For once the World Bank says something smart about the real causes of prosperity

A Mexican migrant to the U.S. is five times more productive than one who stays home. Why is that?

The answer is not the obvious one: This country has more machinery or tools or natural resources. Instead, according to some remarkable but largely ignored research—by the World Bank, of all places—it is because the average American has access to over $418,000 in intangible wealth, while the stay-at-home Mexican's intangible wealth is just $34,000.

But what is intangible wealth, and how on earth is it measured? And what does it mean for the world's people—poor and rich? That's where the story gets even more interesting.

Two years ago the World Bank's environmental economics department set out to assess the relative contributions of various kinds of capital to economic development. Its study, "Where is the Wealth of Nations?: Measuring Capital for the 21st Century," began by defining natural capital as the sum of nonrenewable resources (including oil, natural gas, coal and mineral resources), cropland, pasture land, forested areas and protected areas. Produced, or built, capital is what many of us think of when we think of capital: the sum of machinery, equipment, and structures (including infrastructure) and urban land.

But once the value of all these are added up, the economists found something big was still missing: the vast majority of world's wealth! If one simply adds up the current value of a country's natural resources and produced, or built, capital, there's no way that can account for that country's level of income.

The rest is the result of "intangible" factors—such as the trust among people in a society, an efficient judicial system, clear property rights and effective government. All this intangible capital also boosts the productivity of labor and results in higher total wealth. In fact, the World Bank finds, "Human capital and the value of institutions (as measured by rule of law) constitute the largest share of wealth in virtually all countries."

Once one takes into account all of the world's natural resources and produced capital, 80% of the wealth of rich countries and 60% of the wealth of poor countries is of this intangible type. The bottom line: "Rich countries are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity."

What the World Bank economists have brilliantly done is quantify the intangible value of education and social institutions. According to their regression analyses, for example, the rule of law explains 57 percent of countries' intangible capital. Education accounts for 36 percent.

The rule-of-law index was devised using several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The latter include civil society groups (Freedom House), political and business risk-rating agencies (Economist Intelligence Unit) and think tanks (International Budget Project Open Budget Index).

Switzerland scores 99.5 out of 100 on the rule-of-law index and the U.S. hits 91.8. By contrast, Nigeria's score is a pitiful 5.8; Burundi's 4.3; and Ethiopia's 16.4. The members of the Organization for Economic Cooperation and Development—30 wealthy developed countries—have an average score of 90, while sub-Saharan Africa's is a dismal 28.

The natural wealth in rich countries like the U.S. is a tiny proportion of their overall wealth—typically 1 percent to 3 percent—yet they derive more value from what they have. Cropland, pastures and forests are more valuable in rich countries because they can be combined with other capital like machinery and strong property rights to produce more value. Machinery, buildings, roads and so forth account for 17% of the rich countries' total wealth.

Overall, the average per capita wealth in the rich Organization for Economic Cooperation Development (OECD) countries is $440,000, consisting of $10,000 in natural capital, $76,000 in produced capital, and a whopping $354,000 in intangible capital. (Switzerland has the highest per capita wealth, at $648,000. The U.S. is fourth at $513,000.)

By comparison, the World Bank study finds that total wealth for the low income countries averages $7,216 per person. That consists of $2,075 in natural capital, $1,150 in produced capital and $3,991 in intangible capital. The countries with the lowest per capita wealth are Ethiopia ($1,965), Nigeria ($2,748), and Burundi ($2,859).

In fact, some countries are so badly run, that they actually have negative intangible capital. Through rampant corruption and failing school systems, Nigeria and the Democratic Republic of the Congo are destroying their intangible capital and ensuring that their people will be poorer in the future.

In the U.S., according to the World Bank study, natural capital is $15,000 per person, produced capital is $80,000 and intangible capital is $418,000. And thus, considering common measure used to compare countries, its annual purchasing power parity GDP per capita is $43,800. By contrast, oil-rich Mexico's total natural capital per person is $8,500 ($6,000 due to oil), produced capital is $19,000 and intangible capita is $34,500—a total of $62,000 per person. Yet its GDP per capita is $10,700. When a Mexican, or for that matter, a South Asian or African, walks across our border, they gain immediate access to intangible capital worth $418,000 per person. Who wouldn't walk across the border in such circumstances?

The World Bank study bolsters the deep insights of the late development economist Peter Bauer. In his brilliant 1972 book Dissent on Development, Bauer wrote: "If all conditions for development other than capital are present, capital will soon be generated locally or will be available . . . from abroad. . . . If, however, the conditions for development are not present, then aid . . . will be necessarily unproductive and therefore ineffective. Thus, if the mainsprings of development are present, material progress will occur even without foreign aid. If they are absent, it will not occur even with aid."

The World Bank's pathbreaking "Where is the Wealth of Nations?" convincingly demonstrates that the "mainsprings of development" are the rule of law and a good school system. The big question that its researchers don't answer is: How can the people of the developing world rid themselves of the kleptocrats who loot their countries and keep them poor?

Ronald Bailey in Reason Magazine, le 05 octobre 2007

Jacob Zuma, the new leader of South Africa’s ruling African National Congress, has claimed supremacy over his bitter rival, Thabo Mbeki, the country’s president, whom he ousted as party president last year, saying unequivocally that power resides in the ANC and not the presidency. 

Speaking to the Financial Times, he all but dismissed Mr Mbeki and his cabinet ministers as lame ducks as he sought to stamp his authority on the country and address the bitter power struggle that has left business people worried the country is leaderless. 

“Power lies in the ANC,” he said. “It’s the ANC that wins elections, the ANC that has the power to identify people who must be part of government ... If he [the president] is not part of the ANC leadership, he doesn’t have authority.” 

In an interview in the party headquarters, Mr Zuma, who relied on the support of the unions and the left to take over the party, repeated his mantra that the advent of a new party leader did not mean that ANC economic policies would change. 

But in a reflection of his balancing act between wooing business and satisfying his power base in the unions, he refused to rule out a debate on a left-ward shift of economic policy. 

Asked if he would consider supporting calls by the Communist party for a return to nationalisation, he said that, if asked to give a view on such a shift, he would not make a definitive statement, but rather would open a discussion. “I think let the issues be put on the table so that we discuss what are the merits of that argument,” he said. 

Such equivocation is increasingly exasperating business people as they seek to understand the implications of his takeover of the party in last December’s five-yearly ANC conference. In the past two months South Africa’s business confidence has suffered a series of blows, primarily caused by an electricity crisis that has led to rolling power cuts but also compounded by uncertainty about the direction of the ruling ANC. 

Given the ANC’s electoral dominance, as party leader Mr Zuma is on paper the out-and-out favourite to be the country’s next president after next year’s elections. But first he has to overcome a trial in August on charges of corruption, fraud, racketeering and tax evasion. 

He reiterated his longstanding charge that the prosecutors have pursued a politicised agenda in their seven-year investigation, and dismissed the idea of not competing in the elections while he sought to clear his name. “It is a very funny case, very funny,” he said. 

Mr Zuma was concerned about the rand’s 15 per cent fall in value since the start of the year. He said he would like it to strengthen but attributed its decline to global economic jitters as well as domestic uncertainties. 

His strongest language was reserved for the fight against the country’s dire rate of violent crime, which has claimed two more high-profile victims this week and led to calls from a prominent black actor for a “million man” march to the government buildings. 

He called for more “biting laws” and less focus on the rights of criminals, who he said were too easily released from prison. “We must strengthen the law so people mustn’t think that even if I commit a crime in any case it’s fine.” He also said he would not oppose a referendum on the death penalty that was abolished soon after the end of white rule, if there was a “sufficient majority” calling for one. But he added he was against the death penalty. 

Par Alec Russel in The Financial Times, le 6 mars 2008

Un des objectifs principaux de l'Union Africaine est de favoriser l'intégration économique et politique du continent. À côté de l'Union Africaine, d'autres organisations régionales sont établies pour stimuler l'intégration économique dans une région particulière. Une intégration efficace en Afrique est perçue comme une des voies susceptibles de surmonter les défis auxquels fait face le continent. 

L'idée d'une Unité Africaine existe principalement sur le papier. Il n'y a aucun effort concret pour que les pays africains puissent profiter les uns des autres aux termes d'une coopération économique forte. Cette situation n'est pas intentionnelle. En dehors des barrières linguistiques, il y a les problèmes de communication et de transport qui gênent la libre circulation des marchandises et des services. Les divers efforts gouvernementaux et régionaux d'organisation pour créer une Afrique sans frontières n'ont pas pu voir le jour. 

Avec un total de 53 Membres, l'Union Africaine comprend 15 Etat sans littoral et 7 États insulaires, le transport aérien qui devait favoriser l'intégration de l'Afrique n'a eu aucun impact. En dehors des tarifs élevés qui caractérisent les vols inter-africains, les liaisons aériennes sont bien meilleures avec les pays de l'Europe et de l'Amérique du Nord. En comparaison, le trafic aérien annuel de l'Afrique constitue environ 4.5 % des 1.8 milliards de passagers du trafic mondial annuel. 

Cela pose en Afrique le défi intimidant de libérer les mouvements de marchandises et de services. L'amélioration des technologies et les réalisations du secteur privé pour vraiment unir l'Afrique ont commencé à faire avancer les choses. Car il y a bien sûr des avantages économiques énormes à avoir une Afrique unie. Ainsi, les sociétés de télécommunication mobiles en Afrique ont préparé le terrain pour l'unité africaine. 

Cela vient suite à la libéralisation du secteur des télécommunications mobiles dans beaucoup de régions du continent. Plus de 36 pays ont créé un organisme de réglementation séparé pour le secteur des télécommunications. De même, environ 45 pays ont autorisé des opérateurs privés de téléphonie mobile à s'installer. Cela a ouvert la voie pour l'apparition de la concurrence dans le secteur de la téléphonie mobile. 

L'intégration réelle vient du secteur privé. Les sociétés de télécommunication fonctionnant dans le continent le démontrent avec le lancement d'un réseau unique. Avec son lancement, en septembre 2006, cette innovation du marché a garanti la liberté de mouvement à travers les frontières géographiques. 

En fin de compte, cela a permis de donner le tempo pour l'apparition d'un marché fort en l'Afrique. 

Une initiative de réseau commencée en Afrique de l'Est est devenue aujourd'hui un large réseau qui couvre 12 pays comprenant l'Est, le Centre et l'Ouest de l'Afrique. En conséquence, 400 millions de personnes dans ces régions de l'Afrique peuvent émettre des appels et envoyer le SMS aux tarifs locaux. À cet égard, le prix du marché commun est fixé conformément au tarif moyen proposé par les compagnies de télécommunication. 

Les avantages sont bien sûr immenses. Cela va éliminer les appels à l'intérieur de l'Afrique qui doivent d'abord être acheminés par l'Europe avant la connexion. Les abonnés peuvent émettre et recevoir des appels partout où ils sont dans les 12 pays. De plus, ils seraient capables de gérer leurs affaires en temps réel, sans avoir à s'inquiéter de la façon de contacter leurs associés dans leur pays d'origine. De même, il est possible d'émettre des appels sortant au même tarif moyen qu'un client local. 

Fondamentalement ici, un réseau unique de télécommunication mobile a vraiment lancé l'Afrique vers une union poussée et une relation commerciale améliorée. En s'impliquant, les opérateurs privés de télécommunication cimentent les diverses parties de l'Afrique et mettent, en même temps, le continent sur la route certaine de la prospérité économique. Par dessus tout, le nouveau développement jouerait un rôle crucial dans la promotion du commerce transfrontalier et stimulerait la croissance économique. 

Ce qui peut être déduit de ceci est que l'unité africaine est tout à fait possible. Cela a été convenablement démontré. Cependant, cette union sera impossible à atteindre si la tâche de la réaliser est laissée aux divers Etats dans le continent. Au mieux, l'Unité Africaine continuerait à exister uniquement sur le papier et elle constituerait un sujet de discussion à chaque forum. 

En gros, l'atteinte graduelle de l'objectif d'une Afrique sans frontières a été rendue possible par l'action du secteur privé. C'est une indication forte que les objectifs de l'Union Africaine et de plusieurs organisations régionales sont progressivement récupérés par les entrepreneurs privés qui sont prêts à penser du nouveau, à se rendre en dehors des sentiers battus. 

Ce qui doit être fait par les divers Etats dans le continent désormais, c'est d'éliminer progressivement toutes les lois et réglementations qui entravent la participation du secteur privé à l'économie. Du moment où il y a des opérateurs de télécommunication qui assurent pouvoir connecter les diverses parties de l'Afrique avec leurs réseaux, il incombe aux régulateurs de télécommunication et aux fonctionnaires d'Etat des divers pays en Afrique de réduire et de simplifier les procédures de licences. 

Mieux encore, ils devraient arrêter d'imposer des frais de licences énormes aux opérateurs de télécommunication mobiles. Quand cela sera fait, une des voies concrètes pour unir réellement l'Afrique sera enfin dégagée. 

Thomson Ayodele, in unmondelibre.org, le 23 décembre 2007