in post-Soviet development seems to have been more about pre-USSR state capacity than (universally reasonably high) education levels.
I'd argue a sufficient supply of skilled labor is a necessary, but definitely not sufficient, condition for takeoff growth.
* yes, Tajikistan had a civil war, but so did Georgia. also, that's a low GDP/capita, even for somewhere that had a civil war.
Thanks, Lauren! Nice points about the (usually neglected) post-Soviet states. Definitely agree with "necessary but not sufficient".
I desperately would love to see more economic history of not-European former Soviet republics. One would think this could be economic history catnip; the Soviets loved cutoffs!
(I think the latter is partially responsible for the relative oversupply of economic history of eastern Europe - 1) reasonable historical data, 2) some natural experiments, 3) a relatively reasonable supply of economists of eastern European descent with useful language skills/cultural context.)
https://www.cornellpress.cornell.edu/book/9781501715563/laboratory-of-socialist-development/
This has been on my reading list for a while but haven't gotten to it
sold
Oh, I also meant to say in original comment - Poland had a substantial pre-USSR state (e.g. https://en.wikipedia.org/wiki/Polish%E2%80%93Lithuanian_Commonwealth), as did Georgia (https://en.wikipedia.org/wiki/Kingdom_of_Georgia). Kyrgyzstan and Tajikistan had more nomadic herders, so less existing state capacity.
Likewise, Kenya now has a very high primary school completion rate, and has been above the education level of 1960 South Korea for a while, but has yet to see explosive growth
Location, location, location. It’s often more important than education or other abstract factors. Location is why wealthy families are willing to pay a premium to live in areas with better schools. It’s why people flock to regions with more job opportunities.
Poland benefits from being geographically situated right next to the economic powerhouse of Europe, giving it access to robust trade and growth opportunities. Meanwhile, Tajikistan, once a key stop along the Silk Road, now sits at the middle of nowhere after people learnt how to sail. Its location, which was once a major advantage, is now a challenge in a world connected by modern technology and global shipping.
yeah but Kenya has a good location - it has many neighbours, it is in theory the best port location for much of Central and East Africa, but they actually go via Tanzania.
Great post, I made a similar comparison about Ghana and South Korea.
https://open.substack.com/pub/yawboadu/p/guns-germs-and-cobalts-6th-q-and?r=garki&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
Sure the penn tables show Ghana was above, but like you said you gotta look a level deeper. I like using the comparison of Qatar vs. Singapore or Saudi Arabia vs Italy. The Arab states have higher incomes, but by looking at exports or composition of the labor force, you can tell which economy is more productive/skilled. Same issue with Kenya/Ghana vs. South Korea.
Most African economies post independence were cash crop economies in terms of exports. For Ghana at independence, over half of its exports were cocoa beans while South Korea was already selling textiles.
Great article - Additional point - South Korea was still recovering from a devastating war (ended just 7 years earlier in 1953) with North Korea with est. 3 million & devastated war torn economy. May partly explain the low GDP per capita thus under-estimating its productive potential.
Pre-colonial Korea state was also pretty impressive with some notable achievements that have few parallels in Kenya or wider African continent 👇🏿
- Korean King constructed the first power generating plant in 1899.
- Korean Kingdom had an active navy ship building industry starting in the 11th Century. Some of the larger Korean Navy ships could carry 200 marines.
- About 900 Korean Navy ships participated in the ill-fated Mongol invasion of Japan in 1280!
- Amazingly, the world 1st Naval Artillery battle was won by Korea when 80 Korean Naval ships defeated a Japanese fleet of 500 naval ships in 1380!.
https://www.global-developments.org/p/no-south-korea-was-not-poorer-than?utm_campaign=post&utm_medium=web
Wow Oliver, I don’t know where to start. Very interesting article indeed - I wish I’d known more about your work when I was doing my MSc. I find land reform fascinating and feel like it doesn’t get as much air time as it deserves in development. The work of Cristobal Kay was very interesting in offering an explanation for why East Asia overtook Latin America. Your family story resonates so much with me, as a British Korean, who now lives in London. There’s a novel in there somewhere if you ever start deciding to write an autobiography. I will look at your research too, once I’m in front of a computer. Mine focused on making a case for looking at economic growth / redistribution on a gendered basis during the time of Korean industrialisation.
during the time of industrialisation http://eprints.lse.ac.uk/122006/
Thank you very much. A highly informative text, and the coda is excellent as well.
Interesting
This is a very interesting article, but I am not sure your evidence matches your original claim: “South Korea was not poorer than Kenya.”
I think that it would be more accurate to say that both South Korea and Kenya were extremely poor, but South Korea had some resources that later became valuable: capable administrators, industrial policy and export targeting and infrastructure-building.
I'm skeptical of the state capacity as the primary driver of economic development.
First, let's consider the digital revolution of the 2010s. If state capacity were truly the primary driver of economic development, we should have seen significant economic gains from digitalization's enhancement of state capabilities. Digital technologies have dramatically reduced the costs of tax compliance and enabled developing nations to better tax their informal sectors. Surveillance and monitoring have become remarkably cheaper and more effective – from digital cameras to satellite imaging. We see practical applications of this technology already: Brazil uses satellite data to fight deforestation, while environmental groups leverage similar technology to expose methane leaks in gas infrastructure.
Yet the evidence doesn't support the expected outcome. Take India, for example. Despite enthusiastically embracing digital technology in both public and private sectors, India's growth in the 2010s was notably slower compared to the liberalization-driven growth of the 1990s and 2000s. The digital dividend for state capacity hasn't translated into accelerated economic development.
Perhaps most damning to the state capacity argument is the historical puzzle of East Asia. If state capacity were truly fundamental to economic development, how do we explain East Asia falling behind Europe in the first place? For centuries, East Asian states were far more sophisticated in their administrative capabilities than their European counterparts. The gap between Asia and Europe actually grew for hundreds of years, only beginning to close in the latter part of the 20th century.
These observations suggest that while state capacity might play a role in economic development, its importance may be overstated. The relationship between state power, technological capability, and economic growth appears to be more complex than the state capacity theory suggests.
I assure you there is very robust evidence for the following and that this only very short and deeply limited amount of it: South Korea -- along with some other, perhaps most notably Germany and Japan -- benefited immensely from open secret (and likely domestically illegal) transference of the USA's domestic economy into theirs. The US Government literally paid for entire steel plants in South Korea, and parts suppliers they required, and the necessary electrical, water, etc infrastructure for them, all for free. And that is among other things. And a then newly emergent Global Center began semi-centrally planning the world economy in such a way as too boost South Korea. Over the decades these same forces were at on Kenya, and thats how've they treated it. In the 1830s, against the odds, powerful forces were defeated in the USA, their plans, which the most "authoritative" epistemological institutions in the country asserted were correct in the absolute, well those plans, the plans for the development of the mid western territories of the USA and eventually California, were almost interchangeable with the plans that have been imposed on Kenya for the past few decades, and at their core, in a fundamental way the governmental structures that they asserted California needed if it were to be successful, are also about the same as the governmental structures Kenya has had. The USA and each of states, instead embarked with completely different governmental structures that what either USA has today or what the Global Center has demanded that nations like Kenya have:
The United States once had genuinely democratic governance structures, however imperfect and limited, fundamentally based around decentralized and publicly accessible mass-member parties. The Democratic Party, as a small "d" democratic institution, and the Republican Party, as a small "r" republican institution, were honest in their naming and functioned within a semi-politically, semi-economically, and semi-scientifically decentralized system. These parties, while far from flawless, allowed for real representation, meaningful participation, and a level of public accountability in both economic and political decision-making.
However, due to the dirty deeds of an assortment of powerful special interest groups, our parties have transformed into centralized, exclusionary membership organizations. The so called Democratic Party has become a technocracy party, and the so called Republican Party became a conservative party. Neither really represents their original principles of democracy or republicanism, and they dont offer meaningful access or representation to the public. This shift has been accompanied by a broader centralization of political, economic, and scientific decision making, which has caused the effective loss of most democratic governance structures.
Great piece. Really like it. But, one query (my wife says I nitpick). The impact Tswana precolonial state is a primary example of the argument of Nobel Prize winners Acemglu, Johnson and Robinson's analysis of institutions and economic development. While one may not agree with the whole of the AJR argument, the centrality of the precolonial state formation to Botswana's post-colonial acheivements is uncontrovertable. But it does not appear on your map of precolonial states in Africa.
why don,t yu take a look at national Iq and gdp per capita ?
They are highly correlated and probably , single best indicator of potential gdp growth
i think Vietnam is BREAKOUT NATION and will join middle and developed nations soon . It,s students already perform at OECD level at PISA studies .
Even son of multi- millionaire Sheikh of Saudi Arabia score less than bottom 20 % Japnese kids . Saudi Kingdom is spending like 6% GDP on Education for last 40 years . how much of it is just (Genes) .
I think this argument would be stronger if it was a more specific claim about an exogenous shock to capital intensity reducing the per capita income of SK in 1960. If this were the case, then we should expect to see faster growth rates in SK for solow reasons, and this would give us some reason to think SK had a headstart over sub-Saharan Africa in growing per capita GDP.
On the other hand, if SK was consistently at the same income level as sub-Saharan Africa until 1960, this would imply that the advantages of higher education levels and deep roots of state capacity aren't sufficient to cause economic growth and need a specific set of policies to take advantages of this latent potential.
This seems like an importantly different argument from claiming that SK and Kenya had the same income levels in 1960 because it implies that the policy choices in SK were in fact very important, even if they wouldn't be as effective if implemented in Kenya.
In a handwavey fashion, I think this post argues that comparing the growth rates of SK and Kenya from 1960 identifies the ATT but not the ATE of the policies SK adopted, but claim that they didn't start from the same income level implies that not even the ATT is identified by the comparison.
Can you do posts comparing india post independence to East Asia / and or Africa. You hear similar arguements
Why did India significantly underperform economically for so long? While India was under British rule for approximately 200 years, the colonial administration was largely run by Indians themselves - around 90% of colonial officials were Indian. In fact, Indians were so integrated into the British colonial system that they formed significant portions of colonial administrations in Africa. This complicates the standard "extractive institutions" narrative.
Even more telling is the post-independence period. If we accept the theory that extractive colonial institutions were the primary barrier to development, we'd expect to see significant improvements after independence. Yet the Indian state struggled with basic governance functions that even authoritarian regimes typically manage - maintaining law and order, collecting taxes, ensuring utility bill payments, and containing ethnic conflicts. This suggests deeper institutional and structural challenges beyond the colonial legacy.