Politics, Public Expenditure and the Evolution of Poverty in Africa 1920-2009

We investigate the historical roots of poverty, with particular reference to the experience of Africa during the twentieth century. Like the recent studies by Acemoglu et al (2001, etc) we find that institutional inheritance is an important influence on current underdevelopment; but in addition, we argue that the influence of policies on institutions is highly significant, and that in Africa at least, a high representation of European settlers in land ownership and policy-making was a source of weakness, and not of strength. We argue this thesis, using mortality rates as a proxy for poverty levels, with reference to two settler colonies – Zimbabwe and Kenya – and two peasant export colonies – Uganda and Ghana. Our findings suggest that in Africa, settler-type political systems tended to produce highly unequal income distributions and, as a consequence, patterns of public expenditure and investment in human and infrastructural capital which were strongly biased against smallholder agriculture and thence against poverty reduction, whereas peasant-export type political systems produced more equal income distributions whose policy structures and, consequently, production functions were less biased against the poor. As a consequence, liberalisation during the 1980s and 90s produced asymmetric results, with poverty falling sharply in the ‘peasant export’ and rising in settler economies. These contrasts in the evolution of poverty in the late twentieth and early twenty-first centuries, we argue, can only be understood by reference to differences between the settler and peasant export economies whose roots lie in political decisions taken a hundred years previously.