John Mukum Mbaku

Foreign aid and economic growth in Cameroon

Cameroon is classified as a lower-middle-income country. Since it became a unified and independent country in 1961, Cameroon has received significant amounts of foreign aid, most of it from France and the European Economic Community. Since the 1960s, economic growth in the country has been quite significant. Between 1965 and 1980, the gross domestic product grew at an average annual rate of 5.1%, and at a rate of 2.3% between 1980 and 1990. Cameroon seems a good test case for determining the effects of foreign aid on economic growth in developing countries. An econometric model, based on the neoclassical production function, is developed and used to test the relationship between foreign aid and eonomic growth. The model is tested using time-series datd on the country from 1971 to 1990. The results show that domestic resources have a stronger impact on economic growth in Cameroon than foreign resources. These results, however, must be taken with the understanding that the data suffer from measurement probl...

Bureaucratic and political corruption in Africa : the public choice perspective

Since the 1970s, most countries in Africa have failed to make any significant improvements in the standard of living of their citizens. One of the most important reasons advanced to explain continued poverty and deprivation in the continent is pervasive corruption. Corruption, the subject of this book, has become quite pervasive in Africa and now constitutes an important development constraint. This book emphasizes the public choice perspective to corruption cleanups and thus, also presents the international dimension of corruption along with global efforts to tackle the problem.

Foreign aid and economic growth in Cameroon: Evidence from cointegration tests

Mbaku (1993, 1994) presents empirical evidence to support the hypothesis that in Cameroon, during 1971-90, foreign aid had no impact on economic growth. In this note, we apply the recent technique of unit-root testing and Johansens maximum likelihood procedure to show, on the contrary, that foreign aid had a positive contribution to economic growth in Cameroon during the period under study. We attribute the differences in the results to the differences in methodology, and the implied optimal lag structure in our study. We contend that cointegration tests are warranted in studies of this nature, before any structural analysis and policy implications of the model, are derived.

Rent-Seeking and Institutional Stability in Developing Countries

Although developing countries are most often associated with institutional instability, most are fairly stable and may be considered extremely stable if one takes into account the fact that policies adopted by many of these nations are highly inefficient. In a large number of cases, post-independence economic policies adopted by developing countries have resulted in very slow, stagnant or even negative economic growth. In more advanced and democratic countries, such policies would prevent the reelection of leaders. Although a small fraction of the population enjoys an extremely high standard of living, the majority of the population in developing countries have not experienced any significant gains in their standard of living since independence. Yet, while there have been several coups and attempted coups, many governments have remained relatively stable with some leaders remaining in power for over a quarter of a century. In other cases leaders have served until their death and successors have continued uninterrupted with remarkable stability even when such leaders adopt what may be considered extremely inefficient policies. Why then have many institutions remained so stable? The present paper argues that the stability observed in many developing countries is a result of a rent-seeking equilibrium between well organized interest groups in the population that compete for wealth transfers generated by the relatively weaker and more poorly organized groups. In this equilibrium, the military is one of the most important interest groups that benefit from the transfers. Because rent-seeking in these countries often involves violence, the

Rents, military elites, and political democracy

In autocratic regimes the military elite is in a position to extract rents, because without the support of the military the government is in general not able to sustain itself. In this paper, we empirically confirm the negative relation between transfers to the military and the degree of democracy for developing countries. We use an instrumental variable approach to account for the simultaneity that arises since the degree of democracy is itself a function of transfers to the military.

Female headship feminization of poverty and welfare.

Female-headed households are at greater risk of slipping into poverty than male-headed households. Indeed, sex and marital status of the head of household are the most important determinants of a familys poverty status in the US. Divorce, separation, death of a husband, and out-of-wedlock births can lead to female headship. Transfer payments, especially the Aid to Families with Dependent Children program, are blamed for contributing to increased marital instability and out-of-wedlock births. The authors examined the role of welfare benefits in influencing female headship. Preliminary results using standard estimation procedures indicate that transfers do not significantly influence female headship. Standard estimation procedures are, however, erroneous because they ignore differences in propensities to establish mother-only households. Therefore, adjusting for differences in propensities to establish female-headed households, the level of welfare benefits is indeed an important factor in explaining the variation in the changes in the birth rates to unmarried women. The use of a weighted measure suggests that welfare benefits, by increasing female headship of women who otherwise have low propensities to be female heads, have played a significant role in the feminization of poverty.

Corruption Cleanups in Africa Lessons from Public Choice Theory

The study critiques the development literatures neglect of the role played by institutions in development, with special emphasis on corruption cleanups. Such neglect is especially problematic in view of the fact that corruption is a major constraint to wealth creation and economic growth in Africa. The policy limitations of traditional development models with respect to corruption can be remedied by incorporating insights from the theory of public choice into the design and execution of new anti-corruption programs. Such insights include the introduction of new and more relevant rules, reform of existing laws and institutions, provision of more effective and relevant incentive structures, and enforcement mechanisms to reduce the profitability of opportunism.

Military expenditures and bureaucratic competition for rents

Summary and conclusionThis paper has provided empirical evidence on the relationship between transfers to the military and the degree of political competition in a country. It has been argued that in both democratic and autocratic rent-seeking societies, the military may have a significant advantage in capturing government transfers. In democratic societies, the role of the military as guardian of national security puts it in a unique position to seek transfers. As a result, military elites in these countries have been quite successful in influencing the political system to increase rents to them and members of their group. In dictatorships, violence is an important rent-seeking behavior. Since the military has a comparative advantage in violence, it has emerged as the dominant rent-seeking interest group in these countries. As a result, military groups dominate resource allocations in most politically unstable countries.The dictator, who also holds a monopoly in the supply of legislation, is protected by members of the dominant group. In the case in which the military is the dominant group and provides the dictator with protection in exchange for rents, military elites will work to stunt the development of interest groups that could threaten the dictators monopoly on power or the militarys rent stream. Such rent-seeking activities by the military should significantly constraint the development of political competition in the country.

Corruption and Rent-Seeking

In recent years, social scientists have become increasingly interested in the study of the political dimension of economic growth and development. Part of this interest can be found in the belief that traditional constructs have not been policy-relevant, especially since they usually fail to emphasize the importance of laws and institutions to economic growth. For example, the neo-classical economics model deals only with choice-through-markets, whereas its policy recommendations are usually implemented through non-market processes by a bureaucracy whose behaviour is not within the model. The state is treated as the ‘exogenous, omni-competent and costless instrument for the implementation of policies promoting “economic efficiency”’ (Wiseman, 1990, p. 105). In recent years, the public-choice model has emerged as a more intellectually satisfying approach to the study of public policy.

Political instability and economic development in Sub-Saharan Africa: Some recent evidence

Political instability has become endemic to Sub-Saharan Africa. Since the early 1960s, when most of the African countries began to achieve independence, more than fifty coups have taken place in the continent. This rise in political decay has significantly affected economic development. This study examines the relationship between elite political instability and economic development in Sub-Saharan Africa. It concludes that lack of political stability has contributed significantly to economic stagnation in the continent of Africa.