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The Independent Institute
Commentary

U.S. Recognition Doesn’t Bode Well for Somalia


The United States government’s recent recognition of Somalia’s new government is no cause for hope for the Somali people. Official recognition brings official largess in the form of development aid that will do little to promote development. Worse yet, recognition might help to legitimize what is likely to be yet another oppressive African government.

In a White House ceremony with Hassan Sheikh Mohamud, the recently elected president of Somalia, Secretary of State Hillary Clinton said, “I’m very pleased that... we are taking this historic step of recognizing the government.” Most news stories have reported the event as a good sign for progress in the region. Unfortunately, official recognition is likely to do more harm than good for the average Somali.

President Mohamud and his government will benefit from official recognition because they are now eligible for official development grants from the World Bank, IMF, and USAID. More than $2 trillion has been given in official development assistance since 1950, but there is little to show for it other than flush Swiss bank accounts for former government officials.

The effective and appropriate dissemination of aid is only a small part of the problem. The real problem is that development aid funds are driven by proximate causes of economic growth: infrastructure, education, investment, etc; while it perverts the fundamental cause of growth—good institutions that secure economic freedom. Countries that have more economic freedom have higher standards of living, higher rates of growth, and do better on just about every measure that people care about.

Development economist P.T. Bauer contended for decades that development aid politicized economic life and discouraged markets. More recently, co-author Matt Ryan and I found that higher levels of aid led countries to have lower levels of economic freedom after receiving the aid.

Isn’t official recognition at least a sign that Somalia is moving towards establishing a more stable state? Maybe, but we should be cautious. Somalia’s previous government was predatory and non-democratic. An oppressive government is not necessarily better than when no government exists at all. Why should we expect this new government to be any different?

Governments repress economic freedom in Africa more than on any other continent. As measured by the Index of Economic Freedom, the average sub-Saharan country is classified as mostly unfree. Their average Polity IV score, which measures how democratic or autocratic a country is, falls below 3 (like present-day Iraq), which is far shy of the index threshold of 6 to be classified as broadly democratic.

An oppressive government is therefore not necessarily more civilly advanced than when no government exists at all. Contrary to popular perception in the United States, Somalia has not been in a state of chaos since its government collapsed in the early 1990s. Rather, Somalia has relied on its customary legal system, in lieu of a state, to provide law and order.

Law is based on customs and clan elders make judgments on cases and mediate disputes between members of different clans. Rather than jailing wrongdoers, the guilty party must pay restitution to the plaintiff. There is no legislature that passes laws. Instead, law is “discovered” through the dispute resolution process. Indeed, it’s not entirely unlike the early English common law system that our legal system evolved from.

Somalia’s institutional environment in its state of anarchy is far from perfect. But co-authors Ryan Ford, Alex Nowrasteh and I found that it outperformed Somalia’s previous government and the governments of many other African countries between 1990 and 2005 when we conducted our study.

Our research examined 13 different measures, including life expectancy, immunization and disease rates, access to various telecommunications, and access to water/sanitation. In 2005, Somalia ranked in the top 50 percent of African countries in six of our 13 measures, and ranked near the bottom in only three. This compares favorably with circumstances in 1990, when Somalia last had a government and was ranked in the bottom 50 percent for all seven of the measures for which we had that year’s data.

Perhaps most impressive is Somalia’s change in life expectancy. During the last five years of government rule, life expectancy fell by two years, but since state collapse, it actually has increased by five years. Only three African countries can claim a bigger improvement.

The United States government’s recognition of the Somali government opens the door to money that could help entrench the political elite of the new government. Unfortunately, it does not guarantee that the new government will provide the protection of individual rights and economic freedoms that are necessary for sustained development.


Benjamin Powell is a Senior Fellow at The Independent Institute, Director of the Free Market Institute at Texas Tech University, and former President of the Association of Private Enterprise Education. Dr. Powell received his Ph.D. in economics from George Mason University. He has been Assistant Professor of Economics at San Jose State University, Associate Professor of Economics at Suffolk University, a Fellow with the Mercatus Center's Global Prosperity Initiative, and a Visiting Research Fellow with the American Institute for Economic Research. He is also the editor of the Independent Institute books, Housing America: Building out of Crisis and Making Poor Nations Rich.