The Role of Elites in Economic Development

Description

Elites have a disproportionate impact on development outcomes. While a country's endowments constitute the deep determinates of growth, the trajectory they follow is shaped by the actions of elites. But what factors affect whether elites use their influence for individual gain or national welfare? To what extent do they see poverty as a problem? And are their actions today constrained by institutions and norms established in the past? This volume looks at case studies from South Africa to China to seek a better understanding of the dynamics behind how elites decide to engage with economic development. Approaches include economic modelling, social surveys, theoretical analysis, and program evaluation. These different methods explore the relationship between elites and development outcomes from five angles: the participation and reaction of elites to institutional creation and change, how economic changes affect elite formation and circulation, elite perceptions of national welfare, the extent to which state capacity is part of elite self-identity, and how elites interact with non-elites. --------------- The actions of today’s global elite define in large measure the way in which global developments, including the triple crisis of finance, food, and climate change, is being played out. We look to elites as both the cause of and the solution to the problems we face in economic development. In the crisis context, there is a strong focus on global elites. But existing work on income inequality reminds us that to understand the role of elites, we need to understand their position within the national development contexts. The study of elites is an inherently multidisciplinary endeavour which is reflected by the presence of rich veins of research on the topic in many academic disciplines. Too often there is little interaction between scholars in these different areas because of diverse vocabularies and analytical lenses. At a UNU-WIDER conference—held in Helsinki on 14–16 June 2009—we specifically sought to bridge the disciplinary divide. Some 150 scholars participated in our effort to take stock of what we know about the place of elites in society, and in the growth and development processes. Throughout, we tried to keep in mind our objective of offering policy options. The chapters in this volume demonstrate that the role of elites touches upon a complex set of issues. This volume cuts across disciplines and methodologies, providing multidisciplinary insights. The authors include economists, sociologists, anthropologists, and political scientists. They take both global and national perspectives to advance our understanding of the behaviour and engagement of elites in the field of development. This effort is particularly relevant to development policy because as propoor frameworks have become prominent, the question of how to engage elites has become the subject of increasing discussion. State capacity-building and reform is in large measure enacted by elites. Those with political and commercial influence can direct the trajectory of society and the spread of inequality. And as more societies than ever are tied into the global economy, elites are those best positioned to take advantage of opportunities for knowledge transfer and innovation—and come up with workable solutions to the challenges faced by humankind. List of Figures xi List of Tables xiii List of Abbreviations xvi Notes on Contributors xviii 1. Introduction: The Role of Elites in Economic Development 1 Alisa DiCaprio Part I. Theoretical Considerations 2. Elites and Property Rights 19 Alice H. Amsden 3. Elites and Institutional Persistence 29 James A. Robinson Part II. The Formation and Circulation of Elites 4. The International Circulation of Elites: Knowledge, Entrepreneurial and Political 53 Andrés Solimano and Diego Avanzini 5. Fruit of the Vine? An Augmented Endowments-Inequality Hypothesis and the Rise of an Elite in the Cape Colony 87 Johan Fourie and Dieter von Fintel 6. Two for the Price of One? The Contribution to Development of the New Female Elites 120 Alison Wolf 7. New Light on China’s Rural Elites 140 Björn Anders Gustafsson and Sai Ding Part III. The Preferences of Elites 8. Poverty in the Eyes of Brazilian Elites 179 Elisa P. Reis 9. Mutual Interdependence between Elites and the Poor 200 Chipiliro Kalebe-Nyamongo 10. Why Are the Elite in China Motivated and Able to Promote Growth? 231 Xiaowei Zang Part IV. Elites and State Capacity 11. The Simple Analytics of Elite Behaviour under Limited State Capacity 251 François Bourguignon and Thierry Verdier 12. Is it Possible to Reform a Customs Administration? The Role of the Customs Elite on the Reform Process in Cameroon 281 Thomas Cantens 13. Rekindling Governments from Within: Getting Public Sector Elite Officials to Support Government Reform in Brazil 307 Monica Pinhanez Part V. Grass-Roots Responses to Elites 14. Tackling Elite Capture by the ‘Counter-Elite’ and ‘Co-Opt-Elite’ Approaches in Bangladesh and Ghana 329 Sam Wong 15. Understanding the Dynamics of Elite Behaviour in a Development Context 351 Alice H. Amsden and Alisa DiCaprio Index 363 Contents x List of Figures 3.1 Social relations and political appointees of President Tubman in 1960 36 3.2 Liberia: constraints in the executive and Polity index 37 3.3 Urbanization by region in Germany in the nineteenth century 46 4.1 Entrepreneurship and GDP: the ‘U-shaped’ relationship for 42 selected countries (2005–6) 60 4.2 High-skilled migration rates for six selected OECD countries (1975–2000) 73 4.3 Medical talent emigration rate per region, 1991–2004 74 5.1 The relationship between scale and the type of labour used 92 5.2A Number of slaves required per standard deviation of production 107 5.2B Number of slaves required per standard deviation of production 108 5.3A Distribution of total number of slaves owned per farmer, various years 110 5.3B Cumulative distribution of total number of slaves owned per farmer, various years 110 5.4A Distribution of number of vines planted per farmer, various years 111 5.4B Cumulative distribution of leaguers of wine production per farmer, various years 112 5.5A Distribution of muids of wheat reaped per farmer, various years 113 5.5B Cumulative distribution of muids of wheat reaped per farmer, various years 113 5.6A Distribution of head of cattle owned per farmer, various years 114 5.6B Cumulative distribution of head of cattle owned per farmer, various years 115 5.7 Cumulative distribution of number of Knechts (European wage labour) employed per farmer, various years 115 6.1 University enrolment patterns in a developed country: male and female students in the UK, 1900–2000 127 6.2 The expansion of higher education in selected countries: proportion of school-leavers proceeding to higher education 128 6.3 Male and female candidates for the International Baccalaureate 131 6.4 Gender breakdown for working proprietors and directors, India, urban areas only, 2001 134 6.5 Gender breakdown for production and operations department managers, India, urban areas only, 2001 135 7.1 Distribution of different categories of households among income deciles defined for all households in 1995 and 2002 156 7.2 Distribution of different categories of households among wealth deciles defined for all households in 1995 and 2002 157 11.1 Income 257 11.1(a) Market income 257 11.1(b) Rent market income 257 11.2 Incentives for state capacity–building 260 11.2(a) Marginal benefit and cost 260 11.2(b) Payoff after increase in state capacity 260 11.3 Archetype economies in a 3-class model 269 13.1 VAT/GDP ratio predict by TOs’ wage 313 14.1 New governing structure of the communal solar home system in Cox’s Bazar 338 xii List of Figures List of Tables 3.1 The persistence of the landed elite in four ‘black belt’ counties of Alabama 39 3.2 Curriculum vitae of Max Sisulu 42 4.1 Prizes to talent: Nobel laureates in science and economics (1980–2008) 64 4.2 Prizes to talent: Nobel prizes in literature (1980–2008) 64 4.3 Distribution of talented elites: Global Creativity Index, 2005 65 4.4 Distribution of talented elites: Global Talent Index, 2007 66 4.5 Scientific and technical production: journal articles, researchers, and technicians (average 1998–2003) 67 4.6 Destinations of foreign students studying in OECD countries by origin (2004) 68 4.7 Applied talent: patent applications (average 1998–2004) 69 4.8 Intra-company transferees from South America to the USA (1996–2002) 71 4.9 Government expenditure in Research & Development (average 1998–2004) 72 4.10 Composite entrepreneurship indicator: attractiveness of countries to develop entrepreneurial activities 77 5.1 Descriptive statistics 100 5.2 Descriptive statistics 101 5.3 OLS estimates of the composition of the slave labour force (dependent variable: number of slaves per farming household) 102 5.4 OLS estimates of the composition of the slave labour force (dependent variable: number of slaves per farming household) 103 6.1 Female labour force participation, UK, 1891 125 6.2 Professionals and managers: gender break-down, USA, 1910 126 6.3 Female participation in higher education, for selected developed and developing countries, percentage female graduates, first degree 129 6.4 Average female representation in the workforce of the ten largest multi-nationals operating in East Asia 133 6.5 Women’s share as legislators in lower or single legislative house, May 2009 136 7.1 Number of categories in 1995 and 2002 151 7.2 Marginal effects based on estimating multinominal logit model for elite status in 2002 153 7.3 Predicted probability of belonging to various household categories in rural China in 2002 (%) 155 7.4 Average household per capita income among categories 1995 and 2002 (yuan, in 2002 prices) 158 7.5 Average household wealth per capita and wealth components for categories 1995 and 2002 (yuan, constant 2002 prices) 159 7.6 Estimates of income and wealth functions (Walder type) for 1995 and 2002 (selected coefficients and their standard errors) 163 7.7 Estimates of income and wealth functions (Walder type) for 1995 and 2002, specification when cadre status and entrepreneur status respectively are interacted with per capita county income (selected coefficients and their standard errors) 164 7.8 Estimates of income functions (Nee type of model) for 1995 and 2002 165 7.A1 Characteristics of different categories of households, 1995 and 2002 169 7.A2 Various income sources among elite and non-elite households in rural China, 1995 and 2002 170 7.A3 Income and wealth inequality in categories of households by region, 1995 and 2002 172 7.A4 Distribution of counties according to quintiles per capita household income, 1995 and 2002 (per cent and average quintile number) 173 8.1 Major obstacles to democracy in Brazil (%) 184 8.2 Brazil’s most important problems (%) 185 8.3 Major national goals in the near future (%) 186 8.4 Priority initiatives for reducing inequality (%) 186 8.5 Viability and desirability of particular social policies (%) 187 8.6 Why social policies do not meet their objectives 188 8.7 Worst consequences of poverty in large cities 189 9.1 Obstacles to democracy 213 9.2 Malawi’s most important problems 214 9.3 Elite estimate of poverty 214 List of Tables xiv 9.4 Coping strategies of the vulnerable segments of society 219 9.5 Elite policy preferences 221 13.1 STAB tax officers’ salaries in Brazil 312 13.2 Courses offered at the STABs, 1997–8 317 14.1 Comparing the ‘counter-elite’ and the ‘co-opt-elite’ approaches 344 List of Tables xv