Explaining Botswana's Success: The Critical Role of Post-Colonial Policy.

Most economists agree that private property, the rule of law, and free markets are crucial for economic development, but there is still disagreement over what other factors determine why some nations are rich while others are poor. Jeffrey Sachs (2001) and Sachs and Warner (1995, 1997) argue that climate, geography, proximity to the coast, and distance from the equator are significant determinants of economic growth (see also Diamond 1997). By contrast, North (1981), North and Thomas (1973), and Rosenberg and Birdzell (1986) insist that a particular set of institutions--namely, polycentric governance, the rule of law, and a rich respect for private property--have led to the West growing rich. More recently, Acemoglu, Johnson, and Robinson (2001), hereafter AJR, argue that geography and demography matter because they affect the quality of institutions: During colonialism, low-quality institutions were established in regions with high-population densities and low life expectancies. By contrast, regions with low-population densitites and high life expectancies established better institutions. Thus, sub-Saharan Africa was left with bad institutions because colonists in Africa faced low life expectancies and tried to colonize areas with large populations. The incentive for colonists was to expropriate rents as quickly as possible rather than think of the long run.