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This criticism consists largely of status signaling, and is only possible because of the unfication of the world by the postwar order and the development of technology that exposes less developed countries, the regions, and peoples within them to their relative position. Prior to the industrial revolution, and certainly into it’s first decades, agrarian and population expansion was the only means of increasing wealth. As such most of history consisted of attempts to capture territory, labor, and resources as the only means of increasing wealth. After the industrial revolution industrialization and modernization were more impactful than acquisition of more territory. The only value of colonies then, were the natural resources. The net effect is that colonies were more costly than valuable which is one of the reasons for postwar decolonization.
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There are two factors that determine the consequences of colonization:
a) which european country performed the colonization, and the stage of that country’s cultural and institutional development. The anglo-Dutch invented the trade system and the anglos invented the modern rule of law state. This is because these were the two most developed countries with the greatest seafaring demand for trade. The french and Spanish were less developed. The french retained both the authoritarianism of the cathoic chuch and of the monarchy – even after the revolution, and more so after napoleon. The Spanish, less developed than the french retained the feudal biases that they brought to south america as neo feudalism. The Russians brought their eurasian authoritarianism of the mongols to bear and not through trade but through conquest and resources. So whether you were an anglo or duct colony, a french, spanish, or russian, determined the standards of government that were brought to the colony. You were lucky if an anglo colony. Not so much anyone else’s.
b) The state of development both culturally and institutionally of the colonized country, territory, or people. The less developed the more forcible the organization necessary to reform tribal or chieftain or kingdom or empire into sufficient economic and political organization that trade was possible in that region. The more backward, the greater shock, the more advanced teh colonizers, the more beneficial the colonization despite the shocks = over the long term.
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The problem remains is that the more tribal and politically immature the region (islam, africa) the more challenging the adjustment. At present Islam is still going through it’s adaptive crisis with great turmoil, south america is finally maturing out of feudalism, and it’s failed experiments with cetnralized socialism, and southeast asia appears to be doing just fine given they are more neotenic civilizations with greater homogeneity to start with.
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Diagnosis (causal claim): Underdevelopment in Latin America, the Caribbean, Africa, and parts of Southern Eurasia is primarily the consequence of external predation: slavery, colonial extraction, unequal exchange, imperial wars/coups, corporate exploitation, sanctions, debt regimes.
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Prescription (policy claim): Therefore the path to development is anti-imperial mobilization—nationalization, import-substitution, strategic autarky, single-party discipline, and redistribution—until external dependence is neutralized.
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Constraints: geography (market access, navigable waterways, arable land), disease burden, climate volatility, distance to frontier, initial human capital, population age structure.
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Capital formation: physical (roads, ports, power), human (education, health), institutional (property/contract enforcement, fiscal capacity), social (trust outside kin/clan), technological (adoption, export sophistication).
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Governance: violence control, corruption control, competence (state capacity), reciprocity toward domestic and foreign investors, macro stability, openness + industrial policy coherence.
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Enslavement & extraction: demographic collapse, capital drain, predatory institutions.
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Arbitrary borders: heightened ethnic fractionalization → higher coup/war risk.
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Colonial legal origin: extractive administrations & concessions → weak property rights outside the state or cronies.
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Cold War interventions: coups, civil wars fueled by superpower rivalry; sanctions; commodity-price manipulation; resource concessions.
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Debt & conditionality cycles: pro-cyclical austerity, sudden stops, IMF programs with weak local fit.
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Knowledge/IP regimes: latecomer penalties; technology licensing frictions.
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State formation failure: shallow tax base, weak courts, politicized security services.
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Patronage equilibria: clientelism over merit; public payrolls substitute for production.
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Kinship intensity & low impersonal trust: raises transaction costs, narrows market scale.
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Policy errors: ISI beyond infant-industry windows; permanent overvaluation; financial repression; soft-budget SOEs; expropriations without capability transfer.
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Resource curse dynamics: volatility, rent capture, Dutch disease, weakened accountability.
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Demography: high fertility → capital dilution; urbanization without industrialization.
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Education & health lags: slow accumulation of skills and labor productivity.
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Border test: Countries with similar colonial trauma but different governance quality should diverge. (e.g., Botswana vs. neighbors; Mauritius vs. peers.)
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Commodity cycle test: During price booms, do TWL regimes convert rents into non-resource exports/productivity? If not, the binding constraint is domestic capability, not external oppression.
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Openness with reciprocity test: Where rule-of-law + openness rise together, does growth accelerate despite past exploitation? If yes, primary causality shifts inward.
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Policy reversal test: When TWL policies are relaxed toward export discipline and macro realism, do outcomes improve? (Chile post-1990, Vietnam post-Doi Moi.)
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Narrative: From 1970s oil bonanza to 1980s debt crisis; 1999 Bolivarian revolution; 2000s–2010s nationalizations, price controls, exchange controls; sanctions in late 2010s.
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External factors: Commodity volatility; some sanction effects (later stage); historical oil concessions shaped a rentier state.
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Internal dynamics (binding): Oil-rent substitution for taxation → weak fiscal consent; chronic overvaluation → non-oil tradables collapse; expropriation without capability transfer; price/exchange controls → shortages, capital flight; politicized PDVSA de-skilling.
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Counterfactual: With a Norway-style fund + realistic FX + competitive non-oil policy, vulnerability remains but collapse is avoidable. External antagonism is insufficient to explain the scale of failure.
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Narrative: Pre-1959 unequal development; post-revolution expropriation, planning; COMECON subsidies; shock after USSR collapse; partial opening (tourism, remittances), re-tightened controls; US embargo persists.
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External: Embargo and lost Soviet subsidies were large shocks.
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Internal: Central planning’s productivity ceiling; dual currency distortions; repression of private enterprise; skill formation high but absent incentives for innovation/export.
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Outcome: Good basic human development for income level; poor productivity and growth. External pressure mattered, but system design caps prosperity.
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External: US interventions, civil wars, coffee/banana price swings, gangs shaped by US deportations; terms-of-trade shocks; hurricanes.
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Internal: Highly concentrated land/property rights; weak courts/policing; fiscal incapacity; criminal governance in corridors; political polarization. Costa Rica avoided militarization, invested in education/tourism/eco-exports → better outcomes.
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Inference: History of intervention raised violence; yet domestic elite bargains and state capacity determine divergence (Costa Rica vs. Northern Triangle).
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External: Slave trade depopulation; arbitrary borders; commodity dependence; French monetary arrangements; jihadist spillovers (recent).
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Internal: Resource curse (Nigeria); weak electricity/ports; patronage fragmentation; low tax/GDP; education quality gaps; Sahel security crises.
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Positive deviants: Ghana’s democratic alternation and relative macro discipline; Senegal’s institutional continuity; Côte d’Ivoire’s export diversification in rebounds.
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Lesson: Colonial legacies heavy, but governance + public goods explain relative winners.
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External: Settler extraction; sanctions (apartheid era); commodity cycles; liberation struggles.
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Internal:
Botswana: early property clarity over diamonds, conservative macro, rule-bound bureaucracy → compounding gains despite landlocked geography.
Zimbabwe: expropriation without capacity, monetary collapse.
Zambia: copper dependence; SOE inefficiency; gradual reform improved but vulnerable to cycles.
South Africa: world-class firms/infrastructure but apartheid’s human-capital scar + governance decay (state capture) limit TFP.
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Inference: Same region, similar external winds; rule quality and rent management dominate long-run variance.
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Moral accounting: It keeps the historical bill of damages visible (slavery, conquest, coups, sanctions).
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Bargaining realism: Highlights power asymmetries in trade, finance, and IP.
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Elite discipline: Points out that foreign alignment can entrench domestic compradors.
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Social cohesion: Emphasizes distributional legitimacy as a development input.
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Primary-cause error: Over-weights exogenous causes in contemporary underperformance, under-weights state capacity + policy quality.
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Capability neglect: Treats nationalization as transfer of ownership rather than transfer of know-how (which rarely transfers without reciprocity incentives).
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Protection without clocks: Uses tariffs/controls as permanent shelter, not time-boxed scaffolding to force export discipline.
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Reciprocity failure: Unpredictable treatment of capital (domestic/foreign) raises risk premia, starving precisely the investment needed to escape dependency.
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Information poverty: Isolation reduces learning-by-export and technology diffusion—the very engines of catch-up.
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Replace “break dependency first” with “earn bargaining power first” through export competitiveness, institutional credibility, and human-capital compounding. Interdependence under reciprocal, rules-based constraints beats autarky.
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Decidability tests (without discretion):
Did policy raise non-resource tradable exports per capita within 10–15 years?
Did TFP and electricity generation per worker trend up persistently?
Did the tax base (non-resource) deepen?
Did schooling-adjusted learning outcomes and infant mortality converge toward frontier?
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Truth tests (scope-limited claims):
“Sanctions reduced output” → quantify pre/post differentials vs. unaffected neighbors controlling for commodity cycles.
“Nationalization improved capability” → track O&M performance, downtime, and cost curves vs. private comparators.
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Judgment (residual discretion): When evidence is mixed, choose remedies that minimize irreciprocity: time-boxed protection, transparent rent-to-results contracts, sovereign wealth funds with rule locks, predictably compensable expropriation.
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Macrostability first: credible, boring monetary/fiscal rules; FX realism; independent statistics.
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Capacity before control: professionalize revenue, courts, and procurement before ambitious industrial policy.
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Time-boxed infant industry: escalating export benchmarks; sunset clauses; automatic rollback if targets missed.
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Open regionalism: scale markets via regional power/standards pools; trade corridors and ports.
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Human capital flywheel: teacher quality, basic health, and firm-linked vocational pipelines.
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Rent-to-capability contracts: in resources and utilities, convert rents into local supplier development under auditable milestones.
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Sovereign wealth & rule locks: insulation from commodity cycles; fiscal councils; transparent dividend rules.
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Diaspora & FDI reciprocity: attract know-how with predictable rights, fast dispute resolution, and local-partner protections.
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Dependency & world-systems: Prebisch-Singer; Frank; Cardoso & Faletto.
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Institutional accounts: North/Wallis/Weingast; Acemoglu/Johnson/Robinson.
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Late development & industrial policy: Amsden; Wade; Johnson; Rodrik; Hausmann/Hidalgo (ECI).
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Resource curse & rents: Auty; Collier/Venables; Mehlum/Moen/ Torvik.
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Africa specific: Herbst (state formation); Miguel (econometric evidence); Jerven (data/measurement).
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Latin America cycles: Edwards (left turns); Dornbusch/Edwards (macroeconomics of populism).
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Sanctions & growth: Hufbauer et al.; Neuenkirch/Neumeier (macro effects).