draining development.pdf - Khazar University

466 Draining Development?than ruling territory and population through the contemporary stateinstitutions with which we are most familiar. Political elites have limitedincentives to nurture or build the institutions that might ensure peaceand the rule of law (reliable and effective militaries, police, judiciaries,and prison services), mobilize large numbers of people into politics(political parties), encourage political bargaining among different interestgroups (legislatures), collect revenue for public purposes (tax agencies),make informed policy decisions and implement them consistently(civil services), encourage private investment (property rights systemsand predictable policy-making processes), or provide the technical supportneeded to hold government to account for the use of public money(public audit offices). Effective institutions of these kinds become barriersto the pursuit of particularistic strategies aiming at the enrichment offamily members and small associated groups. 9What does this all look like in practice? In chapter 13 of this volume,James Maton and Tim Daniel detail five rather spectacular cases relatingto individual kleptocrats from Indonesia, Kenya, Nigeria, and Zambia.There may be no better case than Nigeria, a country that suffered precipitousdeclines in institutional quality around 1970 when it suddenlybecame a major oil exporter.The problem is not simply one of embezzlement and bribery. The entirestate machinery exists to siphon off cash. Many functions of governmenthave been adapted for personal gain. It starts at the frontier. Access to thefast-track channel at Lagos airport can be bought from touts for $10. Borderguards in cahoots with them work extra slowly to make this optionmore attractive.A universe of red tape engulfs the economy. In a survey by the InternationalFinance Corporation, Nigeria ranks 178th out of 183 countrieswhen it comes to transferring property. In some Nigerian states, governorsmust personally sign off on every property sale; many demand a fee.Senseless restrictions and arcane procedures abound. Procter & Gamblehad to shelve a $120m investment in a factory to make bathroomproducts because it could not import certain types of specialist paper. AnAmerican airline waited a year for officials to sign off on an already agreedroute from Atlanta to Lagos.Massive economic failure is the result. Employment in industry hasshrunk by 90% in the past decade, “almost as if by witchcraft”, says one