December 24, 2004

British vs. French ex-Empires:

As I discussed below, one of the most popular papers in recent economics was "Law and Finance," which argued that countries whose legal systems derive from the British common law provide more protection of outside shareholders than countries with French-derived law codes. Over time, however, this useful little insight has bloviated into a general explanation for the wealth and poverty of nations, illustrating the tendency of modern economists to not see what is in front of their noses.

A reader writes:

I'm curious to hear how they compare the relative performance of Taiwan and Singapore, both with Chinese populations, the latter with a British legal heritage and the former without such a heritage, but with almost identical GDPs per capita today. There is clearly some benefit to be derived from *not* being ruled by mainland China, but it seems to matter rather less *who* colonized you (at least, between Britain and Japan).

I'm also curious to hear how they compare the relative performance of Malaysia and Thailand. Their economic performance is fairly similar (Malaysia is a bit ahead) but Thailand was never colonized at all. (Thailand, by the way, is about 14% ethnic Chinese, not so wildly different from Malaysia's 24%.)

It's interesting to look at the list below of countries in Africa, their former colonial masters, and GDP per capita (PPP method, from the CIA factbook), ranked by GDP per capita:

Country Colonial Power $GDP per Capita
South Africa Britain 10,700
Botswana Britain 9,000
Namibia Britain (prev German) 7,200
Tunisia France 6,900
Libya Italy 6,400
Algeria France 6,000
Gabon France 5,500
Swaziland Britain 4,900
Egypt Britain 4,000
Morocco France 4,000
Lesotho Britain 3,000
Equatorial Guinea Spain 2,700
Ghana Britain 2,200
Guinea France 2,100
Angola Portugal 1,900
Zimbabwe Britain 1,900
Sudan Britain 1,900
Mauritania France 1,800
Cameroon France (prev German) 1,800
Gambia Britain 1,700
Senegal France 1,600
Togo France 1,500
Uganda Britain 1,400
Cote D'Ivoire France 1,400
Rwanda Belgium 1,300
Djibouti France 1,300
Chad France 1,200
Sao Tome & Principe Portugal 1,200
Mozambique Portugal 1,200
Benin France 1,100
Burkina Faso France 1,100
Central African Repub France 1,100
Kenya Britain 1,000
Liberia USA (sort of) 1,000
Mali France 900
Nigeria Britain 900
Zambia Britain 800
Guinea-Bissau Portugal 800
Madagascar France 800
Niger France 800
Ethiopia Italy (sort of) 700
Eritrea Italy 700
Comoros France 700
Congo, Dem Republic Belgium 700
Congo, Republic France 700
Burundi Belgium 600
Tanzania Britain (prev German) 600
Malawi Britain 600
Sierra Leone Britain 500
Somalia Italy (and Britain) 500

You can find pairings that look like they support the Legal Affairs contention and pairings that look like they refute it. Ghana (fmr British) is doing better now than Togo, Benin or the Ivory Coast (all fmr French). But Nigeria and Sierra Leone (both fmr British) are doing substantially worse than Cameroon and Guinea (both fmr French). And Senegal (fmr French) and the Gambia (fmr British) look pretty much identical. Algeria (fmr French) and Egypt (fmr British) each have Arab populations, lots of sand and some oil. But Algeria is doing better economically in spite of the fact that it's been more politically unstable of late, and the fact that Egypt has the canal and massive American support. The bottom four basket cases on the list, in economic terms - Tanzania, Malawi, Sierra Leone and Somalia - were all at least partly colonized by Britain.

Britain's most successful former colonies in sub-saharan Africa are South Africa, Botswana and Namibia, plus Swaziland and Lesotho, which were never precisely colonies. South Africa dominates the economy of the region, and it is only 75% black African. Namibia is 87% black African and Botswana's stats are not usefully broken out (they count white in the category "other" and I don't know what else is in that category; "other" is 7% of the country). So it's plausible to attribute the outperformance of this entire region to South African exceptionalism, which is surely related to the exceptional racial breakdown of the country. Of the next batch - Ghana, Zimbabwe, Gambia and Uganda - none has a non-African population above 2%. Meanwhile, the most successful French former colonies in sub-Saharan Africa are Gabon, Guinea, Cameroon, Senegal and Togo. Gabon is 1% French, but 11% "other Africans and Europeans" and it has a tiny population, so maybe it's an outlier and we should discount it [It's just an oil spigot country.] The next four countries have non-African populations of well under 2% - smaller, on average, than the four British successes. And their average GDPs are pretty similar:

Country Colonial Power Non-African % Total Populat GDP per Capita (USD)

Ghana Britain <1% 20.8mm 2,200
Guinea France <1% 9.3mm 2,100

Zimbabwe Britain <2% 12.7mm 1,900
Cameroon France <1% 16.1mm 1,800

Gambia Britain 1% 1.6mm 1,700
Senegal France 1% 10.9mm 1,600

Togo France <1% 5.6mm 1,500
Uganda Britain 1% 26.4mm 1,400

Do you see a pattern here? I don't.

Looks to me like the French legal heritage works about as well as the British if you compare otherwise similar countries.

My published articles are archived at -- Steve Sailer

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