Nobel Prize 2024: Key economics lessons for Kenya, rest of Africa

Academics take great pride in being cited or quoted. It’s a badge of honour, that others acknowledge your ideas.  

If you go through Google Scholar, you can check the citation records of registered scholars. Citing other scholars or authority is a time-honoured tradition in academia.

Non-scholars find it demeaning; they think we cite even the obvious. Yet the same non-scholars are hungry for hits on their Facebook pages and YouTube channels and want us to subscribe. They want to make money.

For scholars, it’s often about bragging rights rather than money. We can’t deny that we are unlikely to win in the citation race.

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Enough on citations. I was excited to see Turkish-American economist Daron Acemoglu win this year’s Nobel Prize alongside two other scholars. The reason is simple, I cited him in my dissertation whose focus was economic growth. 

Daron Acemoglu together with Simon Johnson and James Robinson won this year’s Economics Nobel Prize “for studies of how institutions are formed and affect prosperity,” according to the Royal Swedish Academy of Sciences.

Curiously, Sweden, Norway, Netherlands and Denmark have monarchies like the UK. Why didn’t we keep ours? I could be Prince Iraki or the Duke of Somewhereshire. 

Daron teaches at the Massachusetts Institute of Technology (MIT).

The university, though known for technology and engineering, excels in other disciplines, including economics. What are the flagship courses for out universities?

Simon Johnson teaches at the same university, while James A  Robinson is from the University of Chicago. Their focus has been economic growth, an issue that spills into the political arena. Have you noted how politicians promise economic growth as they seek our votes in every election?

The trio went beyond elections into history. They focused on institutions built by colonial powers. They conclude that economic growth can be explained by the quality of institutions, which can either be extractive, with the elites making as much as they can from the masses or inclusive, sharing prosperity.

Think of all the institutions that run a country, from the judiciary to parliament, the executive, and their derivatives. Who do they serve? The trio argued persuasively that countries, where colonial powers such as Canada or Australia built institutions, prospered.

Compare that with, say, Africa or South America. Jostein Hauge of Cambridge University argues the trio ignore the excesses of colonialism in these places.

Someone will quickly add that economists are not supposed to be emotional. I would add, the laureates ignore kinship.

The Canadians, Americans, and Australians are kinsmen by blood. That ensures economic cooperation and labour mobility.

In addition, it’s easier to “plant” institutions there. Language and religion make this transplanting easier.

Compare that with Africa and its many languages and religions. The institutions bequeathed to Africa, South America and other former colonies, have live wires in the capitals of the West and lately East. Does that hinder their effectiveness?

Their studies also fail to explain exceptions like the phenomenal growth of China without democratisation. Could it be a general reluctance by the West to acknowledge that Chinese institutions can also work? If we can ignore colonialism and its excesses in explaining economic growth, should we also ignore the Chinese “lack of democracy?”

Closer home, we can extend Nobel laureates’ work to Africa, under different colonial powers and institutions. We had the French in West Africa and the Britons in Eastern and Southern Africa. 

Today, former French colonies are abandoning the language. Some argue that the institutions they inherited have not worked. On my last visit to West Africa, I noticed a big difference between the former French and British colonies.

Britons in my opinion, seem to have built more robust institutions, including tapping into African institutions like chieftains. Remember the indirect rule? Was that inclusion?  

Africa has some exceptions. Angola and Mozambique were ruled by the Portuguese for about 500 years. Why didn’t they build strong institutions?  Or it was all extractive? Remember, the Portuguese invaded East Africa before going to Mozambique. What was their legacy?  

It gets more interesting.  Ethiopia, Sierra Leone, and Liberia were never colonised. Why have they not grown faster than the rest of the African countries, which was colonised?  

Could there be another factor X beyond institutions that explain economic growth? How will AI and other emerging technologies upend economic growth models like Solow’s?

There is no shortage of economic problems to solve and win, particularly in Africa. One is how a government can operate without taxes and debt while embracing public-private partnerships.

Another is how dark forces like witchcraft have affected economic growth. Add “light” forces like religion. When will a Kenyan win an economics Nobel Prize?  Why can’t we start our own Nobels?