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Flaws, imperfections in nation building success formula

Column by Oscar Wendel, conference manager for Logistics Middle East.
Logistics, COMMENT, Business Trends

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Column by Oscar Wendel, conference manager for Logistics Middle East and the Construction Group at ITP Publishing

On a recent visit to Baghdad and Basra, I had plenty of time to contemplate the oft-discussed question of ‘why nations fail or succeed’. Recent years have seen many good books and TED talks by authors such as Niall Fergusson, Jared Diamond and Ian Morris, who make claims of having identified the success factors in this regard. The proposed formulae tend to be variations of a ‘framework’ whereby institutions shape social environment through education, free enterprise and incentive, which allows for success to naturally follow suit.

I can’t help but feel that an underlying motivation with these books is to try and circumvent any suggestion that there are inherent qualities of different cultures that influence how well they are able to collaborate in larger contexts. Whether this politically-correct assumption is accurate or not is difficult to give a definitive answer to. But in trying to avoid unpleasant realities of human nature such as these, I think it gets forgotten how difficult it really is to organise at all any population beyond a certain size. Wholesale chaos and violent infighting are the norm rather than the exception. Europe is not exempt. Recent history includes wide-scale terrorism in Northern Ireland and genocide in the Balkans. Instead of asking why nations fail, isn’t it more relevant to ask: “Why don’t all nations actively fail?”

There are many factors that can explain what underlies a country’s economic success. Innovation explains prosperity for many nations, yet is an insignificant factor for a majority of countries. Singapore is often used as a prime example of creating prosperity. Their main accomplishment has little to do with innovation and everything to do with creating social stability, despite their extreme ethnic and religious diversity. This ability is the most significant and universal factor predicting a nation’s development.

It is like a teacher first getting the class to sit down, be quiet and pay attention. There is no one correct way to do this. But if a teacher lacks this skill, investing in more textbooks and computers in the classroom will not compensate for it.

When post-war nations rebuild, among the first outsiders to arrive, and the last to ever leave, are the armies of government-funded advisors armed with PowerPoint presentations to hold endless workshops on effective governance and sustainable growth. These cushy jobs, complete with compound lifestyles with minimal interaction with the local population, continue for as long as there is no discernible improvement in the countries they are there to help! In fact, the more dangerous the country is perceived to be, the better the perks and hardship grants.

Those responsible for developing the country appear rewarded better for failure than for success. These misaligned interests also apply to many of the businesses active in, for instance, Iraq. Almost everything there gets imported, and numerous layers of merchants take their cut along the way. The business of providing security, from personnel transports to safeguarding supply chains, often cost more than the actual product sold in the first place. And with the difficulties involved for outsiders to enter the market, this means decreased competition and increased margins.

It is obviously not a case of an active conspiracy to uphold the status quo of perpetual insecurity in dangerous markets such as Iraq, Angola and Nigeria. But where would you ever expect to find any organisation or employee able, and much less willing, to eliminate their jobs and benefits by making themselves obsolete? Yet this is exactly what is expected from these bureaucrats who stand in the way of economic development, which market forces would otherwise ensure takes place naturally.

An example of this is Rwanda, an impoverished African nation that has rebounded surprisingly fast and becoming one of the most stable African nations, with the strongest growth on the continent. In fact, its president has recently spoken out against international aid funds, and it is now receiving none. It is possible that this is, in fact, the best and most effective formula of all for long-term prosperity.
 

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