Tropical Economic Miracles

Document

Citado por

Autor	Rodríguez Mauricio Acosta
Páginas	11-69

D E S A R R O . S O C . 71, P R I M E R S E M E S T R E D E 2013, P P . X-X X , I S S N 0120-3584

Revista

Desarrollo y Sociedad

Segundo semestre 2013

PP. 11-69, ISSN 0120-3584

Tropical Economic Miracles

Milagros económicos tropicales

Mauricio Rodríguez Acosta1

DOI: 10.13043/DYS.72.1

Abstract

During the second half of the last century Botswana and Singapore experi-

enced an unparalleled economic performance among the Tropical countries.

This paper explores and describes the main economic and institutional causes

behind the rapid economic development observed in these two economies. The

quality of institutions —inherited from the precolonial times and the British

rule—, the appropriate integration into the world markets, and the political

stability —achieved by their single ruling parties—, played a significant role in

the “miracles” of Botswana and Singapore.

Key words: Botswana, case study, economic development, institutions, tropi-

cal, Singapore.

JEL classification: N10, N15, N17, O57, P52.

Resumen

Durante la segunda mitad del siglo X X Botsuana y Singapur experimentaron un

desarrollo económico significativamente superior al del resto de países tro-

1 Department of Economics, CentER- Tilburg University. E-mail: m.a.rodriguez@uvt.nl. Phone: +31-

(0)13-466-8758. PO Box 90153, 5000 LE Tilburg, The Netherlands.

I thank Hernado Zuleta (editor of this number) for his guidance during this project. I have also benefited

from helpful comments by two anonymous referees, Alejandro Arregocés, David Bardey, Juan Carlos

Guataquí, and Andrés García. The usual disclaimer applies.

Este artículo fue recibido el 17 de abril de 2013; revisado el 20 de agosto de 2013 y, finalmente,

aceptado 20 de agosto de 2013.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

picales. Este artículo explora y describe los principales elementos del entorno

económico e institucional que determinaron el rápido desarrollo económico

de estos dos países. Dentro de los principales determinantes de los “milagros” de

Botsuana y Singapur se destacan, la calidad de las instituciones —heredadas

de los tiempos precoloniales y del período en que estos países fueron colonias

británicas—, la integración al mercado internacional y la estabilidad política

—lograda por sus partidos políticos hegemónicos—.

Palabras clave: Botsuana, desarrollo económico, estudio de caso, institucio-

nes, trópico, Singapur.

Clasificación JEL: N10, N15, N17, O57, P52.

Introduction

It is a well-recognized fact that Tropical countries (i.e. those located within

geographical tropics, between latitude 23.45º N and 23.45º S), on average have

had an inferior economic performance than their Nontropical counterparts. As

Gallup, Sachs, and Mellinger (1999) extensive study on the effect of geogra-

phy on economic performance concludes, geography does matter for economic

development. In particular, “tropical regions are hindered in development in

comparison to temperate regions, probably because of higher disease burdens

and limitations on agricultural productivity” (Gallup et al., 1999, p. 5).

According to Madison’s (2008) data, Real GDP per capita (RGDP) adjusted by

PPP for the 79 Tropical2 countries in the sample grew at a mean rate of 173%

between 1960 and 2006, whereas for the 61 Nontropical countries this rate

was 216%. The gap in the developmental paths is even more striking if one

observes the RGDP in levels: In 2006 the average RGDP (in 1990 Geary-Khamis

dollars) corresponding to Nontropical countries was $11,783, whereas in Tropi-

cal countries it amounted to $4,390, which is even below the average for Non-

tropical countries in 1960. This great difference in terms of output per head

2 My definition of Tropical and Nontropical countries differs from the one used by Gallup et al. (1999).

I classify a country as Tropical if 50% or more of its area is within the tropics and Nontropical if less

than 50% is within geographical tropics. Geographical information was obtained from the Center for

International Development (CID) at Harvard University. http://www.cid.harvard.edu/ciddata/ciddata.

html

Mauricio Rodríguez Acosta 13

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

can be explained both by the fact that in 1960 the average RGDP in the Non-

tropical countries was almost 3 times the average of the Tropical ones ($4,891

Vs. $1,773), and on top of that the mean growth rate of the RGDP between

1960 and 2006 was 43 percentage points higher in the former.

However, as one explores other characteristics of the distribution of the RGDP

for Tropical and Nontropical countries some interesting features arise. For

instance, in 1960 United Arab Emirates (UAE), with a RGDP of $22,433 had the

maximum RDGP among Tropical countries, occupying the third place in a 140

countries sample, and being one out of the three Tropical countries ranked in

the top 20. 3 UAE’s RGDP in 1960 was two thirds of that of Nontropical Qatar,

which had the highest RGDP of the sample for that year, $33,104. In 2006,

the United States had the highest RGDP of the sample ($31,049), only 5%

above the highest ranked Tropical country, Hong Kong, with a reported RGDP

of $29,489, being the second highest in the whole sample for that year.

The change in RGDP distribution for Tropical countries, and in particular the

change on its right tail, clearly suggests that the averages, of both the growth

rate and RGDP level, are hiding the spectacular economic performance of some

“atypical” Tropical countries.4 As a matter of fact, one finds that during the

second half of the last century, some Tropical countries actually outperformed

Nontropical ones. Those Tropical countries which performed above the expec-

tations are the countries on which the present study focuses, and I refer to

them as Tropical Economic Miracles (TEMs).

Despite the fact that material achievement (economic growth) is not the only

dimension of economic development (Sen, 1988), it is a very comprehensive

measure of development and that is why this variable has been at the core of

multiple applied studies. Moreover, there is no doubt that understanding eco-

nomic growth is an issue of great relevance on both theoretical and empirical

economics. Thus, by implementing a case study on each of the TEMs I pretend

to achieve a better understanding of the role played by political and economic

institutions, under an “adverse” geographic environment (i.e. being located

within the geographical tropics). The ultimate purpose of this study is to pro-

vide further understanding on the following questions: How did these coun-

3 Together with Venezuela and Trinidad and Tobago.

4 See Figure 2, Appendix 1.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

tries became economic miracles? Is there any path to follow or are there a set

of circumstances that would make of each case a very singular outcome? If

those economic miracles within the tropics happen to be “black swans” (Taleb,

2008), generalizations from their experiences would be impossible; neverthe-

less, we would have the opportunity to learn what were the crucial differ-

ences between these countries that achieved a great economic performance

and those that did not.

At the end of the 1980’s and all through the 1990’s, and inspired by the Endog-

enous Growth theoretical models (e.g. Romer, 1986, 1990), a great deal of

empirical studies aimed at comparing the international evidence on economic

growth emerged. Table 1, summarizes the main findings of this literature on

the cross-country evidence on the determinants of economic growth.

Nevertheless, many of these determinants (such as investment or government

size) are deemed only as “proximate causes” of the long-run development.

Instead, during the last couple of decades, the comparative development lit-

erature has been quite active in the search of the “fundamental causes” behind

the dismal performance of the less developed economies. The main debate in

this literature has revolved around the role and relevance of geographical fea-

tures against the role of institutions.

Disease burden, low crop yield, and distance to ports have been identified as

some of the mechanisms through which geography impacts aggregate produc-

tivity and growth. Jeffrey Sachs has been one of the most salient supporters of

this hypothesis, as it is patent from Gallup et al. (1999, 2000), Sachs (2003), and

Sachs and Malaney (2000), among others. For instance, in Gallup et al., (1999)

the authors summarize their findings in four main results: i) Tropical countries

had a slower economic development than Nontropical ones; ii) Coastal regions

are in an advantageous position towards development; iii) Population density

is favorable for economic development in Coastal regions; and iv) Population

growth is negatively related with the potential for growth.5

Another geographical characteristic that has been recognized as a potential

determinant of economic performance in the long-run is the abundance of

5 Those countries that do not fit the first result, i.e. tropical countries that outperformed Nontropical

countries, are precisely my main subject of analysis in the current study.

Mauricio Rodríguez Acosta 15

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

natural resources. For example, Sachs and Warner (1995b, 1999, 2001), Gyl-

fason (2001) and Gylfason and Zoega (2002), find evidence that supports the

so-called hypothesis of “the curse of natural resources”, which claims that

countries with large endowments of natural resources, experience slow eco-

nomic growth. Being the misallocation of resources the main channel through

which this “curse” works. Basically, when there is a large availability of natural

resources, the incentives to invest in human or physical capital to be used in

other sectors are offset, and as a consequence economic growth stagnates.

Table 1. Determinants of Growth

Group Variable Sign Source

Economic Initial GDP (-) Romer (1986), Barro (1989), Barro and Lee (1994),

Sala-i-Martin, Doppelhofer and Miller (2004)

Government size (-) Romer (1986), Barro (1989), Barro and Lee (1994)

Investment (+) Romer (1986), Barro (1989), Barro and Lee (1994)

Education (+) Romer (1986), Barro (1989), Barro and Lee (1994),

Sala-i-Martin et al. (2004)

Inflation (-) Barro (1996)

Openness (+) Garrison and Lee (1995), Sachs and Warner (1995a)

Rest of pop/WAP (+) Bloom and Williamson (1998)

Inequality (?) Banerjee and Dufflo (2003), Halter et al. (2011)

Institutional Political Freedom (?) Barro (1996)

Political stability (+) Barro and Lee (1994) Gupta, Madhavan and Blee

(1998)

Protection of Property Rights (+) Sachs and Warner (1995a)

Source: Author’s construction.

Nevertheless, many recent studies have challenged the “resource curse” hypoth-

esis on the grounds of the potential endogeneity of the resource abundance

measures (e.g. Brunnschweiler and Bulte, 2008; van der Ploeg and Poelhekke,

2010), as well as on the role of poor institutional quality as necessary condi-

tion for resources to be “curse” and not a “blessing” (e.g. Mehlum, Moene, and

Torvik, 2006).6 The latter is a good synthesis of the main message behind the

institutional hypothesis, which states that these “humanly devised constraints”

(North, 1990, p. 3) triumph over geographical features as ultimate explana-

6 For an overview of the resource curse literature see van der Ploeg (2011).

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

tion for development in the long-run (Rodrik, Subramanian, and Trebbi, 2004).

This strand of the literature identifies the proper definition and enforcement

of property rights, as well as the rule of law as fundamental conditions for

investment –and growth– to take-off (e.g. Acemoglu, Johnson, and Robinson,

2001, 2002, 2005a, 2005b; Hall and Jones, 1999).

Under this framework, I start by choosing some of those, a priori, disadvan-

taged countries –according to the geography hypothesis– and then I proceed

to explore and analyze the nature of determinants that allowed them to fol-

low a successful development path. Thus, this study borrows from the geogra-

phy hypothesis that tropical countries on average perform worse, but departs

from it in the sense that I look for those factors that allowed for the “disad-

vantaged geography” to be defeated. In fact, I show that institutions played a

fundamental role in the miracles, and thus this study is closer in spirit to the

institutional hypothesis. Nevertheless, and in contrast with the nature of many

empirical studies adding to the geography Vs. institutions debate, a case study

cannot be framed as a horse race between potential determinants.

The rest of the document is composed of 5 sections. Section I describes the

Case Study Methodology and justifies its pertinence for the current study.

That section also presents the selection of the countries that are subject of

this study, Botswana and Singapore. Section II presents an empirical exercise

that supports the Case Study as methodological approach for the research

question. Sections III and IV are the case studies of Botswana and Singapore,

respectively. Finally, section V is devoted to the concluding remarks.

I. Methodology

Given that I want to describe the developmental path of each identified TEM in

the sample, it is logical that the most appropriate methodological approach is the

case study. As a matter of fact, as I do not intend to identify an independent

phenomenon or cause, but instead the goal is to recognize the interaction of

the causes of each TEM and their outcome (“The Miracle”) as a whole, the case

study is a useful approach according to Feagin, Orum and Sjoberg (1991).

The case study methodology results appropriate since “Case study analyses

provide both the author and the reader with the opportunity to develop a rich

Mauricio Rodríguez Acosta 17

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

understanding of the conditions, processes, and outcomes that have governed

the growth experience of actual economies. As such, they provide a means of

testing the implications of existing theories and developing one’s thinking on

the growth process.” (Young 1992, p. 13). Though for a different subject of study,

Sambanis (2004) also draws attention to the importance of performing case

studies to complement statistical evidence, when one is dealing with problems

that have multiple causes and heterogeneous sources of information.7

This methodological approach seems to be the best choice since the subject of

study has multiple causes: pin-pointing a single cause of the TEMs’ impressive

economic performances is impossible; instead they are the result of a system

of multiple interacting causes. And to get as much information as possible for

each miracle it would be necessary to recur to different sources in each case,

adding some heterogeneity to the information.

Regarding the kind of study that I perform, Yin (2003a) defines six categories

to classify a study: exploratory, descriptive, and explanatory, and each of this

three may be single-case or a multiple-case study. This study belongs to the

descriptive and exploratory multiple-case category. It is descriptive because I

present a detailed description of the TEMs and its contexts, and it is explor-

atory since I the causes of the miracle are initially unknown.

Furthermore, according to Yin (2003b), case studies have five main compo-

nents on their research design. They serve as a logical plan to evolve from the

research questions to the conclusions. These components are:

1) Study’s question: How did some Tropical countries became economic

miracles? Why these countries, and not others? Do these “Miracles” share

common features?

2) Purpose: Identify the main economic and institutional characteristics of

the TEMs and, if possible, find out whether they share any common fea-

tures.

3) Unit of analysis: It is evident that the unit of analysis is each TEM. How-

ever, it is worth to mention that the TEM must be defined in both space

(a country) and time (in some specific period). For example, Country X

7 His study is on the causes of civil war.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

became an economic miracle during the 1980’s; so, country X’s economic

policy during the 2000’s is not relevant for the present study.

4) Linking data with purposes: This component is closely related to the rel-

evance of the data to be reviewed, and consequently the starting point

is the background literature on empirical economic growth. Thus, I need

to focus in aspects such as, investment, education, and Political Stability,

among other recognized catalysts of economic growth.

5) Criteria for interpreting the findings: This component is highly important when

there are rival propositions to prove, but since this is an exploratory study and

I am not looking for a single explanation or cause, rather for a set of multiple

causes, the best way to include this element in the research setting is by

contrasting several sources of information, both statistical and historical.

Case selection

The identification of the TEMs follows a simple algorithm:

1) Compute the 10-year growth rate for each country.

2) With the purpose to avoid having “false” economic miracles, that is coun-

tries which exhibit a great performances during one decade but during the

following decade are a disaster (Easterly, Kremer, Pritchett and Summers,

1993) I calculate the moving centered average of order 21 of the growth

rates computed at 1, for each year. For example, in 1975 I have the 10-

years average growth rates from 1965 to 1985.

3) I select the two Tropical countries that remained more consecutive years

among the top 10 of the moving centered average calculated at 2. Accord-

ing to Maddison’s (2008) dataset I obtain that the pair of cases adjusted

to these criteria are: Botswana (1970-1994) and Singapore (1971-1993).

When the exercise is replicated for the data from the World Bank’s World

Development Indicators (WDI), results are the same in terms of countries

and quite similar in terms of the period: Botswana (1970-1996) and Sin-

gapore (1970-1987).8

8 Hong Kong ranked third after Botswana and Singapore, thus it also deserves to be labeled as a TEM. However,

I decided to exclude it from the study because it remained under the British control until 1997.

Mauricio Rodríguez Acosta 19

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

Of course this algorithm is not an indisputable way to select TEMs. However,

what is indisputable is that Botswana and Singapore had an amazing eco-

nomic performance during the second half of the last century, and thus they

deserve to be labeled as “Economic Miracles” and to be part of this study. In

other words, I may be failing for the exclusion of some cases, but not for the

inclusion of these two.

II. Econometric Exercise

In order to add to the pertinence of the case study as methodological approach

to determine the causes of the Economic Miracles within the tropics, I per-

form classical growth regressions. This empirical exercise serves to show –once

more– the divergence between Tropical and Nontropical countries, and to dem-

onstrate how growth measuring exercises may fail to find the specific sources

of growth, in particular for the countries that achieved extraordinary economic

performances under an unfavorable geographic environment.

Table 2. Descriptive Statistics and Source

Variable Obs. Mean Std. Dev. Source

growth 3,685 23.994 32.573 Heston, et al. (2009)a

ki 3,685 21.118 10.381 Heston et al. (2009)

kg 3,685 16.456 7.782 Heston et al. (2009)

lsc 3,685 9.065 8.997 Barro and Lee (2000)

rgdp (in logs) 3,685 8.407 1.024 Heston et al. (2009)

polcon 3,685 0.215 0.200 Henisz (2000)b

ethnic_frac 3,685 0.426 0.263 Alesina et al. (2003)c

a Heston, Summers and Aten (2009). b 2010 release retrieved from http://www.nsd.uib.no/macrodataguide/

set.html?id=29&sub=1. The index goes from 0 to 1, and it increases with the constraints on any political

actor. For instance, a higher index implies that the system exerts more control on the ability of the executive

to change policies. c Alesina, Devleeschauwer, Easterly, Kurlat and Wacziarg (2003).

Source: Author’s calculations.

I estimate five econometric models, following the main findings of Barro and

Lee (1994) as a benchmark. In each model the dependent variable is RGDP per

capita’s ten-year growth rate, while the set of explanatory variables includes:

Investment/GDP ratio (ki); Government Expenditure/GDP ratio (kg); the per-

centage of the population older than 25 years that completed secondary (lsc),

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

as a proxy of human capital; the 10th lag of the RGDP per capita to control for

convergence (l10.rgdp), a political constraints index to partially account for the

institutional dimension (polcon); and an ethnic fractionalization index (eth-

nic_frac), as a proxy for social capital. The summary statistics and the sources

of these variables are presented in Table 2.9 All the variables come in a yearly

frequency with the exception of lsc which comes in a quinquennial structure

and the fractionalization variable which is constant. In order to express lsc

yearly I imputed the precedent quinquennial value for the four year interval

without observations, for example: from 1961 to 1964 the variable takes its

value of 1960. Estimations are performed for 97 countries, 47 Nontropical and

50 Tropical, between 1960 and 2005.10

The first Model presented in Table 3 is an OLS pooled regression. From this

benchmark exercise it is possible to observe that the classical results of Barro

and Lee (1994) are maintained: growth depends positively on investment and

human capital; and negatively on initial RGDP evidencing the existence of

convergence, and on Government Expenditure as percentage of the GDP. These

results do not change when controlled for tropical, a dummy that is active

when more than 50% of the country’s area is within the tropics, according to

the CID geographical data; tropical has the expected (negative) sign, and the

coefficient is fairly large in magnitude (around a third of the growth’s stan-

dard deviation). In the third OLS model, the additional controls, political con-

straints and fractionalization, as well as regional dummies are included. As

expected, countries in which a given political actor, for instance the executive,

faces lower controls and where the society is more ethnically diverse tend to

exhibit a poorer economic performance. The results of the other explanatories

are not significantly affected, although the magnitude of the tropical dummy

coefficient is reduced by 30%. This indicates that in the specification of col-

umn 2 the tropical dummy is also capturing the effect of poor institutions (at

least form the political perspective) and more fractionalized societies.11 Nev-

9 To minimize the potential for endogeneity of the polcon index, I use the average index of the previous

decade.

10 Note that the definition of tropical (i.e. more than 50% of the territory between geographical tropics),

splits the sample of countries almost evenly.

11 Alternative specifications include the polity2 index (Marshall and Jaggers, 2008) on top of the polcon

measure, and a measure of checks and Balances (Beck, Clarke, Groff, Keefer and Walsh, 2001) instead

of the polcon measure. Results do not change significantly, although in the latter the sample size is

significantly reduced

Mauricio Rodríguez Acosta 21

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

ertheless, after controlling for these factors the difference on average growth

between Tropical and Nontropical countries still appears to be very large. In

addition to the OLS models, Panel Data models are estimated, both in Random

Effects (RE) and Fixed Effects (FE) specifications.

Table 3. Determinants of Economic Growth

Variable Linear1 Linear2 Linear3 RE FE

ki 1.689*** 1.621*** 1.355*** 1.267*** 1.101***

(0.063) (0.0633) (0.066) (0.179) (0.201)

kg -0.624*** -0.700*** -0.764*** -1.022*** -0.999***

(0.073) (0.071) (0.071) (0.309) (0.323)

lsc 0.825*** 0.713*** 0.582*** 0.765*** 0.787***

(0.065) (0.064) (0.061) (0.270) (0.291)

l10.rgdp -12.183*** -13.779*** -16.691*** -32.310*** -37.672***

(0.738) (0.772) (0.815) (3.575) (4.275)

l10.polcon 12.061*** 14.844* 12.521

(2.674) (7.818) (8.704)

ethnic_frac -18.865***

(2.216)

tropical -9.858*** -7.146***

(1.195) (1.261)

Regional Dummies Yes

Observations 3,685 3,685 3,685 3,685 3,685

R-squareda0.294 0.309 0.344 0.346 0.353

# of countries 97 97

a The constant is estimated but it is not reported. Robust standard errors in parentheses. *** p < 0.01, **

p < 0.05, * p < 0.1

Source: Author’s calculations.

Most of the results are robust to the different specifications of the model,

and when the traditional consistency tests are performed the FE model (as

expected) is the most recommended.12 Interestingly, the polcon index is no

longer significant; a potential explanation for this is that the index is actually

capturing some fundamental country-specific characteristic of the institutional

framework, and therefore gets wiped-out once all the identification comes

from the within-country variation. In sum, one can argue that there are coun-

12 Results are also robust to different specifications of the dependent variable: exercises with a five-year

growth rate only change in magnitude but not in sign.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

try-specific characteristics, besides these usual “growth sources”, that explain

the economic performance of each country. However, these specific variables,

such as the time-invariant characteristics of the institutional framework, are

hard to measure on an internationally comparable basis, and thus it is diffi-

cult to explicitly incorporate all of them in this type of analysis.

Finally in Table 4, I present the fixed effects obtained from the FE estimation

(i.e. last column of Table 3). Results are consistent with the case selection:

Singapore and Botswana have the second and the third largest fixed effect

for the Tropical countries, just behind Hong Kong. It is possible to observe that

the difference between the selected cases (Botswana and Singapore) and the

rest of the Tropical countries is huge, and their fixed effects are even above

the mean, the median (in the case of Singapore the percentile 75) of the Non-

tropical countries.13 Note further that the difference between Botswana and

the rest of Africa is striking. Botswana has of course the largest fixed effect,

and it is 50% larger than the second in the ranking (Mauritius).

Table 4. Fixed Effects

Obs. Mean Median per-75aStd. Dev. Min Max

World 97 -3.015 -0.116 27.204 35.723 -91.302 53.446

Botswana 36.337

Singapore 45.494

Rest of

Tropicalb47 -25.050 -26.477 -4.336 28.307 -89.407 31.366

Nontropical 47 15.959 24.700 44.546 29.070 -91.302 53.446

Rest of Africac27 -35.691 -36.590 -22.292 25.435 -71.959 23.517

a Percentile 75; b Excluding Botswana, Hong Kong, and Singapore; c Excluding Botswana.

Source: Author’s calculations.

This evidence is important for this study’s purpose in two dimensions: i) clas-

sical determinants of growth are not sufficient to explain countries economic

performance; thus, country-specific analysis, in particular the case-study

approach, seems necessary in order to dig-deeper into the catalysts of great

economic performance. And ii) the fixed effects obtained are compatible with

the case selection, demonstrating that despite being Tropical, Botswana and

13 Fixed Effects’ distribution functions are presented in Figure 3 in Appendix 1.

Mauricio Rodríguez Acosta 23

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

Singapore, had some specific features that allowed them to achieve an impres-

sive growth path.

In order to unveil the particular characteristics that accounted for Botswana’s

and Singapore’s rapid growth, the following two sections of this document

are devoted to expand on each of these cases, with particular emphasis on

the 1970’s and 1980’s.

III. Botswana – A Resource Blessing

Botswana is located in the poorest continent of the world, is landlocked,

around 70% of its territory is within the geographical tropics, and about the

same percentage is covered by the Kalahari Desert. Not exactly an encourag-

ing picture. However, Botswana managed to exhibit an incredible economic

performance that, countries with better “endowments” fell short to accom-

plish. According to Madisson’s data (2008), from 1970 to 1990 Botswana’s

RGDP grew 411%, in 1970 the RGDP was $647 (1990 US dollars) occupying

the 128th position out of 140 countries, while by 1990 its RGDP was $3,306

and it ranked 87th out of 162.

What were the keys for this “unexpected” outcome? The visible causes of this

result can be broadly grouped in three categories: i) Political Stability; ii) Min-

ing; and iii) Trade Policy. It is important to highlight that beneath each of these

categories and in their interactions, inheritance of Twsana people’s ancient

institutions (traditions) played an important role. In fact, the civil servants’

attitude towards public resources and the policy design and implementation

were clearly influenced from the pre-colonial institutions (I will come back

to this point at the end of this section).14 Political Stability allowed Botswana to

elaborate and execute long run development plans, as well as establish positive

relationships with foreign investors that perceived a good business climate,

since risk of expropriation was lower compared with other African countries

where democracy was not as properly established as in Botswana. The case

of economic transformation due to its mineral richness is perhaps the most

well-known cause of Botswana’s prosperity, which evolved from an agricul-

tural economy to a mineral-industrialized economy. The way in which dia-

14 Twsana people are Botswana’s ethnic majority.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

mond richness was managed, is a clear example of how resource wealth can

be converted into a blessing instead of a curse (as many other African coun-

tries have experienced). Botswana’s success may then be labeled as a resource

blessing, with “adequate resource management” drawing the line between

blessings and curses. Finally, as to the Trade Policy Botswana has had a pro-

openness position since its independence, evidence of this was its early mem-

bership to the Southern Africa Custom Unions (SACU).15 As a consequence of

the impossibility to set its own tariffs freely, Botswana could not totally pro-

tect its national industry, avoiding the negative effects on external competi-

tiveness of the import substitution industrialization model followed by many

other developing countries during the 1980’s (Leith, 2005).

I begin this section by presenting some economic indicators, to understand the

context in which the amazing economic growth was accomplished, and then

I will return to the description of each of these three categories that I believe

were the key determinants for Botswana to become an Economic Miracle.

A. Botswana’s Economic Context

Besides its impressive GDP per capita growth (see Figure 1 in Appendix 2 (A2)),

Botswana achieved positive results in other macroeconomic indicators. Though

inflation may be labeled as high using developed countries’ standards, when

compared with developing countries in particular with other African countries

Bostwana’s inflation level was relatively low, always under 18%, as shown by

Figure 2 in A2, having an annual average of 10.3% between 1974 and 2005.

In fact, this economy did not suffer of “modern” hyperinflationary process-

es.16 This “low” level of inflation is even more remarkable when one thinks

that Botswana’s major export is diamonds. As stated above, according to Barro

(1996), long-term high inflation has a negative effect on economic growth.

As Leith (2005) points out, one of the most impressive changes evidenced in

Botswana, was the rapid transformation of its economic activity structure.

At 1975 both industry (which includes mining) and agriculture, account for a

30% of the GDP each. From then, industry experienced a fast expansion, while

15 The other members of this Customs Union are: South Africa, Lesotho, Swaziland, and Namibia.

16 At the beginning of the 1990’s Peru and Brazil experienced hyperinflations, and more recently Botswana’s

neighbor, Zimbabwe.

Mauricio Rodríguez Acosta 25

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

agriculture experienced the complete opposite. By 1989, the former accounted

for 2/3 of the GDP, while the latter was less than 5% of the GDP (See Figure

3 in A2). The increase of more “prone to accumulation” activities, as those

of the industrial and mineral sector is closely related with the evolution of

economy’s investment. Figure 4 in A2, shows an increase of the gross capital

formation as percentage of the GDP from the mid 1960’s to the beginning of

the 1970’s, then investment fluctuates around 45% of the GDP until the end

of the 1980’s. At the beginning of the 1990’s the investment/GDP ratio was

back to its pre-crisis levels.

Regarding to the its economic relation with the rest of the world, Botswana’s

exports as percentage of the GPD experienced a constant increase from 1969

to 1987, period in which this value increased from 23% to 75% (see Figure

5 in A2), after the world crisis at the 1980’s, diamond sales declined around

the world, thus Botswana’s exports reduced to 50% of the GDP by the end of

that decade, and remained around that level until now. Imports as percent-

age of the GDP increased during the first post-independence years until 1981,

when its level was 71%, after that, a rapid decrease is observed, falling below

40% at the beginning of the current decade. Imports behavior can be par-

tially explained by, Botswana’s general Trade Policy. Instead of protecting local

industry with high tariffs, maintaining low import levels, but with an uncom-

petitive national productive system, Botswana followed a free trade model,

and signed into the SACU. Hence, instead having low imports/GDP ratio at

first, and a high ratio when openness became inevitable, Botswana managed

to “substitute” imports by having a constantly competing local industry, ready

to compete in the long-run with its closer partners.

As exports and imports grew in importance, Botswana’s trade picked at the

end of the 1980’s, when total trade represented 123% of the GDP as shown

in Figure 6 in A2. These numbers validate my view on the importance of trade

for Botswana’s economic achievements. After that, trade slowed down and

during 1990’s and 2000’s, fluctuating between 80% and 90%. Figure 6 in A2,

also shows the External Balance, which remained negative until 1983 when

the commercial deficit was around 20%, from 1984 Botswana always achieved

current account surpluses, whit its highest point at the end of the 1980’s. Over-

all, the trade “picture” of Botswana seems rather positive. Not only the ability

to penetrate international markets is evident, but also the capability to sustain

a positive balance with the rest of the world in the long-run.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

Finally, regarding to the population structure, Botswana had a positive evolu-

tion as its working age population increased in relation to the rest. From the

mid 1960’s to 2008, the dependence index reduced steadily to a half of its

value. Bloom and Williamson (1998), find that Demographic Transition played

a main role in East Asian rapid economic development, since a reduction in

the dependency index implies an increase in labor’s productivity. So from Fig-

ure 7 in A2, it is observed that regarding to population, Botswana experienced

a similar transition to that of the East Asian countries. In addition, the per-

centage of unschooled population over 25 was significantly reduced, by 1965

72% of this group was unschooled, and by 1995 this percentage was 36%

(Barro and Lee, 2000).

This brief review of some of Botswana’s macro-indicators leaves the follow-

ing broad conclusions about its economic context: i) macroeconomic stabil-

ity, at least monetary stability, was achieved; ii) trade played a main role, and

a sustainable a positive relation with the rest of the world was attained; iii)

high levels of capital investment were accomplished; and finally iv) Botswana

experienced a demographic transition favorable to foster economic growth,

and an important reduction in the unschooled population.

B. Botswana’s Keys for the “Miracle”

1. Political Stability

Though Botswana is a young nation, independent since September 1966, its

democracy and political institutions have been quite stable. First elections

were celebrated in 1965, still as British Protectorate, and since then they took

place every five years. Botswana has never suffered a coup, nor civil neither

military, contrary to the experience of several other African countries. Botswa-

na’s Democratic Party (BDP) has been the ruling party uninterruptedly since

first elections, basically because it represents the Botswana’s ethnic majority

(Twsanas) and because it managed to have healthy relations with both rural

peasants and elites.17, 18 The BDP was founded by probably the most signifi-

17 Initially under the name of Bechuanaland Democratic Party because by its foundation in 1961 Botswana

still was a British Protectorate, The Bechuanaland Protectorate.

18 During the years, popular support to the BDP has been declining due mainly to the urbanization of the

population. In particular, the BDP seems to be less popular among the urban working class.

Mauricio Rodríguez Acosta 27

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

cant figure of Botswana’s modern history, Seretse Khama. Khama was the first

president, and stayed in office until his dead in 1980. He played an important

role in the country’s transformation from one of the poorest nations in the

world to a prosperous independent nation.19 As addressed by Leith (2005) and

Matin (2008), Khama’s leadership, had an undisputable effect on Botswana’s

development. One fact that in particular depicts his long-run vision of a devel-

opmental state was the Mines and Mineral act of 1967, which entitles the

Central Government with the rights of exploitation of the subsoil wealth. As

remarked by Leith (2005), Khama believed that leaving these rights in hands

of the regional authorities or of private companies would deprive the Central

Government of an important revenue source to finance public investment. This

single fact would prove to have an impressive impact on Botswana’s mineral-

guided economic development.

Besides Khama’s leadership, according to Tsie (1996) Political Stability in

Botswana is explained by the government’s rule of law, as well as by the low

level of corruption and human rights’ violations. This author also emphasizes

in the fact that Political Stability has been a central element in Botswana’s

accelerated development process.

At independence the major an almost unique mean of accumulation was cat-

tle, and this had an important effect on the political context through three

main channels: i) as cattle is easy to move, it was “protected” against preda-

tory practices (Leith, 2005) discouraging the formation of corrupt predatory

institutions, that deter the private initiative; ii) not all individuals own cattle,

and in some cases they have to recur to the good-will of owners to borrow it,

this situation created a patron-client system of loyalty between cattle owners

(future political elite), and rural peasants (future political capital of the BDP

(Samatar, 1997); iii) as main source of national wealth, prosperity of cattle

sector was a common interest not only for cattle owners, but for the whole

society, providing the new independent government with a unique environment

of social cohesion towards the common objective of developing this sector,

which also facilitated the coordination of the Trade Policy. Thus, Botswana’s

government did not have to start from achieving agreement between its politi-

cal and economic majorities, but from maintaining the ex-ante concurrence,

19 According to Maddison (2008), Botswana’s RGDP in 1966 was 473 (1990 US dollars), occupying the

137th place of 140.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

which implies that at least the first step through Political Stability and policy

coordination was accomplished even before independence.

Several scholars recognize that a great deal of these shared interests rested

on the need for maintaining a competitive beef exporting sector, in particular

a competitive exchange rate was desired (Acemoglu, Johnson and Robinson,

2003; Leith, 2005, Martin, 2008; Samatar, 1997; Tsie, 1996). They also coin-

cide in the fact that fortunately, rulers understood that the best way to pro-

tect these interests was by the implementation of growth and development

promoting policies. Government’s position in favor of the capitalist accumu-

lation and property rights protection, derived from the elites’ interests, defi-

nitely paved the path for Botswana to have a development promoting state

instead of a predatory one, and the emergence of good institutions (Acemo-

glu et al., 2002).

Botswana’s Political Stability was also strengthened by the formation of a pro-

fessional public service. In 1966 Botswana lacked of prepared civil servants,

president Khama who lived and studied in England during the mid-1940s,

decided that the best way to build an efficient civil service was by enrolling

prepared foreigners and Batswana expatriates, instead of employing unpre-

pared residents.20 Other African countries failed to build a responsible pub-

lic apparatus under the pretext of protecting their national interests, but Mr

Khama had a different view on the subject, in his own words: “we should never

sacrifice efficiency on the altar of localization” (Leith 2005, 57).21 The foreign

nature of the civil service was born in the form of technical assistance, but

not the common short-term assistance; instead, these foreign experts lived

for long periods in Botswana, and some of them even adopted the national-

ity, as remarked by Leith (2005). This long-term character of the assistance

had two outcomes: first, policy recommendations were tailor-made accord-

ing to the needs and characteristics of the country; second, foreign experts

were able to train Botswana’s nationals, whom in the end became the basis

of a national professional civil service.

20 According to Acemoglu et al. (2003), at independence only 22 Batswana were graduated from Univer-

sity.

21 Leith (2005) cited it from Fawcus and Tilbuy (2000).

Mauricio Rodríguez Acosta 29

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

As Samatar (1997) highlights, merit and professional capability were at the

core of this modern bureaucratic system. Since its independence, Botswana

benefited from the presence of experts on public policy design, and the result

of it was evident, especially when compared with other regimes that were

deliberately against hiring foreigners for the public service (e.g. Somalia). This

efficient apparatus has an important share on the constant success of the BDP,

but the relation goes in both directions. Building such a professional system

requires a lot of time and commitment, without Political Stability, this well-

functioning bureaucratic would have never been emplaced.

Political Stability, together with the sound economic policy design of the (mid-

dle-term) National Development Plans, brought economic stability about.22

These plans created boundaries on fiscal expenditure, impeding excessive

expenditure, and thus excess of money circulation (hence inflation) during

the booms of fiscal revenues. Instead, during positive shocks on revenues, the

government was able to accumulate foreign exchange reserves, a strategy that

played an essential role in maintaining a favorable exchange rate, therefore

buffering the negative effects of Dutch Disease on the exports sectors other

than mining (Leith, 2005; Martin, 2008).

However, the most important particular consequence of Botswana’s Political

Stability, which has been always associated with its public commitment to the

protection of property rights (Acemoglu et al., 2003), is its undisputable impact

on government’s social contract with foreign investors. Foreign investors per-

ceived protection of their interest and low political risk; Leith (2005) remarks

that investors perceived low risk of time-inconsistent policies, a perception

funded in the large political majority achieved by the BDP, which deterred a

“winner takes all” behavior because, after all the party will remain in the power.

In exchange for this favorable climate, investors were more prone to do long-

term investments and to reinvest their revenues, which were essential for the

construction of modern infrastructure in Botswana. FDI played an important

role in Botswana’s economic performance (Leith, 2005).

22 As Leith (2005) mentions this Plans were inherited from the last years of the Bechuanaland Protectorate

when, in order to receive aid from Great Britain a detailed plan of the way in which this aid was going

to be used must be submitted.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

The most remarkable example of these long-term ties between the govern-

ment and foreign investors, as pointed by Tsie (1996), Acemoglu et al. (2003)

and Martin (2008), is the joint-venture that took place between De Beers and

Bostwana’s government over Debswana, company in charge of the Botswana’s

diamond exploitation.23, 24 This relation with De Beers was quite favorable both

for the private investors and the government. De Beers perceived a higher level

of protection due to the joint participation of the government in the com-

pany, increasing its incentives to assume the initial costs of exploration given

the lower probability of expropriation (Martin, 2008). As to the government,

on the one hand it had access to one half of Debswana’s revenues, allowing

it to finance its investment in physical and human capital (Leith, 2005), key

factors on the positive economic performance during 1970s and 1980s. On

the other hand, the government took advantage of De Beers’ expertise in the

diamonds market and its ability to sustain a favorable price, due to its mar-

ket power (Martin 2008). Botswana’s production was completely marketed

through De Beers’ sales filial, Central Selling Organization, which controls

the majority of the diamonds’ sales around the world (Ghemawat and Lenk,

1990; Modise, 2000).

2. Mining

One of the most remarkable features of Botswana is the importance that

diamond exploitation acquired. However, at independence Botswana did not

export any diamonds at all; in fact, diamond mining did not start until the

early 1970s (Modise, 2000). During the 1970s Botswana experienced a rapid

transformation of its economic structure (see Figure 3 in A2). As Leith (2005)

remarks Botswana was an agricultural (ranching) state at the beginning of the

1970s, and by the end of that decade mining was the second largest sector

in the economy, and this trend continued during the 1980s. This impressive

transformation was a central element in Botswana’s economic performance.

23 Since its establishment in 1888, De Beers largely controlled the world supply of diamonds. Ghemawat

and Lenk (1990)

24 Debswana stands for: De Beers Botswana Mining Company. Botswana’s government owns half of the

company and DeBeers owns the other half.

Mauricio Rodríguez Acosta 31

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

The first great mineral finding occurred in 1967, when De Beer’s geologists

found the Orapa Kimberlite pipe.25 “The Botswana government signed a joint-

venture agreement with De Beers creating… Debswana. Under this agreement

De Beers started up the Orapa mine in 1971 and continue to operate it on Behalf

of the government” (Ghemawat and Lenk 1990, p. 3). Another major finding,

which marked the role of Botswana as one of the major diamond exporters in

the world market was the opening of the Jwaneng mine in 1982 (Ghemawat

and Lenk, 1990; Modise, 2000); as an scholar points out “The commissioning of

the Jwaneng diamond mine in 1982 further reinforced this structural change

in Botswana’s economy from one dominated by beef exports to a diamond-

dependent one” (Tsie, 1996, p. 599).

Those great findings would trace the path for Botswana to become a main

participant in diamond’s world market. Between 1981 and 1982 Botswa-

na’s diamond output increased by more than a 50%. Diamond’s production

in Botswana grew from 2.4 million carats in 1976 to 10.9 million carats in

1983. This impressive growth in diamond’s production was achieved through

the massive De Beers’ investments in Orapa and Jwaneng mining complexes

(Curry, 1987). Nonetheless, these investments proved to be more than effective.

Indeed, by 1982 Botswana’s diamond mines were among the most productive

in the world: $10 dollars per carat in 1982, against $20 and $98 dollars per

carat in South Africa and Namibia respectively (Ghemawat and Lenk, 1990).

At the core of the mineral riches–development relation, was the Mine and Min-

eral Act of 1967. Proposed by Mr Khama, this act guaranteed the rights of the

Central Government on the subsoil mineral resources. This “crucial decision” as

labeled by Acemoglu et al. (2003), demonstrates Khama’s interest in general

progress; before the act mineral riches were entitled to the tribe than owned

the land, and despite fact that the Bangwato tribe, of which Khama was the

chief, owned the richest mineral lands, he opted to transfer the ownership of

mineral sources to the central government. Leith (2005) remarks that Khama

chose to use mineral revenues for national purposes; the ownership of mineral

riches allowed the government to finance investment in physical and human

capital (quite scarce by the time of Botswana’s independence).

25 Kimberlite pipes are the main source of mined diamonds. Diamonds in this kind of mines are embedded

in Kimberlite rocks.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

In order to obtain revenues from mineral activity, Botswana’s government

opted for an alternative to the “common” royalties’ model (Leith, 2005). Even

though, companies have to pay a royalty for exploitation rights, and to pay a

tax according to their revenues. Government decided to have a more direct

participation in mineral activity through its joint-venture with the private sec-

tor, Debswana. This participation as owner, allowed the Government to have

a firsthand control of private initiatives, that otherwise may deter transfers

from private to public hands (Curry, 1987). According to Ghemawat and Lenk

(1990), 20% of Debswana’s revenues were directed to Operating Costs, 25%

to De Beers and 55% to Botswana’s government. This combined model of

taxation and participation, proved to be successful manly because a long-run

relation between private investors and government was build, allowing the

reinvestment and redistribution of mining revenues which, all in all is the way

in which mineral richness was translated into economic prosperity.

Joint participation, continuous private investments and mineral richness well

above expectations, improved government’s bargaining power, and thus its

ability to obtain fiscal revenues from the mineral activity (Curry, 1987). As

Hill (1991) states, the government had two main sources of revenues, cus-

tom revenues and mineral revenues. These mining revenues came mainly from

the diamond exploitation, through the long-term agreements with De Beers.

According to Curry (1987), by 1982 mineral production represented around

40% of the GDP, twice as large as its relative value four years before. By the

mid-1980s mineral revenues represented almost a half of the total fiscal rev-

enues and this trend continued during the 1990s.

Acemoglu et al. (2003) highlight that the existence of institutions that

respect and protect the property rights, as well as the low levels of corrup-

tion in Botswana, were quite important in the process of reinvestment of the

revenues obtained from mineral exploitation. The massive reduction of illit-

eracy and poverty rates would have never been achieved if mineral revenues

were predated. According to the UNDP (2005), Botswana’s government has a

decided position toward the utilization of mineral revenues in human capital

formation, infrastructure development, and diversification of economic activ-

ity. At independence Botswana had 7 kilometers of paved roads, in contrast to

the 6,872 kilometers in 2002; life expectancy at birth in 1966 was 46 years,

it increased to 67.5 years in 1999; under-five child mortality decreased from

Mauricio Rodríguez Acosta 33

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

15% in 1981 to 5% in 1997; net enrollment rate grew from 42% in 1971 to

98% in 1997 (UNDP, 2005).

Even though mineral riches played a key role in the development of Botswana,

resources have been often identified as a curse for most of the Sub-Saharan

countries.26 This means that what appears to be a particularly positive initial

endowment results in an unmanageable burden. Those countries that find out

how to exploit the possibilities allowed by this richness seem to be the excep-

tion rather than the rule in the developing world.

Botswana’s case turned out to be a resource blessing (or a Miracle) for the

mixing of two causes: good luck and good institutions. Good luck, as stated by

Leith (2005), firstly because of the nature of the diamonds that are founded in

Botswana, diamonds there (and in the rest of Southern Africa) are embedded

in Kimberlite rocks, thus a huge extractive infrastructure is needed in order

to exploit the Kimberlite pipes. This eases the state control over the mineral

activity, the legality of it and the transfer of revenues from the extractors to

the government; contrary to the alluvial exploitation of diamonds, which is

done in small scale and it is hardly regulated. The exploitation of the alluvial

sources can be easily controlled by illegal armed groups, and that is why this

type of diamonds are sadly known for being the financial muscle of several

conflicts in Central Africa (e.g. Angola, Democratic Republic of Congo, and

Sierra Leone).

Nonetheless, the need of a huge extractive infrastructure does not assure a

successful management of resource wealth, oil extraction is highly capital-

intensive and some of the largest producers in Africa were or are embedded

in large civil conflicts, and remain poor in terms of infrastructure and human

capital (e.g. Nigeria, Angola in particular the separatist region of Cabinda, and

Sudan). Here appears the other element of the equation the good institutions,

as Mehlum et al. (2006) and Boschini, Petterson and Roine (2007) remark, a

resource curse can be reverted through high quality institutions. An institu-

tional framework devoted to the protection of property rights, inherited from

the pre-colonial institutions, favored the presence of foreign investors decided

to maintain long-run investments, and allowed the existence of a healthy rela-

26 Gylfason, 2001; Gylfason and Zoega, 2002; Sachs and Warner, 1995b, 1999, 2001; for the particular

case of Botswana: Martin, 2008; and Mikesell, 1997 for the case of mineral rich countries.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

tion between the government and the private entrepreneurs.27 Without the

adequate legal enforcement of property rights, foreign investors would never

emplace such impressive extraction complexes in Botswana, and much of its

richness would probably be underexploited (Boschini et al., 2007). Moreover,

the institutional framework also limited the type of relationships that could

arise between private investors and government officials. Corruption and brib-

ing was less spread than in other Sub-Saharan countries; instead, a long-run

relationship with between the parties was established. This healthy behavior

was encouraged by the amazing richness of the subsoil, which guaranteed

revenues over a very long time horizon.

In addition to the protection of property rights, Mr Khama’s leadership allowed

for the redistribution of mineral revenues in the form of public expenditure.

As part of his agenda, first he ensured the property of the subsoil richness

to the Central Government, and then devoted the mineral revenues to improve

the country’s infrastructure, access to education, and health. It is clear

that the institutional framework was a necessary condition for Botswana’s

impressive mineral-guided progress that turned it into an Economic Miracle.

3. Trade Policy

The SACU was established at the beginning of the 20th century, well before

Botswana’s independence, between South Africa and the British High Com-

mission Territories (which included the Bechuanaland protectorate, current

Botswana). After Botswana’s, Lesotho’s, and Swaziland’s independence, SACU

terms were renegotiated in 1969 with South Africa in order to favor the three

smaller and least developed members of this union. Renegotiation of SACU

terms allowed Botswana to obtain a more share of the revenues from imports’

tariffs, and thus accelerate its “economic” independence from the Great Britain,

that during the first decade of independence provided a good amount of the

fiscal revenues in the form of foreign aid (Leith, 2005; Tsie 1996). As remarked

by Hill (1991) joint to mineral revenues, customs revenues were one of the

largest sources of public income, and mineral activity had a positive impact on

customs revenues, a great deal of capital goods had to be imported for mineral

exploitation. According to Curry’s (1987) data around 25% of fiscal revenues

during the first half of the 1980s came from customs revenues.

27 For more details: Acemoglu et al., 2003 and Robinson, 2009.

Mauricio Rodríguez Acosta 35

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

As South Africa maintained the control of the SACU until the mid-1990s,

Botswana’s government had no saying on its own tariffs, this implied that

it lacked of the necessary power to protect the local industry, which some-

how avoided the implementation of an Imports Substitution Industrializa-

tion (Leith, 2005). Nonetheless, the local manufacturing industry remained

underdeveloped, mainly because of the high competitiveness of the neigh-

boring industries and the appreciation of the Pula against the South African

Rand (Taylor, 2002).

Besides fiscal revenues, Botswana’s Trade Policy left two important outcomes.

First, in 1975 an agreement that covered beef exports to Europe was achieved,

allowing the entry to Europe of beef from Botswana at a favorable tariff. This

agreement fostered beef exports to Europe, favoring must of the rural popu-

lation, which were almost exclusively devoted to ranching, this included both

large cattle owners and humble peasants. Second, as a member of the Cus-

toms Union, Botswana has the right to move its merchandise freely through

the whole territory of the Union allowing it to access the coast, which in some

degree helped to diminish the negative geographical condition of being land-

locked (Leith, 2005).

By the mid 1980’s diamonds already represented around a half of Botswa-

na’s exports (Curry, 1987). Other success of Botswana’s Trade Policy was the

agreement on the commercialization of these diamonds. The government and

De Beers agreed for all the diamond production to be bought by the Central

Selling Office (CSO), De Beers’ distribution branch. This agreement favored

the government since it took advantage of De Beers’ large expertise in the

diamond market, and also allowed it to obtain rents from the market power

exerted the CSO (Ghemawat and Lenk, 1990; Leith, 2005).

C. Final Remarks on Botswana – The Fundamental Role of

Institutions

Even though, Political Stability, Mining, and Trade Policy may be highlighted

as the visible (proximate) causes of Botswana’s economic success, underneath

them, the institutional framework played a fundamental role in the design

and implementation of a sound developmental strategy. Where do these good

institutions come from? Botswana had the fortune of inheriting pre-colonial

tribal institutions in which the definition and protection of property rights

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

were at core of the personal relations. These tribal institutions largely sur-

vived the British protectorate, and thus after independence the Mr Khama’s

government was a relentless defender of the market economy, and thus of the

adequate definition and protection of private property. Protection of private

property and the rule of law proved to be central for Botswana to be able to

transform its riches in the ground into actual productive public goods (Ace-

moglu et al., 2003; Robinson, 2009).

The functioning of the government also exhibits an inheritance from Twsa-

na’s institutions, in its accountability and consensus-seeking decision process.

Back in the pre-colonial times, each tribe had a kgotla, a sort of a local coun-

cil where “public policies” were presented and debated. According to Samatar

(1997) and Tiruneh (2004), the kgotlas constituted the highest consultation

body in the country, and even though the Kgosi (king) had the power to impose

policies at his own will, the existence of the kgotlas created the necessity to

achieve popular acceptance before policy implementation; “whenever the king

ignored the advice of the kgotla, he ran the risk of being assassinated, over-

thrown, or banished” (p. 19).

This institution proved to be important in two, almost contradictory, dimen-

sions. First, it created a sense of pluralism and transparency which turned out

to be highly significant for the establishment of a system of checks and bal-

ances (Carroll and Carroll, 1997). After independence the kgotlas were replaced

with actual councils that acted as overseers of central government’s policies.

The government’s seek for consensus became a convention; policies were usu-

ally debated among several ministries and widely presented to the public in

order to obtain a more pluralistic, objective, and popular outcome (Samatar,

1997; Leith, 2005). This limited the possibilities for a rapacious behavior, and

therefore allowed for a better allocation of the revenues from the mineral sec-

tor. Second, even though the kgotlas were supposed to be open to every male

adult, they were largely controlled by the economic elites (i.e. large cattle

owners) Tiruneh (2004), and this created a highly stratified society. However,

the interests of the domestic elite and their future political capital (the peas-

ants) were aligned due to its common economic activity. The protection of

large-scale ranching also turned out to be the fundamental common ground

between the local elites and the colonial rulers. This, together with the lack

of British interest in an active management of the protectorate (Beaulier,

2003), largely insured the survival of the social interactions created by the

Mauricio Rodríguez Acosta 37

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

pre-colonial institutions (Good, 1992). In the end this stratification and inter-

est alignment facilitated a smooth transition towards independence and explains

why the BDP’s dominance of the political scenario was strongly rooted on its

rural popularity.

A final feature of the inherited institutions was the attitude towards saving.

Victim of crude and long-lasting droughts, Twsana people learnt that during

prosperous times a portion of the output must be saved for the less favor-

able times (Leith, 2005), similarly to what happens in countries with seasons

(Zuleta, 2008). This attitude, together with the accountability exercised by

the British government over the financial aid offered during the first years

after independence, evolved into a long-term planning of fiscal expenditures.

This helped to maintain the expenditure fixed and devoted to developmental

projects. Furthermore, government savings during exports booms served as a

macroeconomic stabilizer, as Hill (1991) points out, Botswana’s government

used unexpected revenues from mining booms to accumulate international

reserves, instead of using it for additional non-productive public expenditure,

minimizing the opportunities for rent-seeking. This policy helped to avoid

the exchange rate appreciation, a typical symptom of the Dutch Disease, and

thus it helped to protect the exporting sector. This stands in stark contrast to

the experience of some large oil producers in Africa (e.g. Nigeria, Equatorial

Guinea, and Angola).

However, as may be inferred from president Ian Khama’s latest inauguration,

Diamonds are not forever.28 Botswana still has three serious –related–chal-

lenges for the future: i) diversify its diamond dependent economy; ii) reduce

the high levels of unemployment, currently above the 17% according to World

Bank; and iii) reduce economic inequality. As pointed out in the World Bank’s

country overview, despite the good track of democratic performance, economic

inequality Botswana is among the highest in the world.29 In spite of the efforts

to promote other sectors beside the mineral one, diversification still remains

incipient in Botswana (Good, 2005). As mineral exploitation is capital inten-

sive, the capacity to generate employment, in particular for the growing urban

working class, remains quite limited. The government has been trying to pro-

mote small-scale entrepreneurship through developmental banks. However,

28 The Economist, October 24, 2009.

29 http://www.worldbank.org/en/country/botswana/overview.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

this policy has been far from successful, and as highlighted by Martin (2008)

there is still a need for the redistribution of mineral riches among the whole

population. At this point it seems like Botswana has profited from the short-run

benefits of economic inequality on growth. However, if in the coming years

this inequality is not effectively combated, the negative long-run effects of

economic inequality would continue to act (e.g. low incentives for the accu-

mulation of human capital), posing a serious drag on future economic perfor-

mance (Halter, Oechslin, and Zweimüller, 2011).

IV. Singapore – The Lion City30

Singapore is one of the most highlighted cases of economic success during the

second half of the last century. Regardless of its minuscule area, 710 km2, and

the complete absence of natural resources, Singapore managed to transform

its economy into one of the most powerful and modern systems of the world.

Geographically, Singapore took advantage of its position that, in addition to

its size and the fact that it is an island, created a complete dependency on the

rest of the world, proof of this is that even water must be imported.

Singapore experienced an amazing progress from a middle income economy

to a rich one, according to Maddison’s (2008) dataset, in 1970 Singapore’s

RGDP per capita ranked 39 of 140 with a value of $4,439 (1990 US dollars),

by 1990 its RGDP per capita grew 220% reaching a value of $14,220 occupy-

ing the 18th place in the sample. At 2006 Singapore had the 5th largest RGDP

per capita of the world.

Behind this impressive performance I identify three visible causes: i) the Political

Stability; ii) the Economic Transformation; and iii) Openness. As in the case of

Botswana, Singapore has a major ruling party the People’s Action Party (PAP),

which since independence has obtained the majority of the sits in the par-

liament (Haas, 1999). This situation, allowed the continuity of developmen-

tal and transforming policies, and strengthened investors’ confidence since

the PAP’s regime demonstrated a full commitment with the protection of the

property rights, and enhanced the private initiative. Again, stability of politi-

cal institutions devoted to the enforcement of private property demonstrated

30 This is the translation of Singapura, the original (Malayan) name of the island.

Mauricio Rodríguez Acosta 39

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

to be central for the attraction of foreign capital. Singapore also experienced

a notable Economic Transformation, from a raw labor intensive manufactur-

ing economy with high unemployment rates in the mid 1960’s, to a devel-

oped services center by the 1980’s, with an intensive use of both physical and

human capital. Its production path moved from manufactured merchandises

with a low level of value-added, to the production of technological goods

(e.g. microchips, electronics) and services, which off course involve a higher

level of value-added. Finally as stated by Rumbaugh (1995), Singapore may be

labeled as a free trade regime, not only because of the free flow of merchan-

dise and services, but also because of the low level of restrictions on capital

flows. Its open position toward trade both inwards and outwards is related to

the fact that imports are necessary for this island without natural resources

and scarce land, while exports are essential to develop the economic appara-

tus when domestic market is minute. On top of the low barriers to trade, and

given that a remarkable portion of its development relayed on FDI, Singapore

facilitated the free flow of capital. Hand in hand with its Economic Transfor-

mation its exporting path evolved from simple re-exports to exports of ser-

vices and high-technology goods.

All three main causes are linked through the attraction of foreign capital.

Political Stability and Openness set the proper environment for the arrival of

international capitals. While Economic Transformation and rapid expansion

of exports, would never be achieved in the absence of the financial muscle

provided by the foreign investors. In the following I provide an outlook of the

economic environment of the Singapore’s Miracle, and then I will come back

to explore the importance of each of these three visible causes.

A. Singapore’s Economic Context

Along its prosperity process (See Figure 1 in Appendix 3 (A3)) Singapore

achieved a more than satisfactory level of macroeconomic stability. Inflation

always exhibited very low levels, with an average annual change in the CPI

of 3.3% between 1961 and 1995, as shown by Figure 2 in A3. This demon-

strates that the Monetary Authority of Singapore (MAS) so far succeeded in

its main objective: maintaining a low and stable level of inflation. According

to Barro (1996) this low level of inflation may have a positive impact on eco-

nomic growth in the long-run.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

During this prosperity and price stability period Singapore also experienced

an important Economic Transformation. As van Elkan (1995) presents, dur-

ing the 1970’s and 1980’s Singapore moved its production to activities with

higher value-added levels, which implied the more intensive utilization of

human and physical capital. As shown in Figure 3 in A3 from the mid 1970’s

the Services sector presented an increasing participation in Singapore’s GDP.

Moreover, this sector has had the largest participation in the economy, always

above the 60% of the total production. In particular, Singapore emerged as

an international financial center, due to the government policies toward the

attraction of foreign capital, and the general favorable climate for investment.

As a result, the supply of several financial and business services increased dur-

ing the last stages of Singapore’s development at the 1980s.

Capital inflows are at the core of Singapore’s splendid economic perfor-

mance and Economic Transformation. The Singaporean government was able

to attract capital, and to use it for the rapid Economic Transformation and

development of the country. As an outcome gross capital formation as GDP

percentage rose steadily from 10% at the beginning of the 1960s to a peak

level of 50% by the mid-1980s, and after the 1986 crisis it stabilized around

35% (See Figure 4 in A3).

The high level of investment allowed to transform the economic apparatus,

providing the possibility to participate in more capital intensive activities with

higher value-added. This capital-led industrialization brought Singapore’s

exports to a new level. Singapore’s exports evolved from re-exports to exports

of oil derivates and then to manufactures of a high technological value and

services that embedded a large participation of human capital. According to

the World Bank’s WDI, between 1989 and 1999 High-technology exports as

percentage of the total manufactured exports grew steadily from 36% to 60%.

As result of this transformation, in addition to the export promotion policy,

external balance on goods and services grew continuously from a 20% of the

GDP deficit at the mid-1970s to a 20% surplus 20 years later (See Figure 5 in

A3). Singapore’s reliance on foreign trade is evident when total trade as per-

centage of GDP is explored. According to Heston et al. (2009) data, by 1965

total trade as percentage of the GDP was 210%, since then it rose rapidly and

steadily, by 1980 it was 400% of the GDP then it reduced to 300% by the

mid-1980s due to the slowdown of the world economy, and by the beginning

of the 2000s it reached again its level of 1980 (See Figure 6 in A3).

Mauricio Rodríguez Acosta 41

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

Finally in relation to the population, Singapore experienced a favorable demo-

graphic transition, in which its WAP increased in relation to the rest of the

population, as presented by the dependency index in Figure 7 in A3. Since

the mid-1960s, the WAP grew steadily in relation to the rest of the popula-

tion, causing a fall in the dependency index from 0.85 in 1965 beneath 0.4

at the beginning of the 1990s. This rapid and strong change in Singapore’s

demography arguably had a positive effect on economic growth through two

main channels: on the one hand as the dependency index decreases average

productivity of the labor input increases (Bloom and Williamson, 1998); on

the other hand, during this kind of demographic transition the savings rate is

expected to grow under the Life-Cycle Hypothesis; Husain (1995) finds empiri-

cal evidence that supports the positive impact of the demographic transition

on the private saving rate in Singapore. In addition to this favorable change

in the population structure, Singapore’s development was also fostered by an

improvement in its human capital, according to Barro and Lee (2000) data,

by 1960 a 61% of the total population over 25 was unschooled, and by 1995

this percentage was reduced to 14%.

From this review of Singapore’s macro-indicators we can derive the following

conclusions about its economic context: i) monetary stability was achieved, in

fact inflation has always been quite low; ii) very high levels of capital invest-

ment were accomplished, having an impact on Singapore’s Economic Transfor-

mation and exports’ composition; iii); trade has a central role for Singapore’s

economy, and a positive external balance was achieved through the increase

in the exports’ value-added; iv) as in the case of Botswana, Singapore expe-

rienced a demographic transition favorable to foster economic growth and a

rapid reduction in the percentage of unschooled population.

B. Singapore’s Keys for the “Miracle”

1. Political Stability

Singapore is young nation, autonomous from the British rule since 1959 year

in which Lee Kuan Yew, Singapore’s renowned leader, was appointed as prime

minister. Since that year and until now the People’s Action Party (PAP), Mr

Lee’s party, dominated every parliamentary election. However, transition to

independency was far more complex than in the case of Botswana. Complex-

ity of Singapore’s independence was rooted in the PAP’s prerogative of merg-

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

ing Singapore with Malaysia. The rationale for this premise was to expand

the domestic market and improve the access to resources. The merger had a

large popular acceptance; in 1962 the referendum over Lee’s proposal for the

merger was supported by the majority of Singaporeans. In 1963 The Federa-

tion of Malaysia was officially established with Singapore as one of its states.

Nonetheless, Singapore obtained very little political representation in the

Federation and its economic development was not at the top of the agenda,

as it was for the PAP. This feeling of marginalization of Singapore’s priorities

led to an increase in the political tensions between the Malayan government

and Singaporeans leaders, and Singapore was finally expelled from the Fed-

eration in 1965 (Haas, 1999).

As political climate stabilized, and the PAP’s dominance and position toward

economic development strengthened, Singapore’s regime gained credibil-

ity and confidence among foreign investors.31 By the end of the 1960s, and

due to the PAP’s ability to guarantee the continuation of its policies in favor

of the private initiative and of the protection of property rights, FDI inflows

started to rise.

As stated by Neher (1999), the PAP’s popular support was grounded in its role

during independence from the British rule, and also in the government’s capac-

ity to maintain a successful developmental path which translated into eco-

nomic prosperity for Singaporean population. As mentioned by this author,

PAP’s total dominance of the parliament was not judged by the common

Singaporean, since the state demonstrated an impressive ability to satisfy Sin-

gaporeans’ needs.

The PAP not only succeeded in improving the life standard of the common Sin-

gaporean, but more importantly for its consolidation as Singapore’s single ruling

party, it was able to generate a broad consensus around the idea that individ-

ual liberties, including the possibility to chose among different parties, are less

important than common welfare and generalized economic prosperity.

This preponderance of common interest over individual needs, at the core of

the party’s and civil population beliefs, is grounded in Lee Kuan Yew’s “Asian

Values” ideology. Asian Values are defined as an alternative to what Mr Lee

31 All the seats of the 1968 parliamentary elections were won by the PAP, Haas (1999).

Mauricio Rodríguez Acosta 43

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

labeled as Western Values, which in his view were not suitable for Singapore’s

context: “The West is viewed as having too much democracy, resulting in chaos,

licentiousness, and lack of respect for societal needs” (Neher 1999, p. 47). Mr

Lee’s Asian Values are of central importance for the maintenance of the PAP

as Singapore’s unique ruling party: “As such, the AV (Asian Values) project’s

ability to secure citizen’s co-opepation in de-legitimizing ideological alterna-

tives and preventing social fragmentation in the name of communitarianism

makes it a social technology par excellence for the sustaining of one-party

ideological dominance” (Sim 2001, p. 64). Mr Lee’s capability to embed these

values into a mixed society, and his direct association with the independence

from the British rule and the separation from Malaysia to create an indepen-

dent nation, elevated him to the quality of Singapore’s father.32 His leadership

and his strong belief in the incorruptibility of the civil servant allowed him to

stay in the charge of Prime Minister from 1959 to 1990. Mr Lee is recognized

for his support for a meritocratic and transparent civil service, as well as for

his commitment to the capitalistic development of the economy. It is impos-

sible to unlink Mr Lee’s role as Prime Minister and Singapore’s development,

as under his command the island achieved one of the highest rates of eco-

nomic growth in the world.

Singapore is not exactly the best example of a democracy; in fact, its case is

cited as a frustrating one by Chua (1994) since great economic performance

was not accompanied by democratization. However, the constant improve-

ment in Singaporeans’ material welfare legitimized the PAP’s hegemony and

Mr Lee’s extended service as Prime Minister. Moreover, popular acceptance

of PAP’s domination allowed the government to have a severe intervention in

Singapore’s economic system, leading it through several phases of develop-

ment from a simple entrepôt to an active financial and business center, and

to give continuity to its development plan.

Attracting overseas capital was absolutely important for the transformation of

the economic apparatus thus, the Singaporean government intervention always

had a positive impact on the protection of the foreign investors’ interests.

During all the phases of development the government has intervened in the

labor market. During the first stages of development, in order to attract for-

32 According to Haas (1999) Singapore’s multiethnic population has three main ethnic groups: Chinese

(77%), Malays (15%) and Indians (6%).

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

eign investors to foster the industrialization process and to reduce the unem-

ployment, labor costs were kept low and trade unions were heavily monitored.

In 1968, the Employment Act and the Industrial Relations Act were intro-

duced to limit the workers’ bargaining power, and as consequence the firms

did not have to deal with expensive labor and strong trade unions (Grice and

Drakakis-Smith, 1985; Lam, 2000; van Elkan, 1995). This intervention proved

to be successful not only to attract foreign investment to foster the industri-

alization process, but also to significantly reduce the unemployment rate.

However, as new “cheap labor” centers emerged in South East Asia, the Sin-

gaporean government had to change the developmental strategy in order to

maintain its competitive advantage in the attraction of foreign capital. By the

mid-1970s, the government decided to promote investment in activities that

were more intensive in the use of technology (van Elkan, 1995). As a response

to the increasing demand of skilled workers, that rose as a consequence of the

emergence of these activities with higher value-added, the government also

incentivized human capital investments. With this purpose it granted finan-

cial incentives to the firms that invested in workers’ training, and the National

Wages Council devised a new wage structure that rewarded investments in

human capital (Grice and Drakakis-Smith, 1985).33 This new phase in Singa-

pore’s development which lasted until the beginning of the 1990s, resulted

highly successful and is clearly the best-known part of its economic success,

as affirmed by Neher (1999) it was the outcome of a perfect match between

human capital and foreign investment.

Besides intervening in the labor market to direct it in the same way of its

developmental path, the Singaporean government made another major inter-

vention in the economy by the creation of the Central Provident Fund (CPF),

which is a mandatory pension scheme and described as “… the greatest ele-

ment of government control over the economy” (Lingle and Wickman 1999, p.

68). The CPF was established in 1955, and started with mandatory contribu-

tion rates over the wage of 5% by the employees and 5% by the employers.

These rates increased steadily between 1968 and 1984 reaching a maximum

rate of 25% by both the employee and the employer. After the 1986 crisis the

employers’ rate was cut to 10%, then this rate was gradually increased and by

33 The NWC is in charge of producing the wage guidelines for the government intervention in the labor

market.

Mauricio Rodríguez Acosta 45

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

the beginning of the 1990s it was over 18%. Contributions from both employ-

ers and employees amounted to 40% of the wage by then. The impact of this

over private savings was huge, as savings through the CPF were a 50% of the

total private savings by the mid-1980s (Husain, 1995). This program might

explain why Singapore exhibits one of the highest savings rates in the world.

For instance, according to the IMF data, during the 1980s Singapore had an

average savings rate of around 40% of the GNP, against the 32% of Japan.

2. Economic Transformation

According to van Elkan (1995), Singapore’s development could be separated

into 4 phases, from its beginning dedicated to the entrepôt trade, to the vibrant

business and financial services center of the 1990s. In the following I stick to

her 4-phases timing of Singapore’s development. These phases are: i) Import-

Substitution Policies (1959-1965); ii) Export Orientation (1966-1973); iii)

Industrial Restructuring (1973-1984); iv) Economic Diversification (1985-).

The first phase was characterized by the need to abate unemployment and to

replace its declining entrepôt trade activities due to the emergence of direct

trade routes between East and West. Besides the positive shock in the size of

the local market derived from the merger with Malaysia, the industrialization

process was directly supported by the government with the implementation of

fiscal incentives to labor-intensive firms. These incentives were granted under

the Pioneer Industries Ordinance and the Industrial Expansion Ordinance intro-

duced in 1959. Along with the fiscal incentives, at the beginning of 1960s the

government decided to raise the tariffs and impose quotas to imports in order

to protect local industry and new investors from foreign competition. In order,

to coordinate its industrial policy the Economic Development Board (EDB) was

established in 1961 (van Elkan, 1995).

However, separation from Malaysia in 1965 and the withdrawal of Brit-

ish troops still emplaced in Singapore had a great impact over Singaporean

economy, caused by the reduction of its local market. As a consequence, the

import substitution strategy resulted insufficient to promote industry and to

reduce the two digits levels of unemployment. Thus, in the mid-1960s a new

phase in the development process started with the re-orientation of produc-

tion to rest of the world: the phase of export oriented industrialization began.

One of the most sounded policies followed to promote exports were the fiscal

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

incentives to exports introduced in 1967, these incentives consisted in pro-

viding 90% tax exemptions for export profits (Young, 1992).34 “In principle,

these (fiscal) incentives do not discriminate between domestic and foreign

investors. In practice, because they are usually linked to sizable investments

involving advanced technologies in new (targeted) industries, the overwhelm-

ing majority of participants are foreign” (Young 1992, p. 23). Thus, most of the

firms devoted to produce only for the local market ceased to exist as tariff and

quotas were removed; in the meantime, a large amount of foreign investment

attracted by the new industrial policy arrived to Singapore.

Besides the “directed” fiscal incentives, a clear government position towards

the labor market reinforced the strategy to attract the foreign investment

necessary to promote the export oriented industrialization, and to drive this

capital to labor-intensive activities in order to tackle the high unemployment

rate. This stage of Singapore’s development forced the government to commit

with the provision of a “cheap” and stable labor force (Kuruvilla, 1996). Gov-

ernment intervention to drive foreign investment into labor-intensive activi-

ties was a natural reaction to the needs of the moment: by the mid-1960s

Singapore had a high rate of unemployment, with a growing labor force as

female participation increased, and there was an abundance of unskilled labor

(Carling, 1995).

This stage of development generated positive results in two levels. First, the

government succeeded in the attraction of foreign investment, by promoting

Singapore as a country with a unique location, good infrastructure and low

wages (van Elkan, 1995). “Foreign direct investment in manufacturing, which

averaged less than S$30 million per annum during 1960-1965, and only S$73

million during 1966-1967, reached S$151 million in 1968, S$708 million in

1972” (Young, 1992, p. 23), which evidently had a major impact over Singa-

pore’s export activities. Second, the expansion of manufacturing in particular

in electronics, ship repair, petroleum refining, and textiles absorbed much of

the unemployment.35 According to Young (1992) employment in the textile

sector grew by more than 50% between 1971 and 1973. In this sense, the

export oriented industrialization was so successful, that workers started to be

34 According to van Elkan (1995), this reduction was granted under the Economic Expansion Incentives

Act, which reduced the corporate tax rate from 40 to 4 percent, for selected exporters.

35 These sectors were particularly favored by the new industrial policy (van Elkan, 1995).

Mauricio Rodríguez Acosta 47

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

scarce and wages began to rise. In fact, the government had to attract foreign

workers to satisfy the demand; by 1970 nonresident workers accounted for an

11% of the labor force (van Elkan, 1995).

As wages increased in Singapore and new “cheap” labor centers appeared in

South East Asia, the Singaporean government adopted a new turn in its devel-

opmental strategy. Given that unemployment was already abated, two new

(interconnected) priorities seemed to appear in the developmental agenda.

First, the emergence of other South East Asian countries with low cost of labor,

at the same time that Singapore experienced an increase of its wage and a

shortage of raw labor, forced the government to steer its labor market strat-

egy (“cheap” work force). Second, little technological advance was achieved in

the preceding stages; thus, Singapore had to promote the presence of foreign

investment directed to technology and human capital intensive activities, and

take advantage of this by achieving a technological catch-up.

This stage could be considered as Singapore’s transition from a low wage and

low value added manufacturing center, to a technological business and financial

services exporter. As described by van Elkan (1995), the government established

tax incentives both to firms that were involved in high-technology activities,

which were more –physical and human– capital intensive. The government

promoted the investment in new technologies, as well as the participation of

firms in the training of workers. Joint (public-private) training centers were

established to meet the increasing demand of skilled workers.

According to Carling (1995) three labor market policies were introduced to

match the industrial modernization: i) the NWC recommended an increase

in wages above productivity, and the employers’ contribution to the CPF was

increased; as the relative cost of labor increased, firms had incentives to use

capital instead of labor. “… average earnings in manufacturing rose by 81 per

cent between 1978 and 1982, giving in turn an additional incentive for firms

to substitute capital for labor, particularly in the fields of advanced technol-

ogy” (Grice and Drakakis-Smith 1985, p. 56). ii) As described above, the gov-

ernment promoted an improvement in workers skills. The Skills Development

Fund was established to finance training centers and on the job training. iii)

The government announced that by 1984 demand of non-Malaysian unskilled

foreign labor would be finished.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

This resolute position towards the transformation of economic activity, the

“second industrial revolution” as labeled by the government, had impressive

results: Between 1980 and 1981 the value-added per worker increased by

85% (Grice and Drakakis-Smith, 1985); by 1980 Singapore did not produce

any computer’s component, three years later it was the largest exporter of

disk drives in the world (Young, 1992).

After this rapid change in the economy, with a great impact on the labor sup-

ply, Singapore arrived to its final stage of development: a diversification of

its economic activity. High levels of human capital allowed Singapore to par-

ticipate in activities with even higher value-added, the business and financial

services, without abandoning its participation in the high-tech industry.

In order to allocate foreign capital in correspondence to each country’s char-

acteristics, the Johor-Riau-Singapore growth triangle, a joint initiative with

Malaysia and Indonesia was established in 1989. The idea behind this was

that firms established their labor-intensive activities in places with lower

wages (Malaysia and Indonesia) while human capital intensive activities, i.e.

the headquarters, were established in Singapore. “The basic advantage is that

Singapore contributes capital, transport and logistic facilities, whereas Indo-

nesia and Malaysia contribute abundant and cheap labor and land.” (Lingle

and Wickman, 1999, p. 61). Again the fiscal incentives strategy was used, tax

reliefs were emplaced to attract headquarters operations in Singapore.

This agreement also marked a general change Singapore’s position towards

foreign investment, since the government was no longer focused only in the

inflows, but also started to intervene in the direction of the outflows. Local

firms were incentivized to establish their operations abroad, outflows of direct

investment grew from S$2.2 million in 1976 to S$14.2 million in 1989 (van

Elkan, 1995). Nonetheless inflows of FDI continued to grow, according to Lin-

gle and Wickman (1999), by 1994 it accounted for S$4.3 billion against the

S$2.5 billion of 1985.

Since its independence Singapore experienced a considerable transformation

of its economic activity. In particular the 1970s and 1980s witnessed one of

the most rapid changes around the world. This transformation was clearly and

very well directed by the government, with interventions in the labor market,

and by providing fiscal incentives and protection to foreign investors. How-

Mauricio Rodríguez Acosta 49

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

ever, after the recession of the mid 1980s interventions in the labor market

were reduced, as these seemed to have some distortive effects on labor allo-

cation and might being responsible for the negative impact on inflation (Car-

ling, 1995; Lam, 2000; Young, 1992).

3. Openness

As stated by Rumbaugh (1995) Singapore is an open regime, not only for its

pro-free trade position and export-led development, but also for the low level

of restrictions on the capital account, that allowed it to attract the neces-

sary inflows of foreign capital to perform its industrial change. As economic

transformation took place during the 1970s and 1980s, Singapore also trans-

formed the nature of its exports allowing it to develop its trade from simple

re-exporting to high value-added and technologically intensive exports.

This rapid transformation on its exporting path is reflected in the facts that:

i) its external balance on goods and services increased steadily from a 20%

deficit in 1970 to a 15% surplus by the mid-1990s (WDI); ii) according to the

IMF data, in 1970 60% of Singapore’s exports were related with oil refinement

and 10% were Machinery and Equipment, while by 1993 the former repre-

sented only the 20% and the latter the 60% of total exports; and iii) between

1989 and 1999 high-technology exports grew from 36% to 60% of the total

exports of manufactured goods (WDI).

On the imports side, high dependency on international production after sepa-

ration from Malaysia, forced Singapore to have a very low level of tariffs on

imports, for instance, by 1967 the effective rate of protection for the manufac-

turing sector was just 6%, and by the beginning of the 1990s 96% of imports

entered to Singapore free of any restriction, which makes it a true free trade

regime (Rumbaugh, 1995). The obvious cause of this pro-free trade behavior is

the small size of Singapore’s internal market and its lack of natural resources.

On the one hand, it is impossible to produce domestically the necessary goods

and services to satisfy the internal demand, nowadays potable water has to be

imported from Malaysia, and as stated by Lingle and Wickman (1999) Singa-

pore is self-sufficient just in egg and poultry production. On the other hand,

internal demand is not sufficient to sustain a competitive modern economic

apparatus, thus for economic transformation to succeed Singapore’s had to

find foreign demanders for its production. The dependency on international

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

trade was fostered by the sudden reduction of internal market that separa-

tion from Malaysia in 1965 caused.

Besides maintaining low tariffs on imports, and promoting exports as dis-

cussed above, in the search for external markets, Singapore has had a very

active participation in bounding ties with the rest of the world. Despite its

tense relations with Malaysia by the time of the separation, Singapore man-

aged to enter as founding member of ASEAN in 1967; however, the interaction

with the neighbors remained relatively marginal until 1989 when Lee Kwan

Yew launched the Johor-Riau-Singapore growth triangle.36 This cooperation

agreement allowed Malaysia and Indonesia to take advantage of Singapore’s

capital, and permitted Singapore to access Malaysia’s and Indonesia’s cheap

labor, while the triangle itself had a favorable position as a link between East

and West. Moreover, Singapore was also founding member of APEC in 1982, and

in 1992 it was designated to host the Secretariat of this organization (Haas,

1999; Rumbaugh, 1995). Economic transformation and foreign policy also had

an impact on the trade regional pattern (See Table A3 in Appendix 1). Even

though from 1970 most of Singapore’s trade has always being done with ASEAN

countries, during the 1980s trade with the United States and Japan grew in

importance, due to the exports of high-technology goods to these countries.

Nonetheless, by the beginning of the 1990s trade with ASEAN countries gain

participation again as the rest of the South East Asian economies became

richer and started to import high value-added Singaporean goods and ser-

vices (Rumbaugh, 1995).

Singapore’s impressive levels of trade are evident when trade as percent-

age of GDP is calculated. According to Heston et al. (2009) since 1965 Sin-

gapore’s trade has always being more than 200% of the GDP, and by 1980

it reached the 400%, then it reduced to 300% during the mid-1980s due to

the world economic downturn, during the 1990s this percentage grew again

and by 2003 it reached its 1980 level (See Figure 6 in A3). These relative lev-

els of trade are result even more striking when compared with the rest of the

countries, since 1974 Singapore has had the largest level openness in Heston

36 The other founding members were: Indonesia, Malaysia, the Philippines, and Thailand. Currently it has

other five members: Brunei, Burma, Cambodia, Laos and Vietnam.

Mauricio Rodríguez Acosta 51

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

et al. (2009) sample, with the exception of 1983 and 1986 when it was sec-

ond behind Iraq.37

Regarding the capital inflows Singapore adopted an open position towards for-

eign investment, at the same time that it guaranteed the protection of foreign

investors’ interests, in order to attract the necessary capital for its economic

transformation and export-led development. In addition to the directed fis-

cal incentives, that promoted industrialization and exports in certain sectors

dominated by foreign investors, as described in the previous subsection, “the

government issued a solemn promise that no foreign company, under any pre-

text, would be nationalized” (Lingle and Wickman 1999, p. 65). The abolish-

ment of restrictions to capital movements that took place at the end of the

1970s, respect for foreigners’ property, and the directed tax reliefs, had a major

impact on Singapore’s inflows of Foreign Direct Investment (See Figure 8 in

A3). By 1972 net inflows of FDI accounted for 5.5% of the GDP, the aver-

age FDI between 1972 and 1979 was 6% of the GDP, for the 1980s this

average grew to 10% and for the 1990s it rose to 11.5%. Hence Singapore’s

strategy to attract foreign capital proved to be successful, not only for the

increase in FDI, but also because the Singaporean government interventions

in the labor market and its directed fiscal incentives drive foreign resources to

those sectors that needed to be developed (Grice and Drakakis-Smith, 1985,

Lam 2000; Young, 1992).

C. Final Remarks on Singapore – The Emergence of Good

Institutions

During the second half of the last century Singapore achieved one of the most

impressive economic performances in the world. This city-state that declared

its independence from British rule to merge with Malaysia and a couple of

years later was expelled from the Malaysian Federation, represented a clear

case of government planned development within a market system. Despite

the lack of own resources and the small size of its internal market, Singapore

managed to rapidly transform its economy as few countries had ever done. It

took advantage of its favorable location, to become one of the most if not the

most important business and financial center of South East Asia.

37 Since 1960, Singapore was never ranked under the third place in the level of openness according to

Heston et al. (2009) sample.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

The central pillar of Singapore’s rapid development has been its Political Sta-

bility. Political Stability let the government to intervene in several aspects

of Singaporeans life and in its economy, allowing it to promote Singapore’s

Economic Transformation and the export-led development. Nevertheless,

government intervention and policy continuity would never be achieved if:

i) Singaporeans did not internalize the fact that personal interests are less

important than the societal benefit, belief that is at the core of Lee’s Asian

Values (Lingle and Wickman, 1999; Neher, l999; Sim 2001); and ii) the devel-

opmental strategy did not bring the material welfare that legitimized the PAP’s

hegemony (Chua, 1994).

Of course political stability or more specifically, the continuous ruling of a

unique party is not necessarily good. In fact, the lack of political competi-

tion might be interpreted as vice rather than as a virtue. Nevertheless, the

PAP’s continuous hegemony came hand in hand with sound policies devoted

to implement a development plan based on the structural transformation of

the economy, while the Asian Values provided an ideological background and

served to legitimize the uncontested rule of the PAP (Barr, 2000).

An outstanding feature of the Singaporean case is that the institutional frame-

work that fostered the emergence of a developmental state, instead of a klep-

tocratic one, is actually the consequence of the PAP’s early policies, its strong

identity, and its ability to present itself as a good successor in power for the

British; it is therefore not so clear, that one can trace the strong commitment

of the Singaporean government with the protection of property rights and the

fight against corruption back to some pre-colonial or colonial heritage. This

does not mean that the British rule did not leave its footprint on important

constitutions such as the parliamentary character of the government. In fact,

one of the most significant inheritances of the colonial times was the emer-

gence of the post-war control apparatus through which the British tried to

keep the Singaporean and Malayan anti-imperialist movements in line (Trem-

ewan, 1991). This system of repression started by minimizing the role of trade

unions and labor activists, as a way to maintain labor costs down so that the

colonies remained as a steady source of income, so much needed by the weak-

ened post-war British Empire. While the British opted for a direct oppression

strategy in Malaysia, the city-state nature of Singapore called for a differ-

Mauricio Rodríguez Acosta 53

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

ent (less visible) approach. The strategy here was to handle the power to a

domestic party that could on the one hand, limit the rise of left wing parties,

in a more legitimate way than the direct intervention of colonial forces; and

on the other hand, stand by the capitalist interest of the British (Tremewan,

1991). This unique independence opportunity was seized by Mr Lee’s PAP, and

it explains the party’s commitment to the enforcement of property rights, as

well as its ability to “command” a free market economy.

However, issues such as the all-out fight against corruption, championed by

the mighty anti-corruption agency (Quah, 2001, 1995), and the strong com-

mitment with the protection of property rights is an important part of the

PAP’s legacy. Moreover, the lack of any natural resources and of any significant

means of production at the time of independence deterred the rise of a klepto-

cratic state; in other words, as there were no significant sources of taxation

the emergence of a parasitic elite in the first place was less likely. Neverthe-

less, this does not fully explain why the state continuously opted for the pro-

motion of efficiency as the economy developed (Hamilton-Hart, 2000). This

author emphasizes that both the design of the governmental apparatus as well

as some informal institutions framed the constant pursue for efficiency. For

instance, “performance-based measures of success are the norm in the public

sector and efficiency and effectiveness serve as legitimating mechanisms for

the government – possibly because of the lack of any other, such as a tradi-

tional ruling class” (p. 13). As to the informal institutions, a (professional or

academic) merit-based access to the inner circle of the government played a

fundamental role in maintaining the political elite composed of the most able

individuals (Hamilton-Hart, 2000).

Singapore also benefited from the “accidental” fact that after separation from

Malaysia it could never pursue a protectionist policy, forcing it to compete

with the rest of the world, and to rely on foreign investment to rapidly indus-

trialize its economy. In other words, Singapore developed a “defense mech-

anism” against its unfavorable initial conditions based on the attraction of

investment, accumulation of human capital, and the openness to international

trade; this “defense mechanism” resulted to be a highly successful collection

of development instruments.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

V. Conclusions

Initially one would think that Botswana and Singapore had no common fea-

tures on its “Miracles”. Botswana had a development centered on the prosperity

of one single sector (mining), while Singapore achieved its rapid develop-

ment by diversifying its economy. Botswana evolved from a poor economy to

a middle income economy, which implies that it is still at an early stage of

development, with the unresolved tasks of diversify its industry and of allow-

ing that economic prosperity reach the less favored individuals; on the other

hand Singapore is a rich-highly diversified economy, where individuals had

experienced a rapid improvement in its material welfare, and the economy is

devoted to the production of high value-added goods and services. In sum, if

we want to think in development as a gradual process, Singapore is various

stages ahead of Botswana.

However, when one looks into the details of each of these “miracles” some

common features arise:

• BeforeindependencebothcountrieswereunderBritishrule.Theyareboth

very young nations, Botswana became independent in 1966. Singapore

obtained its full autonomy after separating from Malaysia in 1965.

• Bothcountrieshaveaparliamentarypoliticalsystemwithasingleruling

political party, which has been in the power since independence. In fact,

these ruling parties leaded their respective independency movement, the

BDP in Botswana and the PAP in Singapore. Moreover, since independence

both countries were under the prolonged rule of their most prominent

statesmen, and founder leaders of the ruling parties. In the case of

Botswana Seretse Khama governed from 1966 to 1980; Lee Kuan Yew

was Singapore’s prime minister from 1959 to 1990. Both leaders played a

significant role in the development of their countries, by promoting a meri-

tocratic civil service. They also gave preponderance to social welfare above

the individual interest, and acted as bounding links between the common

citizens and the ruling parties.

Even though, Botswana’s and Singapore’s political systems do not really fit

into the western paradigm of a (full) Democracy (e.g. none of Held’s (1996)

models of democracy seems to describe neither Botswana’s nor Singapore’s

system) in neither case the hegemony of one party, and moreover of one

Mauricio Rodríguez Acosta 55

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

individual, has led to the emergence of predatory institutions. On the

contrary, in both countries good institutions, in the sense of Acemoglu et

al. (2002), were inherited or developed: protection of property rights, law

enforcement, and a meritocratic civil service are common characteristics

of the BDP’s and the PAP’s rule. In the case of Botswana these institutions

are likely to be strongly linked to their pre-colonial heritage; in particular,

the existence of the kgotlas seems to be a major determinant of the good

institutional quality in this country. As to Singapore, the PAP modeled itself

as a reasonable heir of the British in the political arena; this meant that,

first the PAP inherited the control apparatus established in the post-war

by the British, and second the PAP strongly committed to the protection

of private property and investors’ interests.

Gwartney et al. (2009) Economic Freedom Index presents a good piece of

evidence of the quality of the institutions in terms of the protection of prop-

erty rights is (see Table A1 in Appendix 1). In the area of “Legal Structure and

Protection of Property Rights”, Botswana obtained a rate similar to that of

the Nontropical countries mean, well above the mean of the Tropical and it

always was the highest-ranked African country; Singapore has always had

a very high rate, being the highest-ranked Tropical country.

• BotswanaandSingaporeheavilyreliedonFDItoachievetheir economic

transformation, the former to develop an industrialized mining sector and

the latter to diversify and foster its exports. Both succeeded in the attrac-

tion of foreign capital, precisely because both governments guaranteed the

protection of the investors’ interests, among other attractive factors such

as the fiscal incentives. Also, both countries achieved very large levels of

gross capital formation.

• BotswanaandSingaporehavehada“forced”pro-tradepolicythatallowed

them to avoid the negative effects of the import substitution policy. In the

case of Botswana the “obligation” was born in its early SACU member-

ship, where external tariffs were fixed by South Africa and there was no

protection for within the SACU trade. For Singapore, open trade came as

a solution to its lack of resources to satisfy the consumers’ demand and

to the small size of the domestic market that would impede the progress

of any competitive industry.

In this regard both countries were very well ranked in Gwartney et al.

(2009) Economic Freedom Index (see Table A1 in Appendix 1) in the area

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

of “Freedom to Trade Internationally”. For each year Singapore was always

ranked second in the sample, behind Hong Kong; and Botswana was in

the top 5 within the Tropical countries and the highest ranked African

country.

• Smallanddocile populationsfavored PoliticalStabilityand government

intervention in Economic Transformation and law enforcement. Docility

is embedded in the national culture. In the case of Batswana it is rooted

in the client-patron relations inherited from the Twsana ancient institu-

tions; for Singaporeans, confidence in the government and legitimacy of its

extended rule lies on the “social above individual interest” principle of the

Asian Values, and it is also rooted in the control apparatus inherited from

the British rule.

• Besidesthese positive features, bothcountries experienced a favorable

progress in the economic determinants of growth identified by the empiri-

cal literature. Table A2 in Appendix 1 presents the evolution of the main

determinants for the 1960s, 1970s and 1980s. Even though, these variables

do not account for the whole economic development of Botswana and

Singapore, they surely had a positive impact on these countries’ economic

achievements.

Though some of these features such as the position towards FDI and trade

(i.e. the proximate causes) might be replicated, others like the political sys-

tems, population size, and more fundamentally the institutional framework

(i.e. the fundamental cause) make of each of these two cases a unique event;

that is why I labeled them as “Miracles”. Botswana is rather exceptional in

the African context because it managed to avoid being yet another illustra-

tion of the resource curse; even though it had a perfect ingredient to be one,

its large allocation of diamonds. The quality of its institutions, above those of

most of the developing countries, played a central role in evading the disas-

ter (very much in the spirit of Mehlum et al., 2006). In the case of Singapore,

its uniqueness is characterized by its city-state structure and by its incredibly

rapid economic transformation; from its dark prospects in the mid-1960s it

grew itself into a world leading economy by the 1990s.

Mauricio Rodríguez Acosta 57

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

References

ACEMOGLU, D., JOHNSON, S., AND ROBINSON, J. (2001). “The colo-1.

nial origins of comparative development: An empirical investigation”,

American Economic Review, 91(5):1369-1401.

ACEMOGLU, D., JOHNSON, S., AND ROBINSON, J. (2002). “Reversal of 2.

fortune: geography and institutions in the making of the modern world

income distribution”, Quarterly Journal of Economics, 117(4):1231-

1294.

ACEMOGLU, D., JOHNSON, S., AND ROBINSON, J. (2003). “An African 3.

success story: Botswana”, In D. Rodrick (Ed.), Analytic Development

Narratives (pp. 80-119). Princeton: Princeton University Press.

ACEMOGLU, D., JOHNSON, S., AND ROBINSON, J. (2005a). “Institutions 4.

as the fundamental cause of long-run growth”, In P. Aghion and S.

Durlauf (Eds.), Handbook of Economic Growth (pp. 385-472). Amsterdam:

Elsevier.

ACEMOGLU, D., JOHNSON, S., AND ROBINSON, J. (2005b). “The rise of 5.

Europe: Atlantic trade, institutional change, and economic growth”,

American Economic Review, 95(3):546-579.

ALESINA, A., DEVLEESCHAUWER, A., EASTERLY, W., KURLAT, S., AND 6.

WACZIARG, R. (2003). “Fractionalization”, Journal of Economic Growth,

8:155-194.

ANONYMOUS. (2009, October). Diamonds are not forever; Botswana’s 7.

impatient president. The Economist, 393(8654):58.

BANERJEE, A., AND DUFLO, E. (2003). “Inequality and growth: What can 8.

the data say?”, Journal of Economic Growth, 8(3):267-299.

BARR, M. (2000). “Lee Kuan Yew and the “Asian values” debate”, 9. Asian

Studies Review, 24(3):309-334.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

BARRO, R. (1989). Economic growth in a cross section of countries 10.

(Working Paper Series 3120). NBER.

BARRO, R. (1996). Determinants of economic growth: A cross-country 11.

empirical study (Working Paper Series 5698). NBER

BARRO, R., AND LEE, J. (1994). “Sources of economic growth”, 12. Public

Policy, 40:1-46.

BARRO, R., AND LEE, J. (2000). International Data on Educational Attain-13.

ment: Updates and Implications (Working Papers 42). Harvard University,

Center for International Development. Data retrieved from: http://dvn.

iq.harvard.edu/dvn/dv/cid.

BEAULIER, S. (2003). “Explaining Botswana’s Success: The critical role 14.

of Post-Colonial Policy”, Cato Journal, 23(2):227-240.

BECK, T., CLARKE, G., GROFF, A., KEEFER, P., AND WALSH, P. (2001). “New 15.

tools and new tests in comparative political economy: The database of

political institutions”, World Bank Economic Review, 15:165-176.

BLOOM, D., AND WILLIAMSON, J., (1998). “Demographic transitions and 16.

economic miracles in emerging Asia”, World Bank Economic Review,

12(3):415-455.

BOSCHINI, A., PETTERSON, J., AND ROINE, J. (2007). “Resource curse or 17.

not: A question of appropriability”, Scandinavian Journal of Economics,

109(3):593-617.

BRUNNSCHWEILER, C., AND BULTE, E. (2008). “The resource curse 18.

revisited and revised: A tale of paradoxes and red herrings”, Journal of

environmental economics and management, 55(3):248-264.

CARLING, R. (1995). “Labor Market Policies”, in K. Bercuson (Ed.), 19. Singa-

pore a case study in rapid development (pp. 29-33). Washington, D. C.:

International Monetary Fund.

Mauricio Rodríguez Acosta 59

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

CARROLL, B., AND CARROLL, T. (1997). “State and ethnicity in Botswana 20.

and Mauritius: A democratic route to development?”, Journal of Devel-

opment Studies, 33(4):464-486.

Center for International Development (CID) at Harvard University. http://21.

www.cid.harvard.edu/ciddata/ciddata.html.

CHUA, B-H. (1994). “Arrested development: Democratisation in Singa-22.

pore”, Third World Quarterly, 15(4):655-688.

CURRY, R. (1987). “Botswana’s macroeconomic management of its 23.

Mineral-Based growth: It used mining revenues for development and

services but must now broaden the beneficiaries”, American Journal of

Economics and Sociology, 46(4):473-488.

EASTERLY, W., KREMER, M., PRITCHETT, L., AND SUMMERS, L. (1993). 24.

“Good policy or good luck? Country growth performance and temporary

shocks”, Journal of Monetary Economics, 32,459-483.

ELKAN, R. VAN (1995). “Singapore’s development strategy”, in K. 25.

Bercuson (Ed.), Singapore a case study in rapid development (pp. 11-19).

Washington, D. C.: International Monetary Fund.

FAWCUS, P., AND TILBUY, A. (2000). 26. Botswana: The road to independence.

Gaborone: Botswana Society and Pula Press.

FEAGIN, J., ORUM, A., S., AND JOBERG, G. (Eds.) (1991). 27. A case for case

study. Chapel Hill, NC: University of North Carolina Press.

GALLUP, J., SACHS, J., AND MELLINGER, A. (1999). Geography and 28.

economic growth (Working Papers 1). Harvard University, Center for

International Development.

GALLUP, J., SACHS, J., AND MELLINGER, A. (2000). “Climate, coastal 29.

proximity, and development”, in G. Clark, M. Feldman, and M. Gertler

(Eds.), Oxford Handbook of Economic Geography (pp. 169-195). Oxford,

UK: Oxford University Press.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

GARRISON, C., AND LEE, F-Y. (1995). “The effect of macroeconomic 30.

variables on economic growth rates: A cross-country study”, Journal of

Macroeconomics, 17(2):303-317.

GHEMAWAT, P., AND LENK. T (1990). “De beers consolidated mines Ltd. 31.

A”, Harvard Business School, Case 9:391-076.

GOOD, K. (1992). “Interpreting the exceptionality of Botswana”, 32. Journal

of Modern African Studies, 30(1):69-95.

GOOD, K. (2005). “Resource dependency and its consequences: The 33.

costs of Botswana’s shining gems”, Journal of Contemporary African

Studies, 23(1):27-50.

GRICE, K., AND DRAKAKIS-SMITH, D. (1985). “The role of the state in 34.

shaping development: Two decades of growth in Singapore”, Transactions

of the Institute of British Geographers, New Series, 10(3):347-359.

GUPTA, D., MADHAVAN, M., AND BLEE, A. (1998). “Democracy, economic 35.

Growth and political instability: An integrated perspective”, Journal of

Socio-Economics, 27(5):587-611.

GWARTNEY, J., LAWSON, R., GRUBEL, H., DE HAAN, J., STURM, J-E., AND 36.

ZANBERG, E. (2009). Economic freedom of the world: 2009 Annual Report.

Data retrieved from: http://www.freetheworld.com/release.html.

GYLFASON, T. (2001). “Natural resources, education, and economic 37.

development”, European Economic Review, 45:847-859.

GYLFASON, T., AND ZOEGA, G. (2002). Inequality and economic growth: 38.

Do natural resources matter? (Working Paper Series 712). CESifo.

HAAS, M. (1999). “A political history”, In M. Haas (Ed.), 39. The Singapore

Puzzle (pp. 15-38). Westport: Greenwood Publishing Group.

HALL, R., AND JONES, C. (1999). “Why do some countries produce 40.

so much more output per worker than others?”, Quarterly Journal of

Economics, 114(1):83-116.

Mauricio Rodríguez Acosta 61

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

HALTER, D., OECHSLIN, M., AND ZWEIMÜLLER, J. (2011). Inequality and 41.

growth: The neglected time dimension (Working Papers 507). University

of Zurich, Institute for empirical research in economics.

HAMILTON-HART, N. (2000). “The Singapore state revisited”, 42. The Pacific

Review, 13(2):195-216.

HELD, D. (1996). 43. Models of democracy. Cambridge, UK: Polity Press.

HENISZ, W. (2000). “The institutional environment for economic growth”, 44.

Economics and Politics, 12(1):1-31.

HESTON, A., SUMMERS R., AND ATEN, B. (2009). Penn World Table 45.

Version 6.3, Center for International Comparisons of Production, Income

and Prices at the University of Pennsylvania. Data retrieved form: http://

pwt.econ.upenn.edu/php_site/pwt_index.php.

HILL, C. (1991). “Managing commodity booms in Botswana”, 46. World

Development, 19(9):1185-1196.

HUSAIN, A. (1995). “Determinants of private saving in Singapore”, in K. 47.

Bercuson (Ed.), Singapore a case study in rapid development (pp. 34-39).

Washington, D. C.: International Monetary Fund.

KURUVILLA, S. (1996). “Linkages between industrialization strategies 48.

and industrial relations/human resource policies: Singapore, Malaysia,

the Philippines, and India”, Industrial and Labor Relations Review,

49(4):635-657.

LAM, N. (2000). “Government intervention in the economy: A compara-49.

tive analysis of Singapore and Hong Kong”, Public Administration and

Development, 20:397-421.

LEITH, J. (2005). 50. Why Botswana prospered. Montreal: McGill-Queen’s

University Press.

LINGLE, C., AND WICKMAN, K. (1999). “Political economy”, in M. Haas 51.

(Ed.), The Singapore puzzle (pp. 15-38). Westport: Greenwood Publishing

Group.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

MADDISON, A. (2008). Historical statistics on world economy, 1-2006AD. 52.

http://www.ggdc.net/maddison/.

MARSHALL, M., AND JAGGERS, K. (2008). “Polity IV Project: Political 53.

regime charac-teristics and transitions”, Electronic resource, 1800-

2008.

MARTIN, P. (2008). “A closer look at Botswana’s development: The role 54.

of institutions”, Paterson Review, 9:35-54.

MEHLUM, H., MOENE, K., AND TORVIK, R. (2006). “Institutions and the 55.

resource curse”, Economic Journal, 116:1-20.

MIKESELL, R. (1997). “Explaining the resource curse, with special refer-56.

ence to mineral-exporting countries”, Resource Policy, 23(4):191-199.

MODISE, M. (2000). “Management of mineral revenues: The Botswana 57.

experience”, Workshop on growth and diversification in mineral econo-

mies. Cape Town, South Africa: UNCTAD.

NEHER, C. (1999). “The case for Singapore”, in M. Haas (Ed.), 58. The Singa-

pore puzzle (pp. 39-54). Westport: Greenwood Publishing Group.

NORTH, D. (1990). 59. Institutions, institut ional ch ange an d econom ic

performance. Cambridge: Cambridge University Press.

PLOEG, F. VAN DER (2011). “Natural resources: Curse or blessing?”, 60.

Journal of Economic Literature, 49(2):366-420.

PLOEG, F. VAN DER, AND POELHEKKE, S. (2010). “The pungent smell of 61.

“red herrings”: Subsoil assets, rents, volatility and the resource curse”,

Journal of Environmental Economics and Management, 60(1):44-55.

QUAH, J. (1995). “Controlling corruption in city-states: A compara-62.

tive study of Hong Kong and Singapore”, Crime, Law & Social Change,

22:391-414.

Mauricio Rodríguez Acosta 63

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

QUAH, J. (2001). “Combating corruption in Singapore: what can 63.

be learned?”, Journal of Contingencies and Crisis Management,

9(1):29-35.

ROBINSON, J. (2009). Botswana as a role model for country success64.

(Research Papers 2009/40). UNU-WIDER.

RODRIK, D., SUBRAMANIAN, A., AND TREBBI, F. (2004). “Institutions rule: 65.

The primacy of institutions over geography and integration in economic

development”, Journal of Economic Growth, 9:131-165.

ROMER, P. (1986). “Increasing returns and long-run growth”, 66. Journal of

Political Economy, 94:1002-1037.

ROMER, P. (1990). “Endogenous technological change”, 67. Journ al of

Political Economy, 98(5):71-102.

RUMBAUGH, T. (1995). “Singapore’s experience as an open economy”, 68.

in K. Bercuson (Ed.), Singapore a case study in rapid development (pp.

34-39). Washington, D. C.: International Monetary Fund.

SACHS, J. (2003). Institutions don’t rule: Direct effects of geography on 69.

per capita income (Working Paper Series 9490). NBER.

SACHS, J., AND MALANEY, P. (2000). “The economic and social burden 70.

of Malaria”, Nature, 415:680-685.

SACHS, J., AND WARNER, A. (1995a). Economic convergence and 71.

economic policies (Network Studies and Analyses 35). CASE.

SACHS, J., AND WARNER, A. (1995b). Natural resource abundance and 72.

economic growth (Working Paper Series 5398). NBER.

SACHS, J., AND WARNER, A. (1999). “The big push, natural resource 73.

booms and growth”, Journal of Development Economics, 59:43-76.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

SACHS, J., AND WARNER, A. (2001). “Natural resources and economic 74.

development. The curse of natural resources”, European Economic

Review, 45:827-838.

SALA-I-MARTIN, X., DOPPELHOFER, G., AND MILLER, R. (2004). “Determi-75.

nants of long-term growth: A bayesian averaging of classical estimates

(BACE) approach”, American Economic Review, 94(4):813-835.

SAMATAR, I. (1997). “Leadership and ethnicity in the making of African 76.

state models: Botswana versus Somalia”, Third World Quarterly,

18(4):687-707.

SAMBANIS, N. (2004). “Using case studies to expand economic models 77.

of civil war”, Perspectives on Politics, 2(2):259-279.

SEN, A. (1988). “The concept of development”, in H. Chenery and T. N. 78.

Srinivasan (Eds.), Handbook of Development Economics I (pp. 9-26).

Elsevier Science Publishers B.V.

SIM, S-F. (2001). “Asian values, authoritarianism and capitalism in 79.

Singapore”, The Public, 8(2):45-66.

TALEB, N. N. (2008). 80. El cisne negro/ The black swan: El impacto de lo

altamente improbable. Barcelona: Paidós.

TAYLOR, I. (2002). “Botswana’s developmental state and the politics of 81.

legitimacy”. Mimeo.

TIRUNEH, G. (2004). “Democratic development in Botswana and Tunisia: 82.

A comparative analysis”, Journal of Contemporary African Studies,

22(1):13-28.

TREMEWAN, C. (1991). The political economy of social control in Singa-83.

pore. Doctoral Thesis, University of Canterbury. Retrived from: http://

ir.canterbury.ac.nz/handle/10092/4612.

TSIE, B. (1996). “The political context of Botswana’s development perfor-84.

mance”, Journal of Southern African Studies, 22(4):599-616.

Mauricio Rodríguez Acosta 65

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

UNDP. (2005). 85. Botswana human development report: Harnessing science

and technology for human development. Gaborone: UNDP.

86. WORLD BANK (n. d.). World Development Indicators.

YIN, R. (2003a). 87. Applications of case study research. Thousand Oaks,

CA: Sage.

YIN, R. (2003b). 88. Case study research. Designs and methods. Thousand

Oaks, CA: Sage.

YOUNG, A. (1992). “A tale of two cities: Factor accumulation and tech-89.

nical change in Hong Kong and Singapore”, NBER Macroeconomics

Annual, 7:13-54.

ZULETA, H. (2008). Seasons, savings and GDP (Documentos de Trabajo 90.

32). Universidad del Rosario, Facultad de Economía.

Appendix 1

Table A1. Economic Freedom Index

Area 1980 1985 1990 1995

Legal Structure and Security

of Property Rights

Botswana 6.75 6.71 6.79

Singapore 9.48 8.45 8.45 8.31

Rest of Tropicala4.11 3.95 4.13 4.57

Nontropical 6.64 6.75 7.08 6.77

Rest of Africab3.99 4.02 4.39

Freedom to Trade

Internationally

Botswana 7.11 7.07 7.33 6.77

Singapore 9.29 9.70 9.70 9.68

Rest of Tropicala4.76 4.69 5.31 6.18

Nontropical 6.22 6.12 6.41 7.02

Rest of Africab4.44 4.44 4.78 5.58

a Excluding Botswana and Singapore. b Excluding Botswana. Both areas are graded from 0 to 10, being 10

the maximum level of freedom and 0 the minimum.

Source: Gwartney et al. (2009). Author’s calculations.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

Table A2. Economic Determinants of Growth

Variable Measure Sign Source Botswana Singapore

1960s 1970s 1980s 1960s 1970s 1980s

Government

size

G/GDP (-) WDI 22.63% 18.43% 24.34% 10.32% 11.05% 11.22%

Investment I/GDP (+) WDI 17.38% 42.54% 29.96% 21.50% 40.49% 42.55%

Education % of unschooled

> 25 years

(+) BL 72.10% 69.10% 52.40% 57.50% 44.20% 39.50%

Inflation CPI variation (-) WDI 11.53% 10.81% 5.91% 2.79%

Openness (X+M)/GDP (+) PT 76.1% 106.7% 120% 287.8% 301.3% 360%

Dependency

Index

Rest of pop/WAP (-) WDI 1.05 1 0.95 0.83 0.6 0.42

WDI: World Development Indicators; BL: Barro and Lee (2000); PT: Heston et al. (2009).

Source: Author’s calculations.

Table A3. Singapore’s Regional Trade Pattern (% of Total Trade)

1970 1975 1980 1985 1990

ASEAN 26.45 18.71 25.16 23.23 21.29

U.S. 10.32 14.84 12.90 16.77 18.06

Japan 14.84 13.55 12.90 12.90 14.84

Source: Rumbaugh (1995) – IMF.

Figure 1. Real GDP per capita Growth (1960-2006)

0.001

0.002

0.003

0.004

Density

0 200 400 600 800

Growth (%)

Tropical Nontropical

Source: Maddison (2008). Author’s calculations.

Mauricio Rodríguez Acosta 67

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

Figure 2. Real GDP per capita

0.0002

0.0004

0.0006

Density

0 10000 20000 30000

Real GDP per capita (1990 USD)

Tropical Nontropical

1960

0.0002

0.0004

0.0006

Density

010000 20000 30000

Real GDP per capita (1990 USD)

Tropical Nontropical

2006

Source: Maddison (2008). Author’s calculations.

Figure 3. Fixed Effects

Botswana

Singapore

0.005

0.01

0.015

0.02

Density

-100 -50 0 50

Fixed Effects

Tropical Nontropical

Source: Author’s calculations.

Tropical Economic Miracles

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

Appendix 2. Figures Botswana

Figure 1. RGDP annual growth (%)-Botswana Figure 2. Inflation CPI (%)-Botswana

Figure 3. Economic Structure (% GDP)-Botswana Figure 4 . Gross Capital Formation

(% GDP)-Botswana

Figure 5. Exports and Imports

(% GDP)-Botswana

Figure 6. External Balance and Trade

(% GDP)-Botswana

Figure 7. Dependency

(Rest of pop./WAP)-Botswana

-3%

12%

17%

22%

10%

12%

14%

16%

18%

10%

20%

30%

40%

50%

60%

20%

40%

60%

80%

Exports Imports -50%

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

1975 1961

1966

1971

1976

1981

1986

1991

1996

2001

2006

1980

1985

1990

1995

2000

2005

1975

1980

1985

1990

1995

2000

2005

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

50%

100%

150%

External Balance Trade

0.4

0.6

0.8

1.0

1.2

20%

40%

60%

80%

Agriculture Industry

Source: WDI-World Bank.

Mauricio Rodríguez Acosta 69

D E S A R R O . S O C . NO. 72, B O G O T Á , S E G U N D O SE M E S T R E D E 2013, P P . 11-69, I S S N 0120-3584

Appendix 3. Figures Singapore

Figure 1. RGDP annual growth (%)-Singapore Figure 2. Inflation CPI (%)-Singapore

Figure 3. Economic Structure (% GDP)-Singapore Figure 4. Gross Capital Formation

(% GDP)-Singapore

Figure 5. External Balance (% GDP)-SingaporeFigure 6. Trade (% GDP)-Singapore

Source: Heston et al. (2009).

Figure 7. Dependency Index

(Restof pop./WAP)-Singapore

Figure 8. Foreign Direct Investment

(net inflows % of GDP)-Singapore

-10%

1961

1966

1971

1976

1981

1986

1991

1996

2001

2006

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

1972

1977

1982

1987

1992

1997

2002

2007

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

1965

1970

1975

1980

1985

1990

1995

2000

2005

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

1975

1980

1985

1990

1995

2000

2005

1961

1966

1971

1976

1981

1986

1991

1996

2001

2006

-5%

10%

15%

-5%

10%

15%

20%

25%

10%

20%

30%

40%

50%

60%

70%

Industry, value added (% of GDP)

Services, etc., value added (% of GDP)

-30%

-20%

-10%

10%

20%

30%

40%

100%

200%

300%

400%

500%

0.3

0.4

0.5

0.6

0.7

0.8

0.9

10%

15%

20%

25%

10%

20%

30%

40%

50%

60%

Source: WDI-World Bank.

Los suscriptores pueden acceder a la versión informada de este caso.

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Accede a más de 120 millones de documentos de más de 100 países, incluida la mayor colección de legislación, jurisprudencia, formularios y libros y revistas legales.
Miles de fuentes de datos

Actualizado cada día, vLex reúne contenido de más de 750 proveedores dando acceso a más de 2500 fuentes legales y de noticias de los proveedores líderes del sector.
Encuentra rápidamente lo que necesitas

Gracias a una avanzada Inteligencia Artificial desarrollada por vLex, enriquecemos editorialmente la información legal para hacerla accesible, incluyendo traducción instantánea a 14 idiomas para garantizar el acceso a la información y la capacidad de efectuar búsquedas comparativas.
Más de 2 millones de usuarios registrados

Fundado hace más de 20 años, vLex proporciona contenido de alta calidad y un servicio muy intuitivo para abogados, despachos, instituciones gubernamentales y universidades de derecho alrededor del mundo

Los suscriptores pueden ver una lista de toda la legislación y jurisprudencia citada de un documento.

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Accede a más de 120 millones de documentos de más de 100 países, incluida la mayor colección de legislación, jurisprudencia, formularios y libros y revistas legales.
Miles de fuentes de datos

Actualizado cada día, vLex reúne contenido de más de 750 proveedores dando acceso a más de 2500 fuentes legales y de noticias de los proveedores líderes del sector.
Encuentra rápidamente lo que necesitas

Gracias a una avanzada Inteligencia Artificial desarrollada por vLex, enriquecemos editorialmente la información legal para hacerla accesible, incluyendo traducción instantánea a 14 idiomas para garantizar el acceso a la información y la capacidad de efectuar búsquedas comparativas.
Más de 2 millones de usuarios registrados

Fundado hace más de 20 años, vLex proporciona contenido de alta calidad y un servicio muy intuitivo para abogados, despachos, instituciones gubernamentales y universidades de derecho alrededor del mundo

Los suscriptores pueden ver una lista de todos los documentos que citan el caso

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Accede a más de 120 millones de documentos de más de 100 países, incluida la mayor colección de legislación, jurisprudencia, formularios y libros y revistas legales.
Miles de fuentes de datos

Actualizado cada día, vLex reúne contenido de más de 750 proveedores dando acceso a más de 2500 fuentes legales y de noticias de los proveedores líderes del sector.
Encuentra rápidamente lo que necesitas

Gracias a una avanzada Inteligencia Artificial desarrollada por vLex, enriquecemos editorialmente la información legal para hacerla accesible, incluyendo traducción instantánea a 14 idiomas para garantizar el acceso a la información y la capacidad de efectuar búsquedas comparativas.
Más de 2 millones de usuarios registrados

Fundado hace más de 20 años, vLex proporciona contenido de alta calidad y un servicio muy intuitivo para abogados, despachos, instituciones gubernamentales y universidades de derecho alrededor del mundo

Los suscriptores pueden ver una lista de todas los versiones de la ley con las distintas afectaciones

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Accede a más de 120 millones de documentos de más de 100 países, incluida la mayor colección de legislación, jurisprudencia, formularios y libros y revistas legales.
Miles de fuentes de datos

Actualizado cada día, vLex reúne contenido de más de 750 proveedores dando acceso a más de 2500 fuentes legales y de noticias de los proveedores líderes del sector.
Encuentra rápidamente lo que necesitas

Gracias a una avanzada Inteligencia Artificial desarrollada por vLex, enriquecemos editorialmente la información legal para hacerla accesible, incluyendo traducción instantánea a 14 idiomas para garantizar el acceso a la información y la capacidad de efectuar búsquedas comparativas.
Más de 2 millones de usuarios registrados

Fundado hace más de 20 años, vLex proporciona contenido de alta calidad y un servicio muy intuitivo para abogados, despachos, instituciones gubernamentales y universidades de derecho alrededor del mundo

Los suscriptores pueden ver todas las afectaciones de un caso

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Accede a más de 120 millones de documentos de más de 100 países, incluida la mayor colección de legislación, jurisprudencia, formularios y libros y revistas legales.
Miles de fuentes de datos

Actualizado cada día, vLex reúne contenido de más de 750 proveedores dando acceso a más de 2500 fuentes legales y de noticias de los proveedores líderes del sector.
Encuentra rápidamente lo que necesitas

Gracias a una avanzada Inteligencia Artificial desarrollada por vLex, enriquecemos editorialmente la información legal para hacerla accesible, incluyendo traducción instantánea a 14 idiomas para garantizar el acceso a la información y la capacidad de efectuar búsquedas comparativas.
Más de 2 millones de usuarios registrados

Fundado hace más de 20 años, vLex proporciona contenido de alta calidad y un servicio muy intuitivo para abogados, despachos, instituciones gubernamentales y universidades de derecho alrededor del mundo

Los suscriptores pueden acceder a una representación visual de un caso y sus relaciones con otros casos. Como alternativa a las listas de casos, el Mapa de Precedentes facilita la tarea de encontrar que caso tienes más relevancia en tu búsqueda. Al mismo tiempo también tendrás una referéncia del grado de aceptación del caso.

Request your trial

¿Por qué debería darme de alta en vLex?

Más de 100 países

Accede a más de 120 millones de documentos de más de 100 países, incluida la mayor colección de legislación, jurisprudencia, formularios y libros y revistas legales.
Miles de fuentes de datos

Actualizado cada día, vLex reúne contenido de más de 750 proveedores dando acceso a más de 2500 fuentes legales y de noticias de los proveedores líderes del sector.
Encuentra rápidamente lo que necesitas

Gracias a una avanzada Inteligencia Artificial desarrollada por vLex, enriquecemos editorialmente la información legal para hacerla accesible, incluyendo traducción instantánea a 14 idiomas para garantizar el acceso a la información y la capacidad de efectuar búsquedas comparativas.
Más de 2 millones de usuarios registrados

Fundado hace más de 20 años, vLex proporciona contenido de alta calidad y un servicio muy intuitivo para abogados, despachos, instituciones gubernamentales y universidades de derecho alrededor del mundo

Los suscriptores pueden ver una lista de resultados conectados a su documentos vía tópicos y citas encontradas por Vincent.

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Accede a más de 120 millones de documentos de más de 100 países, incluida la mayor colección de legislación, jurisprudencia, formularios y libros y revistas legales.
Miles de fuentes de datos

Actualizado cada día, vLex reúne contenido de más de 750 proveedores dando acceso a más de 2500 fuentes legales y de noticias de los proveedores líderes del sector.
Encuentra rápidamente lo que necesitas

Gracias a una avanzada Inteligencia Artificial desarrollada por vLex, enriquecemos editorialmente la información legal para hacerla accesible, incluyendo traducción instantánea a 14 idiomas para garantizar el acceso a la información y la capacidad de efectuar búsquedas comparativas.
Más de 2 millones de usuarios registrados

Fundado hace más de 20 años, vLex proporciona contenido de alta calidad y un servicio muy intuitivo para abogados, despachos, instituciones gubernamentales y universidades de derecho alrededor del mundo

Tropical Economic Miracles

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Miles de fuentes de datos

Encuentra rápidamente lo que necesitas

Más de 2 millones de usuarios registrados

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Miles de fuentes de datos

Encuentra rápidamente lo que necesitas

Más de 2 millones de usuarios registrados

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Miles de fuentes de datos

Encuentra rápidamente lo que necesitas

Más de 2 millones de usuarios registrados

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Miles de fuentes de datos

Encuentra rápidamente lo que necesitas

Más de 2 millones de usuarios registrados

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Miles de fuentes de datos

Encuentra rápidamente lo que necesitas

Más de 2 millones de usuarios registrados

¿Por qué debería darme de alta en vLex?

Más de 100 países

Miles de fuentes de datos

Encuentra rápidamente lo que necesitas

Más de 2 millones de usuarios registrados

Regístrate para una prueba y aprovechar al máximo nuestro servicio, incluidos estos beneficios.

¿Por qué debería darme de alta en vLex?

Más de 100 países

Miles de fuentes de datos

Encuentra rápidamente lo que necesitas

Más de 2 millones de usuarios registrados