The Cancer of Colonialism: An Analysis of Economic Asymmetry Between France and the Maghreb
Evan Schmidt
Master’s Thesis – Utrecht School of Economics
29 June 2006
Table of Contents
Chapter I: Introduction
Chapter II: Colonialism’s Legacy of Uneven Development
A. Defining the Maghreb
B. French and Maghrebi Pre-Colonial Socio-political and Socio-economic Systems
i. France
ii. The Maghreb
a. Algeria
b. Tunisia
c. Morocco
C. Colonial Socio-political and Socio-economic Consequences of Colonialism
i. Understanding the Origins of French Colonization in Algeria
ii. Algeria
iii. Tunisia
iv. Morocco
D. Independence Movements
i. Algeria
ii. Tunisia
iii. Morocco
Chapter III: Theories of Geography and Economic Growth
A. First-nature Geography
i. The Maghreb
a. Algeria
b. Tunisia
c. Morocco
ii. France
B. Second-nature Geography
Chapter IV: The “Reversal of Fortune” and Economic Growth
A. What is the “Reversal of Fortune?”
B. Theoretical Application to France’s Colonization of the
Maghreb
i. Was Algeria a Settler Colony, an Extractive State, or
Something in Between?
ii. The Purpose of Infrastructural Development
iii. Missing Industrialization
iv. Criticism of the Acemoglu et al. Argument
C. Connecting the “Reversal” with Post-Independence
Economic Instability
Chapter V: How to Start Reversing the “Reversal”
Chapter I: Introduction
“
We are condemned to live together.”
[1]― Aziz Kessous, Algerian Muslim Socialist, referring to France and Algeria (1955)
It is perhaps one of the saddest stories in the history of colonization. In the summer of 1830, French forces brutally seized the Algerian capital Algiers in what would become the first of 124 years of French rule in the once prosperous North African country. Soon, words like “rape,” “torture,” and “forced labor” would become synonymous with the French presence in Algeria. However, the colonial period was not entirely a negative experience for Algeria. For example, the French provided Algeria with the construction of a vast techno-economic and social infrastructure and helped to consolidate economic ties with the rest of Europe.
Although the scope and duration would be different from the Algerian experience, French colonization eventually moved to Tunisia in the east (1881) and to Morocco in the west (1912). Even though these two countries missed the violence and virtually absorption that occurred in Algeria, they too faced other negative effects from colonial rule, including the seizure of land and disproportionate taxation. On the other hand, they also saw a rapid modernization of their economic infrastructure that expanded the potential of their economies.
Yet currently, almost fifty years after these countries gained independence from their French colonizers, they remain in the Third World with GDPs per capita of $7,200 for Algeria, $8,300 for Tunisia and $4,200 for Morocco (2005).
These figures are significantly lower than the French rate of $29,900 (2005).
[3] In this thesis, my primary goal is to examine this asymmetric relationship between France and the Maghreb in the context of their comparative history and through economic growth theories. To achieve this goal, I will first evaluate the main socio-political and socio-economic consequences of the French conquest and control of the Maghreb between 1830 and 1962. Then, I will determine whether or not similarities and/or differences in first- and second-nature geography affect the economic prosperity in these two regions. After analyzing these theories of geography and economic growth, I will switch to theories of institutions and economic growth that may shed light on the reasons why France in currently one of the richest countries in the world while its neighbors and former colonies of the Maghreb are still stuck in the Third World. Finally, I will select those elements that best explain the obvious asymmetry between these two regions before concluding with one way the Maghreb may begin to close this gap.
Chapter II: Colonialism’s Legacy of Uneven Development
“
The brutal and abnormal increase of the population, the parallel decline in resources, the collapse of the economy, the contact with the discouraging superiority of foreign techniques, have had the result that the archaic civilisations have broken up.”
[4] ― Germaine Tillion, French ethnologist, commenting on Algeria (1957)
“L’Algérie nous coûte.” (Algeria is costing us).[5] ― Charles de Gaulle, French President, commenting on Algeria (1961)
A. Defining the Maghreb
Throughout the course of this study, I have chosen to use the word Maghreb to refer to the collection of the following three countries: Morocco, Algeria and Tunisia. This decision requires some explanation as this term and related terms (i.e. North Africa) have been used by other authors to refer to a rather varied collection of countries situated in the northern part of Africa. Meaning the “Land of Sunset” in Arabic (or, alternatively, “western”), the term Maghreb was used by Arabs to describe the area to the west of Egypt into which they had penetrated.
In effect, this term excludes Egypt and its divergent historical experience that convolutes the otherwise all-inclusive term of North Africa. Furthermore, when used by French speakers, the term Maghreb refers solely to Morocco, Algeria and Tunisia, all of which fell under the umbrella of French domination during the nineteenth and twentieth centuries (see, for example, the use of the term by Benjamin Stora, 2002). Therefore, because I am concentrating on the asymmetric relation between France and its three former colonies, I have chosen to use the term the Maghreb to refer to Morocco, Algeria and Tunisia.
B. French and Maghrebi Pre-Colonial Socio-political and Socio-economic Systems
Before describing the nature of French colonialism in the Maghreb, I will first briefly describe the nature of French and Maghrebi pre-colonial socio-political and socio-economic systems in the decades before the French invasion of Algeria in 1830.
i. France
In 1789, four decades before the invasion of Algeria, the absolute monarchy of France was overthrown in favor of republicanism and democracy in what is now referred to as the French Revolution. Considered by many a historian to be “the archetype of a bourgeois, violent revolution directed against the feudal nobility,” the French Revolution replaced the privileged orders of the
ancien régime with a new order based on specific principles enumerated in the
Déclaration des droits de l'Homme et du citoyen (
Declaration of the Rights of Man and of the Citizen). Having achieved the “final adoption by France of integral capitalist socio-economic institutions” by undergoing this revolution, France entered the nineteenth century equipped with a primarily capitalist economy “based on commercial agriculture, industry and trade.” By 1830, the country had institutionalized into a “liberal democracy devoted to the free market, the separation of powers, industrialization and colonization.”
[9]
ii. The Maghreb
At the same time France had developed into a fully industrializing nation-state, the Maghreb remained a trio of “military-theocratic pre-capitalistic state[s] whose organizational and institutional features were characterized by certain ‘archaic’ traits.”
[10] In his book
Leadership and National Development in North Africa, Maghrebi sociologist Elbaki Hermassi studies the complex relationship between the pre-colonial socio-economic and political systems of the Maghreb and the centuries-old legacy of tribalism in the region. In his work, Hermassi notes:
If for heuristic reasons, one were to construct a model of the traditional Maghrebi state, it would be useful to present three concentric circles. The first circle would represent the locus of central power, which was based in the cities and which had a threefold vocation: military, commercial and religious. In these urban zones, dynasties of a patrimonial kind were established. To defend themselves and to control the rest of the country, they relied upon tax exempt tribes whose members gradually began to assume military responsibilities. Surrounding this circle of protected cities and privileged tribes, there existed an intermediary zone composed of subject tribes, which were administered either by local notables or by agents from the center and which were submitted to the heaviest system of taxation…Finally, there was a third, peripheral circle with varying boundaries. Within these circles were regularly dissident and semidissident tribes. These marginal units not only constituted a challenge to the central authority through their dissidence but also constantly invaded the state and established dynasties, of which there are historical records. Such dynasties were, however, replaced by dynasties established by other tribes having equal ambition. The model of the Maghrebi state is, then, composed of three elements: people who raise taxes, those who submit to exploitation, and those who refuse it. Clearly, the most basic unit of the pre-colonial socio-economic and political systems of the rural Maghreb was the tribe (in Arabic,
gabyla). Further divided into a series of “interrelated nuclear or extended families [in which] a patriarch was the undisputed head,” the
gabyla served as the center of political and economic decision-making in the pre-colonial rural Maghreb.
In pre-colonial Algeria, for example, the state was divided into four provinces derived from rural tribal or lineage regional sub-systems: the provinces of Algiers, Constantine to the east, Titeri to the south and Oran to the West. Although political power was distributed from the national level to these provinces both
de jure and
de facto, this arrangement had held Algerian society together for centuries.
[13] Incidentally, it was this fact that was confused by future French colonizers who would “assign themselves a ‘civilizing mission’ in a ‘tribal-stateless’ society.”
[14] Altogether, it was through this tribal structure that political, economic, and administrative roles operated within pre-colonial rural Algeria and the rest of the Maghreb.
Furthermore, while France was moving from agriculture to industry, the majority of Maghrebis remained tied to the soil. According to recently deceased Algerian researcher Mahfoud Bennoune, the “organization of economic production [in Algeria] was concentrated on four predominant subsistence activities: agriculture, animal husbandry, horticulture, carried out on fertilized, terraced and irrigated plots of land, and the plantation of fruit trees.”
In terms of its socio-economic structure, Algeria was divided into three classes: a small group of large landowners, a large group of peasant farmers, and a few landless producers. Because land served as the foundation of property rights, the system of land tenure formed the legal basis of the Algerian political economy.
[16] Moreover, an analysis of pre-colonial Maghrebi exports demonstrate the types of agricultural products that were grown in the region. In Algeria, the two major crops produced for export were wheat and wine, whereas in Tunisia, the four main export crops were olives (for olive oil), wool, wheat and animal hides. The pattern of agricultural production in pre-colonial Morocco was closer to Tunisia than to Algeria, with wheat and cereals topping the list of exported crops.
In contrast to the pre-colonial rural economy, the pre-colonial urban economy was dominated by the market. Since pre-Roman times, Maghrebi cities had relied on trade for their economic viability, as “‘it was enough for trade to fall off for the states to perish, along with the cities on which they were based.’”
[18] In Algeria, Morocco and Tunisia alike, foreign trade served as the most important medium for the accumulation of wealth.
However, even though merchants served as the center of economic life in urban centers, the largest Maghrebi cities (i.e. Algiers, Constantine, Marrakesh, Tunis) featured populations that were “socially, economically, and even ethnically heterogeneous... composed of the ruling elements, merchants, artisans and apprentices.”
[20]As far back as the Middle Ages, France had engaged in commercial activities with North Africa. A list highlighting Maghrebi products sold in southern France in the 13
th century illustrates the types of goods traded: “‘from the Kingdom of Fez in Africa came beeswax, leather and skins; from the Kingdom of Morocco came such products as cumin [and] raw sugar; from the Kingdom of Bougie came furs of lamb, leather, and [dry] figs which grew in the country.’”
The commercial relationship between France and the Maghreb solidified over time, and, by the end of the 18
th century, France was dominating all North African trade and had already founded a few factories in Algiers and Tunis.
Finally, I will briefly relate the pre-colonial status of each country within the Maghreb.
a. Algeria
The first country to be dominated by the French, Algeria was the least developed Maghrebi country with respect to political organization. With almost one thousand kilometers of coastline, the country is cut off by mountains that often extend to the Mediterranean Sea. As a result, communication was very difficult and travel from one region to another often took several days. In addition to being the least politically developed of the three countries, Algeria was also the least urbanized by the first quarter of the nineteenth century. In 1830, a mere five percent of Algerians lived in cities, compared to ten percent in both Tunisia and Morocco.
What political control that did exist was centered in the hands of the
dey. With the assistance of his three provincial
beys (whose control he assured through the threat of execution), the
dey “had to rely upon privileged, tax-exempt tribes to neutralize and extract taxes from less privileged tribes.”
The balance of power between the various tribes fluctuated widely, and marabouts and religious orders were charged with the duties of mediation between tribes and justice in the regions that escaped direct control of the dey. Statistical evidence shows that “these men of religion, who for the most part were able to keep their distance from the ruling caste, collected at least half as much in the form of tithes as did the central and provincial governments in the form of taxes.”
The fact that provincial governments collected significantly more taxes than the central government illustrates the fragmentation that characterized Algeria before the French invasion in 1830.
b. Tunisia
Although the least populated of the three countries at the time of colonization (one and a half million compared to four million in Morocco and three million in Algeria), Tunisia was far and away the most homogenous of the three countries. Unlike Algeria and Morocco, “half of [Tunisia’s] population was sedentary, clustered in ancient cities, towns, and villages of the Sahil,” which provided a population that could provide “a stable support for any government.”
Additionally, the vast majority of Tunisians shared a common language (Arabic) and a common experience of exploitation on behalf of a central government.
Whereas Algeria was led by a
dey, Tunisia was ruled by the Hussainid dynasty (1705-1957) of
beys which controlled the central political institution (known throughout the Maghreb as the
makhzan). More structured than its Maghrebi counterparts, the Tunisian makhzan “had greater extractive and regulative capabilities” vis-à-vis Morocco and Algeria.
However, even though Tunisia featured the best organized political system in the Maghreb, its general absence of political cohesion resulted in the country’s vulnerability to foreign (European) domination in the late nineteenth century.
c. Morocco
With a well-secured core surrounded by mountains, Atlantic plains, and three major cities, Morocco was the most resistant of the three countries to European influence. Governed by the Alawite sultans since 1666, Morocco featured a political system that is best described as “an ordered anarchy rather than just plain anarchy, even if foreign consuls and merchants were often hard-pressed to locate the distinction.”
As opposed to a more distinct division in the rest of the Maghreb, the connection between politics and religion was particularly strong in Morocco. This relationship explains the persistence of the Alawite dynasty and the relative lack of political instability that plagued Algeria and Tunisia during the pre-colonial period.
Like its Maghrebi counterparts, Moroccan tribes enjoyed rather substantial autonomy from the central government. To collect taxes and to govern the tribe, the sultan would select a tribal representative (
caid). In exchange, the
caid was permitted to rule his tribe in a manner similar to the way the sultan ruled the country. This symbiotic relationship between the sultan and the tribes persisted until the end of the nineteenth century, when sultan Moulay Abdelaziz sought to tax all tribes and to dismantle decades of tribal privilege. The result was swift: “the tribes neither paid their traditional taxes nor accepted the new system,” and the
makhzan soon disintegrated.
Certainly, the pre-colonial Maghreb possessed a political, economic, and administrative structure that had enabled it to function successfully for hundreds of years. However, after the French invasion of Algeria in 1830, the Maghreb’s pre-colonial socio-economic and political structure began the slow path of disintegration under French rule.
C. Socio-political and Socio-economic Consequences of Colonialism
There is little doubt that the social, political and economic organization of the Maghreb today has been heavily influenced by French rule in the nineteenth and twentieth centuries. However, the extent to which the French affected the futures of Algeria, Tunisia and Morocco during the colonial period is not uniform, for the experiences of colonization differed in both duration and scope. Clearly, Algeria was the most “colonized” of the three countries, as not only was it invaded first (1830), but it also became a full-fledged extension of the French state. Furthermore, the conquest of Algeria was typified by an extraordinarily level of violence that was relatively unknown in France’s other imperial endeavors. Both Tunisia and Morocco, on the other hand, maintained their sovereignty and “only” became protectorates of the French state, in 1881 and 1912 respectively.
This section will be organized in the following matter. First, I will identify the forces that led to French colonization in Algeria. Once I have told the French side of the story, I will move to an analysis of the socio-political and socio-economic consequences of colonialism on Algeria, Tunisia and Morocco respectively.
i. Understanding the Origins of French Colonization in Algeria
To start my analysis of what led the French to invade Algeria, I will first draw upon the conclusions of Daron Acemoglu, Simon Johnson and James Robinson in their article “The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth.” In this study, the authors argue that “the rise of Western Europe after 1500 is due largely to growth in countries with access to the Atlantic Ocean and with substantial trade with the New World, Africa, and Asia via the Atlantic.”
Included in this group of so-called “Atlantic traders” is France, whose monarchy had seized control of trade from French merchants in order to serve its mercantilist interests. In effect, Acemoglu
et al.’s description of French activity during the period studied is that of France’s first colonial empire. From approximately 1600 to 1800, the French involved themselves in an “immense European movement – the discovery of the New World and in mastery of the ocean…[during which] French explorers, missionaries and settlers participated…and extended the sovereignty of their nation to create the first French colonial empire.”
However, by the end of the tumultuous and imperialistic Napoleonic era in 1814, France appeared to have lost its drive to amass world power, and “for all intents and purposes, the first colonial empire was gone.”
This leads to an important question: Why did France invade Algeria during a time in its history when it wasn’t actively seeking imperialistic endeavors elsewhere (i.e. in between the first and second European waves of colonization)? Interestingly enough, the answer to this question begins with a mere diplomatic incident. In 1827, a French diplomat suggested France had a desire to possess a French stronghold in Algeria and announced such intentions in front of the
dey of Algiers. Infuriated and insulted, the
dey was said to have later struck the French counsel with a fan. In response, the local French representative declared that France’s honor had been insulted and urged a break in diplomatic relations with Algeria. Shortly thereafter, while Paris was undergoing a “political upheaval,” the expedition’s command declared a general blockade of Algeria’s entire coastline and inevitably launched a full-scale invasion in 1830.
[35] These events, sparked by French expedition authorities in Algiers, occurred without the knowledge (and, thus, without the consent) of the French government. However, there are several reasons why Paris supported the invasion once it had began. First, by the time Paris became fully aware of what was occurring in Algeria, it was too late to change course, for “any retreat from Algeria would have become a national insult.”
Second, the French government was pressured to support the invasion by two distinct forces: zealous monarchists who were “seeking glory for the royal army,” and business interests “whose trade was made stagnant by [a] blockade of the Algerian ports and the Greco-Ottoman War and who looked upon the conquest of Algiers as a means of revitalizing trade.”
Third, a “conflict between the king (Charles X) and his opposition in the Chamber of Deputies over the limits of royal prerogative” led the former to support the Algerian invasion as a means to divert attention away from the rise of liberalism within the government.
These three factors help to explain why the French government in Paris allowed the continuation of the French expedition’s initial invasion of Algeria in 1830. I will explain what led France into Tunisia and Morocco within the analysis of the socio-political and socio-economic consequences of Maghrebi colonialism that follows in the next three subsections.
ii. Algeria
As previously mentioned, in the context of the greater European conquest of Africa (popularly known as the “scramble for Africa”), the French invasion of Algeria in 1830 was about fifty years premature. From the beginning, the official objective of Maghrebi colonization was to “absorb a large number of idle men and women whose main function would be to provide the
metropole with raw materials and to be used as an outlet for dumping French manufactured goods.”
[39] Specifically, the conclusions of the Commission d’Afrique (1833) were that “the occupation of Algeria would be profitable economically, commercially, politically and militarily to France:”
The economic calculations had belittled the value of colonies. The old nations must have outlets in order to alleviate the demographic pressures exerted on big cities and the use of the capital that has been concentrated there. To open new sources of production is, in effect, the surest means of neutralizing this concentration without upsetting the social order... It is the surest way of preventing the seeds of hostility that are being sown among the working classes, not only against the government but also against society and against property.[40] The French began their conquest of Algeria by seizing the urban centers of the north. This conquest was highlighted by an unusually high level of violence for a colonizing country. A year after Algiers fell on July 5, 1830, nearly 30,000 of its inhabitants has been either killed or exiled. Similar atrocities occurred as the French seized Medea, Constantine, and Blida, the last of which was “jammed with corpses among which were those of old people, women, children and Jews... all [of whom] had been defenseless.”
[41] In addition to killing and displacing thousands of urban Algerians, the French also seized a considerable amount of property, ran those that escaped the initial seizure to bankruptcy, and replaced Algerian currency with French currency. These economic shocks essentially caused the “rise of the modern Algerian proletariat.”
[42] Between 1830 and 1839, France completed the first of four phases of its colonization of Algeria by conquering the urban centers. Next, from 1840 to 1847, the French moved from the urban centers of the north into the fertile Tell plain below. The third (1848-1872) and fourth (1873-1954) phases were characterized by the suppression of the remaining (rural) territory to the present southern border.
[43]Because Algeria lacked strong political organization, the French quickly and easily transferred political control to the Ministry of the Interior in Paris (as opposed to Tunisia and Morocco which would fall under the guidance of the Ministry of Foreign Affairs). Although the governor-general was the head of the French presence in Algeria, the ever increasing settler population soon became the de facto rulers of the country. By 1900, settlers “wielded decisive influence upon the Algerian budget,” held three-quarters of the seats in the local governing bodies (communes de plein exercice), and possessed deputies in Paris that “could block all but the strongest French governments.” This characteristic, which was unique to Algeria, cannot be under-stated. I will further discuss Algeria as a French settler colony in Chapter IV. As early as 1830, the French began a program of land expropriation from the rural population that would be repeated again in Tunisia and Morocco. Claiming they had acquired the right to the land via the conquest, the French expropriated 3,643 square kilometers of land from rural cultivators to give to incoming French settlers between 1830 and 1851,. Throughout the expropriated land, the French established 176
centres de colonisation for the rural
colons who, by 1851, comprised 33,000 of a total French settler population of 151,000 in Algeria.
[46] The impact of the conquest of rural Algeria is substantial. Specifically, rural Algerians and tribes were “left with only a small fraction of what they previously had for grazing, and in many cases, especially in the Sharif valley and Oran, they faced financial ruin.”
More generally,
historian John Ruedy concludes that the systematic expropriation of “both pastoralists and farmers [meant that] rural colonization was the most important single factor in the destructuring of traditional society.”[48]Finally, from the beginning of French occupation, the Algerians were subject to the newly imposed impôts arabes (Arab taxes). Based on pre-colonial Ottoman taxes, the impôts arabes were implemented to fund the development of a basic infrastructure in Algeria between 1830 and 1880. As would be the pattern in the two protectorates, the majority of the tax burden fell on the native population. For instance, “in 1880 alone, out of a total 35 million gold francs in tax receipts, 22 million was paid by Algerians, rising to 30 million in 1887…[meaning] the Algerians furnished 75 percent of the total direct taxes collected.” After the abolition of the impôts arabes in 1919, Algerians were forced to pay new indirect taxes. Once again, the native population faced the brunt of this tax burden: “they paid 73.3 percent of the total collected in 1918, 72.5 percent in 1926 and 74.6% in 1929.” Although there is a powerful negative legacy of colonialism in Algeria, there were also positive attributes of French rule. Most significantly, when Algeria finally realized independence in 1962, it “inherited a relatively adequate techno-economic and social infrastructure represented by several modern cities and towns” that was funded by the aforementioned tax scheme.
For example, this infrastr
ucture “contain[ed] 200,000 apartments and villas, administrative buildings, businesses, shops, hospitals.”
Furthermore, Algeria was left with “one of the most important railway systems in Africa (4,300 km), paved roads and highways (10,000 km), civil airports, harbors and an electrical network (600,000 km).”
[53] These remnants of French rule endowed Algeria with the basic framework of a modern economy. This was an advantage that wasn’t necessarily afforded to other colonial states to the same extent (i.e. sub-Saharan Africa, Central America).
All things considered, the French conquest of Algeria can be characterized simply as a gigantic transfer of the three factors of production (land, labor, capital) from the Algerians to the French, as a destructive force in the elimination of traditional (pre-colonial) Algerian society, and as an engineer of economic infrastructure in the Algerian state.
iii. Tunisia
As their neighbor morphed into an extension of the French state, both Morocco and Tunisia became increasingly concerned for the perseverance of their autonomy. In Tunisia, the bey was facing a French regime to the west and a resurgent Turkish regime to the east. In order to protect his country, the bey commanded a modernization of the Tunisian armed forces. However, such a modernization required significant sums of money which ultimately derived from European (mainly French) loans with outrageously high interest rates. As a result, the bey was forced to raise taxes to the ire of the Tunisian populace while subjecting his country to increased dependence on France. In the late 1870s, France was actively pursuing an agreement with Tunisia to transform the country into a protectorate. In the mind of scholars like Lisa Anderson, French rule in Tunisia was from the start “designed to profit France by guaranteeing the security of Algeria and offering a field for French colonization and commerce.” However, the Tunisians were not too keen on accepting France’s offer. When they refused, the French began to search for reasons to invade Algeria’s eastern neighbor. On March 30, 1881, the French spotted their chance when the Khrumir tribe living in western Tunisia crossed the border into Algeria. Yet, instead of merely sending an expedition to deal with this specific transgression in the west, the French marched all the way to Tunis. On May 12, 1881, the French compelled Muhammed al-Sadiq Bey to sign the Treaty of Bardo which provided the foundation for Tunisia’s becoming a French protectorate. The arrangement was finally complete when Muhammed al-Sadiq Bey’s successor Ali Bey signed the al-Marsa Convention on June 8, 1883. Through the al-Marsa Convention, the French were able to maintain a façade of beylical authority while granting them “direct control over all vital aspects of government.” Although the bey remained the figurehead complete with his own cabinet, the true leader of Tunisia was the French resident-general. As of 1885, the French resident-general “presided over the meetings of the council of ministers,” “acted as the bey’s foreign minister,” served as “the final authority in all affairs of the army and the government administration,” and required that “the bey’s decrees had to be submitted to him for approval before they could be published.” Having assumed control of the Tunisian military, the French soon developed a state bureaucracy that “was an extension and elaboration of the pre-colonial administration” and that “came increasingly to serve French rather than Tunisian purposes.” Upon landing in Tunisia, the French found Tunisia divided into eighty administrative entities (qiyadas). In order to establish their own system of political organization, they grouped the qiyadas into fourteen civil control districts governed by French contrôleurs civils. As sovereign heads of these civil control districts, the contrôleurs civils were instructed to “oversee the administration of the native chiefs, to summon them and to correspond with them, [and] to give them orders,” all without interference from the Tunisians. Within a decade, the tribal lineage that had defined Tunisian political organization for centuries no longer affected its structure. Of course, this is no surprise as tribal lineage was absent in French (and, more broadly European) political history. At the dawn of the twentieth century, France’s administration of the Tunisian Protectorate had become increasingly sophisticated. Various technical services (i.e. Finances and Public Works, Education, Post, Telegraph, and Telephone, and Agriculture) were established to further govern the territory. These services created a series of technical bureaucrats who solely French in origin, since the French claimed Tunisians lacked the requisite technical training. With the administration under its control, the French effectively obtained control over the lives of every Tunisian. Another negative aspect of France’s colonization of Tunisia was the restructuring of Tunisian agriculture. According to Maghrebi scholar Jamil Abun-Nasr, “the protectorate opened Tunisia for French colonization by creating a suitable political and legal framework for the acquisition of lands by the settlers.” Within a decade of Tunisia becoming a protectorate, the transfer of land that had occurred in Algeria in the previous half century began to accelerate at full force. Profiting on the newly established titles that accompanied the administrative restructuring of Tunisian land, French settlers “carve[d] out farmsteads from what had been state lands, collective tribal lands, and habus lands.” As a result, “the Tunisians who had cultivated them or grazed flocks on them were displaced.” Tunisian scholar Kenneth Perkins explains how displacement in the countryside adversely affected the lives of Tunisians in the city:
…the tribes’ loss of good grazing land diminished the size and quality of livestock herds which, in turn, reduced the supply of meat, butter, and other animal products in urban markets. It also deprived weavers and leatherworkers of raw materials, further crippling artisans devastated by decades of European competition. In contrast to urban areas, where the growing taste for European goods had lessened demand for locally produced commodities of virtually every kind, rural regions had shown less enthusiasm for imports and so had provided an important outlet for artisanal production. But the impoverishment of the countryside enervated that market, delivering a clear knockout blow to craftsmen all over the country. While the reorganization of the nation’s agricultural sector diminished the livelihood of rural and urban Tunisian alike, it also inspired profound changes in the pre-colonial way of life. Perkins concludes that “the extension of private property, the relegation of Tunisian farmers to the less fertile lands, the destruction of customary patterns of transhumant pastoralism, and the sedentarizaion of pastorialists had all undermined the utility of the tribal social structures and accelerated social differentiation within the rural population.” Finally, the French instituted a tax system that further illustrates the Protectorate’s purpose as a vehicle to “provide the most favorable environment for French economic activity at the least cost to France.” Even as the productivity among the Tunisian farming community plummeted, the amount of taxes levied on them remained constant. More specifically, “government receipts in 1896 translated into an average tax of ten francs per person, a considerable burden, particularly in the distressed rural regions.” This figure does not include a twenty franc personal tax required of all rural Tunisian males that was not levied to certain urban males or to foreigners. To compound this fiscal pressure, a tax called the ushr existed to collect funds on all cultivated land, settler and native alike, regardless of the success of the harvest. However, the burden of the ushr lied clearly on native Tunisians. Even though European settlers cultivated ten percent of the land, they only paid one percent of the ushr. In the end, Perkins notes that “Tunisians occupied more land, but of marginal value; thus they produced less, but paid more.” As in Algeria, the French did provide Tunisia with a modern economic infrastructure. Developed by the Directorate of Public Works, “the transportation and communication infrastructure…[became] one of the first technical services set up under the protectorate.” By 1884, a rail connection was completed linking Tunis with Algiers. In addition to seeing improvements to their railways, the Tunisians saw both “the improvement of port facilities (at Tunis, Sousse, and Sfax) [and] the construction of a massive naval base (at Bizerte).” Upon the end of French rule, Tunisia retained these elements of a modern economic structure and had the ability to use these facilities in its best interest. Even though French colonization was much less violent in Tunisia than it had been in Algeria, the overall effect was similar. Like in Algeria, the French turned Tunisia into a source of land and capital, and the imposition of an administrative structure that acted in the interest of France resulted in the dismantling of pre-colonial Tunisian society.
iv. Morocco
While Tunisia chose to respond to the French threat by modernizing their armed forces at the expense on incurring substantial debt, Morocco decided to forfeit modernization for financial independence from Europe. Although this policy worked well in dampening European penetration into Morocco during the second half of the nineteenth century, the country found itself at the center of a fight between Great Britain, France, Spain and Germany at the dawn of the twentieth century. Having agreed to recognize Great Britain’s standing in Egypt (Entente Cordiale) and given part of Morocco to Spain, France received affirmation from these two countries for its special interest in Morocco in 1904. Upset with what he considered to be a move that challenged Germany’s interests in the country, Kaiser Wilhelm II journeyed to Tangiers in March 1905 to encourage Moroccan independence. In response to the diplomatic posturing that occurred thereafter, the Algericas Conference was called in early 1906 to resolve the dispute. Finding little support among the participants and unwilling to risk war, the Germans were forced to sign an agreement that favored French interests in Morocco, especially those of trade and commerce.
However, the Algericas Conference did not fully resolve the conflict. Unhappy with intensifying French control in Morocco, the Germans launched a naval cruiser (
Panther) to Agandir on July 1, 1911, in the name of “protect[ing] German interests and mineral prospectors in the Sous.”
Deemed the Second Moroccan Crisis, this incident threatened German occupation of the Sous and brought the European continent close to war. However, with the British at their side, the French diffused the situation by surrendering land near the Congo River in Africa in exchange for German recognition of France’s control in Morocco. With this conflict finally resolved, the French formalized Morocco’s position as a protectorate through the signing of the Treaty of Fez on March 13, 1912.
The method by which the French organized their protectorate in Morocco mimicked their actions in Tunisia thirty years earlier. Whereas the sultan was effectively reduced to a symbolic figurehead, the newly appointed resident-general whose powers included initiating royal decrees and appointing key officials stood at the apex of political power within the country. Immediately below him, his secretary-general “coordinated the work of the nine departments responsible for the economic development of the country, the most important being the departments of finance, agriculture, and public works.”
Furthermore, while some Moroccans retained their posts as heads of villages and tribes, they now found themselves under the watchful eyes of
contrôleurs civils like those in charge in Tunisia. Drawing upon their earlier experiences in Algeria and Tunisia, the French took only a matter of months to effectively seize control of political power in Morocco. The similarities between the process of colonization in Morocco and those in the rest of the Maghreb did not stop with political reorganization. A year after establishing the Moroccan protectorate, the French started a program of land reform that resulted in a transfer of the most fertile lands from the Moroccans to the French. The first step of the program involved turning “roads, rivers, beaches, collective tribal land and forests…into Makhzan property.” Then, after the French commanded the registration of private land, they ensured that “as much property as possible was taken into Makhzan ownership so that it could be made available for sale.” The results of the restructuring of Moroccan agriculture were much the same as they had been in Algeria and Tunisia. Rural Moroccans found themselves forced onto the least fertile fields in the kingdom, and those who did not manage to sustain themselves were forced to either work for the European settlers or migrate to the cities. Moreover, the French constructed a tax scheme similar to those of Algeria and Tunisia which favored settlers of European origin. Instituted by Sultan Abdul-Aziz, a tax on land revenue (
tartib) existed to provide a substantial source of income to the kingdom. In 1923, however, the French adjusted the application of the
tartib and provided a “fifty percent rebate…to farmers employing ‘European methods.’” Although the rebate could in theory extend to Moroccan farmers, it clearly favored the French farmers who were well-versed in these more modern techniques. By 1951, “whereas Moroccans contributed more than eighty percent of the tax income, they received only twenty percent of the money refunded under the rebate system.”
Consequently, the absence of tax relief led many Moroccans into debt “at usurious rates of interest, often more than 50 percent per annum.”
If the farmers failed to finance these loans, they lost their land.
Whereas there is a clear negative legacy of colonialism in Morocco, there is an important positive legacy as well. Between 1911 and 1956, the French built 1,600 kilometers of railroads and 48,000 kilometers of roadways in the country. Furthermore, ports like Casablanca were updated to meet modern specifications for sea trade, a trade enabled and amplified by French rule. In 1953, for example, “exports and imports totaled over nine million tons, more than ten times what they had been in 1923.”
Of the exports, the majority were agricultural products which were made possible by the massive improvement in Morocco’s electrical grid and irrigation systems.
Other important exports included minerals, including four million tons of phosphates exported in 1952 alone.
Even King Hassan himself recognized the value of such an economic infrastructure, writing in his autobiography that “‘Those who assert that in the years between 1910 and 1935, “France turned Morocco into an underdeveloped country” know perfectly well that they are lying.’”
Interestingly, Spanish Morocco did not see nearly the same level of economic development as did French Morocco, primarily because of the dominance of agriculture in this part of the country. Like its Maghrebi neighbors, Morocco would have a modern economic infrastructure at its disposal upon the departure of the French.
D. Independence Movements
In all three countries of the Maghreb, opposition to French rule evolved over time. In the early stages of French occupation, the old elites were the most vocal in decrying the actions of their colonizer. Receiving the initial brunt of the invasion, these former leaders despised their removal from power and questioned France’s true intentions in their country. Next, as certain Maghrebis acceded to power in the new French state bureaucracies, they too became privy to France’s questionable actions and soon allied with the old elite. Within another generation, the reconfiguration of the Maghrebi state began to adversely affect the young and old, the poor and rich alike. As Europe was headed to war for the second time in half a century, a third generation of French-educated elite sparked a wave of nationalism swept throughout Algeria, Tunisia and Morocco. Such nationalism energized the independence movements of these three nations, and by the early 1960s, all three would be free.
i. Algeria
Unlike Tunisia or Morocco who were just protectorates of France, Algeria was legally part of the French state. Moreover, Algeria featured a settler population that was several times larger than that of the other two countries of the Maghreb. For these reasons, the French treated the Algerian push towards independence much differently than they would in Tunisia or Morocco. The first significant revolt erupted just as the Second World War was winding down in Europe. A localized and rather short uprising centered around Constantine, the incident resulted in the deaths of several thousand Algerians and was easily quelled by French forces.
However, the Algerians were not deterred by this failure. Instead, several separate independence movements fused together in 1954 to form the
FLN (Front de Libération Nationale). A major event in Algerian history, this union marked the beginning of the eight year Algerian War of Independence. A subject that in and of itself has spawned many studies, the Algerian War of Independence embodied decades of hostilities between native Algerians and French
colons. In the early hours of November 1, 1954, members of the
the FLN (Front de Libération Nationale) launched surprise attacks against French interests across Algeria, calling for the restoration of the Algerian state for the Algerians. By focusing on “out-organizing the French colonial apparatus and its main coercive instrument, the army of occupation, rather than out-fighting it,” the Algerians created a “revolutionary structure” that enabled them to eventually defeat French forces.[85] Viewing the conflict as a civil war rather than a war of independence, the French saw the Algerian uprising as purely an internal affair. In fact, while speaking at the
Assemblé Nationale on November 12, 1954,
Premier Pierre Mendès-France declared “L’Algèrie, c’est la France (Algeria is France).”[86] By 1959, France had seemingly regained military control over Algeria. However, growing concern of the French populace with respect to war deaths, allegations of war atrocities, and compassion for the Algerian cause led French President Charles de Gaulle to completely change his stance on Algeria by the end of the year. In the Alpine resort city of Evian, talks between France and the FLN began in 1961. At Evian, the two sides agreed to a ceasefire to start on March 19, 1962. Stipulations of the Evian Accords that obliged Algerians to choose Algerian citizenship or risk alien status equated to Algerian independence by June 1962.
Finally, after eight years of fighting and 124 years of subjugation, Algeria was free.
ii. Tunisia and Morocco
When compared to the Algerian War of Independence, the Tunisian and Moroccan independence movements were anti-climatic. Drawing upon resistance that strengthened during the interwar period (1918-1939), Habib Bourguiba of Tunisia and Sultan Muhammed V of Morocco transformed nationalism in their respective countries into veritable forces for independence. While France tried several tricks to suppress these movements (i.e. police repression in Tunisia, exiling Sultan Muhammed V to Madagascar), it soon found itself facing ferocious counterattacks in both countries. When the War for Independence began in Algeria in 1954, the French “decided to cut their losses in the two protectorates, granting self-government to Tunisia in 1955, followed by independence in 1956, the year Morocco also became independent under Muhammed V.”
Thus, whereas France would leave Algeria with a roar, it left Tunisia and Morocco with a whimper.
Chapter III: Theories of Geography and Economic Growth
“Mere place names are not geography. To know by heart a whole gazeteer full of them would not, in itself, constitute anyone a geographer. Geography has higher aims than this: it seeks to classify phenomena (alike of the natural and of the political world insofar as it treats of the latter) to compare, to generalise, to ascend from effects to causes and in doing so to trace out the great laws of nature and to mark their influence upon man. In a word, geography is a science, a thing not of mere names, but of argument and reason, of cause and effect.”[89] ― William Hughes, Professor of Geography at King’s College London (1893)
As stated eloquently by Professor Hughes in 1893, geography is not as simple as pointing out cities or countries on a map. Geography is a much more diverse field of study that draws upon many other academic fields like politics, economics and sociology. In this section, I am considering certain theoretical relationship between geography and economics in order to determine if geographic hypotheses are relevant to our study of Franco-Maghrebi asymmetry.
A. First-nature Geography
Before I begin to analyze the effects of geography on economic growth on France and the Maghreb, it is important to distinguish first-nature geography from second-nature geography. According to Overman, Redding, and Venables, first-nature geography is “the physical geography of coasts, mountains, and endowments of natural resources” and is the source of “factor endowment based trade theory.”[90] Numerous economists like John Gallup, Jeffrey Sachs and Andrew Mellinger (referred henceforth as Gallup et al.) have advanced the idea that a significant link exists between first-nature geography and economic growth. In their article “Geography and Economic Development,” Gallup et al. (2001) “find that location and climate have large effects on income levels and income growth, through their effects on transport costs, disease burdens, and agricultural productivity.”[91] The authors note a strong correlation between the following geographic variables and economic growth within countries: whether or not the country is located in the Northern Hemisphere, the percentage of land based in the geographical tropics, the proportion of the country’s population located within 100 kilometers of a viable coastline, whether or not the country is landlocked, the proximity to one of three “core” economic areas (New York, Rotterdam, Tokyo), and the risk of malaria.[92] In deriving the aforementioned correlations between geography and economic growth, Gallup et al. used the following key equation:
γ = (1/Q)(dQ/dt) = (1/K)(dK/dt) = sA/P1 – δ where:
Q = AK is the aggregate production function of an economy;
the capital stock evolves according to dK/dt = I – δK;
the national savings rate is fixed at s; and
the relative price of investment goods to final output is P1
According to the relationships defined above, “economic growth is positively dependent on the savings rate, s, and the level of productivity, A, and negatively dependent on the relative price of capital goods, P1, and the rate of depreciation, δ.” From this equation, the authors are able to evaluate how variations in transport costs, disease burdens and agricultural productivity affect economic growth. For reasons that will become clear later, the most important component of the Gallup et al. argument is that concerning transport costs. Gallup et al. maintain that transport costs “affect the relative price of capital goods because some investment goods must be imported from abroad,” and in many developing countries, “virtually all equipment investment is imported from abroad.” In effect, transport costs undercut growth by increasing the cost of the imported capital good (which ultimately deflates the growth rate). Altogether, Gallup et al. argue that “growth rates differ according to transport costs” and depend on the following two characteristics: whether or not a country is landlocked and distance from one of the three economic cores. Moreover, the authors find similar behavior in the relationship between transport costs and a model containing intermediate goods. With this model and these findings in mind, I will now take a closer look at French and Maghrebi first-nature geography first to obtain a better idea of these countries’ physical geography, and second, to determine whether or not the argument made by Gallup et al. provides insight into our study.
i. The Maghreb
As defined in Chapter II, the Maghreb is comprised of the modern day states of Algeria, Tunisia and Morocco. In terms of climate, the Maghreb can be divided into three parallel east-west regions: “the northern Mediterranean region, a Saharan one in the south, and an intermediate transitional zone which varies in size from one place to the other.” The limits of these regions are defined by the “Atlas systems of mountains in Morocco and their extensions into Algeria and western Tunisia.” Varying climactic conditions stem from the variation in relief, the proximity to the Mediterranean Sea to the north, and the proximity to the Sahara Desert to the south. The appearance of vegetation is directly proportional to the distance from the Mediterranean Sea. As one moves southwards, one finds increasingly less vegetation because of the decreasing amounts of precipitation. As a result, the most fertile lands are found in the region known as the Mediterranean zone which covers about one-fifth the total land of Algeria, Tunisia and Morocco. More specifically, the Mediterranean zone “includes the Rif mountainous region of northern Morocco, the Atlantic-facing slopes of the Middle Atlas, the Tall Atlas in Algeria, and the High Tall and Dorsale (Fr. “backbone”) in Tunisia.” Rainfall, which occurs primarily in winter, is sufficient enough to sustain agriculture in this region. Acting as a buffer between the Mediterranean zone and the desert is the intermediate zone. This region includes the “High Plateaux in Algeria and eastern Morocco and the High Steppes in Tunisia.” Because of the inconsistency of rainfall, agriculture in this region is subject to the will of ever-changing participation patterns. Therefore, farming is a risky business in the intermediate zone and, in many cases, includes the plots onto which native Maghrebis were pushed following the reconstruction of agriculture by the French. To the south of the intermediate zone lies the Sahara Desert which clearly provides little opportunity for agriculture or any other economic endeavor.
According to Maghrebi scholar Jean Despois, there exist “three features of its [Maghrebi] geography which, together with its location, have had great influence on the life of its people:…(1) its unreliable climate which leads in some regions to great uncertainty about the produce of the land; (2) the existence of extensive steppe lands [intermediate zone] which restrict the areas available for agriculture and favor nomadism; and (3) the longitudinal character of the main geographical zones and the subdivision of the relief, which together rendered the movement of groups from west to east ‘almost useless and often difficult.’” As a result of these features, tribes moved in a north-south pattern as opposed to an east-west pattern which explains the relative isolation between tribes within the three countries of the Maghreb. Having introduced a general picture of Maghrebi first-nature geography, I will now look at the physical characteristics of each individual country within the region.
a. Algeria
The second biggest country in modern-day Africa (after Sudan), Algeria is located in North Africa between eastern neighbor Tunisia and western neighbor Morocco. Neighbors to the Saharan south include Libya, Niger, Mali, Mauritania, and Western Sahara (in clockwise order). To the north, Algeria has 998 kilometers of coastline on the Mediterranean Sea on which two of its three biggest cities (Algiers and Oran) are situated. In terms of area, Algeria has a total land area of 2,381,740 square kilometers (sq km). This figure is about fourteen and a half times bigger than Tunisia (163,610 sq km) and over five times bigger than Morocco (446,550 sq km). In comparison to Europe, Algeria is more than four times bigger than France (547,030 sq km) and 57 times bigger than the Netherlands (41,526 sq km).
With regards to terrain, Algeria is mostly high plateau and desert. However, the coastal region is hilly and contains several natural harbors like the Bay of Algiers. Just below this region, a small, discontinuous coastal plain called the Tell contains all of 3.21% of Algeria’s arable land (76,454 sq km). The Algerian climate can be characterized as arid to semi-arid. On the coast, winters are mostly mild and wet while summers are hot and dry. As one moves south to the high plateau and into the Sahara Desert, winters become colder and drier.[102] Furthermore, the land provides extensive amounts of petroleum, natural gas, iron ore, phosphates, uranium, lead, and zinc. Of these natural resources, ninety-seven percent of Algeria’s exports come from petroleum, natural gas, and other petroleum products. The main receiver of these exports is the United States (22.6%), followed by
Italy (17.2%), France (11.4%), Spain (10.1%), Canada (7.5%), Brazil 6.1%, and Belgium (4.6%) – (2004). In terms of imports, Algeria buys mostly capital goods, foodstuffs, and consumer goods. The majority of these products come from France (30.3%), but also from Italy (8.2%), Germany (6.5%), Spain (5.5%), the United States (5.2%), China (5.1%), and Turkey (4.3%) – (2004). There are two crucial conclusions that derive from these figures. First, neither Tunisia nor Morocco are major importers or exporters of Algerian goods. Second, the majority of Algerian trading partners are situated in te European Union. But do elements of Algeria’s first-nature geography confirm or discredit the link between geography and economic growth as argued by Gallup et al.? In their work, these authors find that the following geographic features depress economic growth: Southern Hemisphere, tropical zone, non-coastal (>100 kilometers from a viable coast), landlocked, being far from an economic core, and a high rate of malaria.[104] Of these six factors, there are five certainties. Algeria is located in the Northern Hemisphere, is not landlocked, and does not currently have a risk of malaria. Furthermore, the fourth of the land area located beneath the Tropic of Cancer is located in the Sahara Desert and the vast majority of the population lives within 100 kilometers of the Mediterranean Sea.[105] The only factor of first-nature geography that might affect Algeria’s economic prosperity has to do with its distance to an economic core. However, Algeria is relatively close to France and, thus, to the Western European economic core.[106] Although distance could be a concern, the fact that Algeria meets the five other geographic factors for economic growth would imply strong economic performance in following the logic of Gallup et al.
b. Tunisia
As the easternmost country of the Maghreb, Tunisia is situated between Algeria to the west and Libya to the east. Like Algeria, Tunisia has a significant coastline on the Mediterranean Sea to both the north and the east totaling 1,148 kilometers. Tunisia covers a total of 163,610 square kilometers which is more than three times smaller than France and almost four times bigger than the Netherlands.
Moving southwards from the mountainous north, one enters a hot and dry central plain in the middle of the country. This land area contains most of Tunisia’s 26,411 square kilometers of arable land (17.05% of the total land). To the south (like both Algeria and Morocco), the country extends into the Sahara Desert. Tunis, Tunisia’s capital and most populous city, is situated on one of the best natural harbors in the southern Mediterranean Sea. Other major cities (i.e. Sfax, Sousse, Bizerte) are also located on the Mediterranean coastline. In general, the climate of the north is considered temperate with mild, wet winters and hot, dry summers. As one moves south, the climate turns hot and dry. With respect to natural resources, Tunisia contains significant amounts of petroleum, phosphates, iron ore, uranium, lead, zinc, and salt. The main exports are textiles, mechanical goods, phosphates and chemicals, agricultural products, and hydrocarbons. Almost one third of these products are sold to France (33.1%), and the other major importers of Tunisian goods are Italy (25.3%), Germany (9.2%), and Spain (6.1%) – (2004). In turn, Tunisia imports textiles, machinery and equipment, hydrocarbons, chemicals, and food. Like Algeria, Tunisia buys most of its goods from France (25.1%). However, it also imports goods from Italy (19%), Germany (8.5%), and Spain (5.3%) – (2004). Like Algeria, Tunisia does not trade significant amounts with its Maghrebi neighbors, but it does trade extensively with members of the European Union. Having identified the highlights of Tunisian first-nature geography, I will now turn to the Gallup et al. study of the relationship between geography and economic growth. The results are very similar to those of Algeria. Elements known to be true are the following: Tunisia is located in the Northern Hemisphere, is not landlocked, does not currently have a risk of malaria, is not tropical, and features a population that mostly lives within 100 kilometers of the Mediterranean Sea.[109] As I concluded in the case of Algeria, the only factor of first-nature geography that may be cause for concern is the distance between Tunisia and one of the three economic cores. Yet, Tunisia is even closer to a European country (Italy) than Algeria and it holds a more central position in the Mediterranean region than any other country in the Maghreb.[110] Altogether, Tunisia meets five of the six criteria established by Gallup et al. and, thus, should exhibit healthy levels of economic growth and development.
c. Morocco
The westernmost country of the Maghreb, Morocco lies between Algeria to the east and southeast, the North Atlantic Ocean to the west, and Western Sahara to the south and southwest. At the mouth of the Mediterranean Sea, Spain holds two small pieces of territory (Ceuta and Melilla) which calculates to sixteen kilometers of shared border with Morocco. Situated on both the Mediterranean Sea and the North Atlantic Ocean, Morocco features the longest coastline in the Maghreb with a total of 1,835 kilometers. About three-quarters the size of France and almost eleven times bigger than the Netherlands, Morocco’s total land area is 446,550 square kilometers.
The northern coast and interior of Morocco are dominated by mountains, plateaus, valleys and coastal plains. On these coastal plains lie the majority of Morocco’s 84,400 square kilometers of arable land (19% of total land area). With regards to climate, the regions that touch upon the Mediterranean Sea and the North Atlantic Ocean possess a more temperate, maritime climate. However, as one moves inwards, the climate becomes more varied within the mountainous regions and hotter near the desert. Although the two largest cities are situated on a coastline (Casablanca, capital city Rabat), the third and fourth biggest cities (Fez and Marrakesh respectively) are found in the interior upon the central plain. In Morocco, the land provides significant quantities of phosphates, iron ore, manganese, lead, zinc, and salt. In terms of exports, Morocco sells clothing, fish, inorganic chemicals, transistors, crude minerals, fertilizers (including phosphates), petroleum products, fruits and vegetables. The biggest importer of Moroccan goods is France (33.6%), followed by neighbor Spain (17.4%), the United Kingdom (7.7%), Italy (4.7%), and the United States (4.1%) – (2004). On the import side, Morocco buys crude petroleum, textile fabric, telecommunications equipment, wheat, electricity, transistors, and plastics. The primary importer, like Algeria and Tunisia, is France (18.2%). The major remaining exporting countries are Spain (12.1%), Italy (6.6%), Germany (6%), Russia (5.7%), Saudi Arabia (5.4%), China (4.2%), and the United States (4.1%) – (2004). As is the case with Algeria and Tunisia, Morocco trades primarily with the European Union, not with its Maghrebi counterparts. In following the pattern above, I will look at Moroccan first-nature geography through Gallup et al.’s model. Like both Algeria and Tunisia, Morocco lies in the Northern Hemisphere, is not landlocked, is not adversely affected by malaria and features a population that is primarily coastal. Furthermore, like Tunisia, none of Morocco’s territory lies beneath the Tropic of Cancer. It is the sixth characteristic of proximity to an economic core that once again could provide an explanation for decreased economic prosperity in Morocco. Though, of all the countries in the Maghreb, Morocco is not only the closest to a European country (Spain), but it also technically shares a border with Europe. Having made this claim, the three countries of the Maghreb are relatively close to the southernmost countries of Europe. When looking at distance between Maghrebi capitals and the city used by Gallup et al. as the center of the European economic core (Rotterdam), I find the following distances: Rabat-Rotterdam – 2,185 km.; Algiers-Rotterdam – 1,694 km.; Tunis-Rotterdam – 1,741 km. Therefore, I will now focus on this sixth characteristic on proximity to an economic core to further examine the relationship between Maghrebi first-nature geography and economic growth. In their study, Gallup et al. use CIF/FOB margins to measure the extent to which transport costs affect economic growth. Measuring “the ratio of import costs inclusive of insurance and freight (CIF) relative to import costs exclusive of insurance and freight (FOB),” these measures are found by the authors to be “predictive of economic growth.” Gallup et al. “estimate an equation relating the CIF/FOB band to the distance of the country to the ‘core’ areas of the world economy (Distance, measured in thousands of kilometers), and to the accessibility of the country to sea-based trade, by including a dummy variable for non-European landlocked countries (Landlocked).” The equation is as follows:
CIF/FOB = 1.06 + 0.010 Distance (1,000 km) + 0.11 (Landlocked)
(84.9) (3.0) (2.4) N = 83, R2 = .32
In running their regressions, the authors find that “there is a penalty for distance from the core economies and for being landlocked,” and that “each 1,000 kilometers raises the CIF/FOB margin by 1.0 percentage points.” Using these results, I can now evaluate CIF/FOB data on the Maghreb. In their 1998 article “Shipping Costs, Manufactured Exports, and Economic Growth,” Steven Radelet and Jeffrey Sachs cited figures for CIF/FOB bands (percent averages,1965 to 1990). A look at the data for specific countries of interest shows the following: 
As one can see, the figures of 10% for Algeria and 6.7% for Tunisia are not that far off from the 4.9% for the United States or the 4.2% for France. Clearly, these figures are significantly lower than the 19% for Niger and the 33.6% for Chad. In examining these figures, it is hard to argue that the Maghreb’s distance from the European economic core is a significant detriment to its economic well-being. If anything, it puts the Maghreb in a position that is similar to countries in the European periphery like Greece, Portugal, and Cyprus. Although they are not located in the heart of Western Europe, Algeria, Tunisia and Morocco alike are relatively close to this vital economic core region.
ii. France
Although France and the Maghreb feature beautiful coastlines on the Mediterranean Sea, their remaining physical geographical features could not be much more different. The second biggest country in modern-day Europe (after Germany), France is located right in the heart of Western Europe and has a diverse group of neighbors. Starting due north from Paris and rotating clockwise, France is bordered by the English Channel, Belgium, Luxembourg, Germany, Switzerland, Italy, the Mediterranean Sea, Monaco, Spain, Andorra, and the Atlantic Ocean. To the south, France has 1,703 kilometers of coastline on the Mediterranean Sea stretching from Menton in the east to Perpignan in the west. France’s total land area is less than one-fourth of Algeria’s total land area at 547,030 square kilometers, but is more than one and one quarter bigger than Morocco, more than three times bigger than Tunisia, and is thirteen times bigger than the Netherlands.
The majority of France’s terrain is flat plains or small hills to the north and east of the country. With the Alps to the east and the Pyrenees to the southwest, a small part of France’s terrain is mountainous. Compared to Algeria, one-third of France’s total land area is arable (183,420 sq km). When looking at total arable land, France has more than two times the land fit for cultivation even though it is less than one-fourth the size of its former colony. In general, winters in France are cool while summers are mostly mild. Closer to the Mediterranean Sea, both winters and summers heat up. The major French cities are Paris, Marseille, Lyon, Lille, Toulouse and Nice.[119] In France, natural resources include coal, iron ore, bauxite, zinc, and timber. In regards to exports, the French sell machinery and transportation equipment, aircraft, plastics, chemicals, pharmaceutical products, iron and steel, and beverages. France’s major export partners are Germany (15%), Spain (9.5%), the United Kingdom (9.3%), Italy (9%), Belgium (7.2%), and the United States (6.7%). It is interesting to note that the top five countries to which France sells its exports are neighbors. On the flip side, France imports machinery and equipment, vehicles, crude oil, aircraft, plastics, and chemicals. These products come from Germany (19.2%), Belgium (9.9%), Italy (8.8%), Spain (7.4%), the United Kingdom (7%), the Netherlands (6.7%), and the United States (5.1%). Once again, the sources of these imports are mainly neighboring countries. When looking at the six geographic factors from Gallup et al., France has no features that would hamper its economic growth, and, thus, Gallup et al. would predict economic prosperity. Altogether, the argument made by Gallup et al. seems on par with the French experience. However, their argument seems to falter in explaining why the three countries of the Maghreb continue to remain Third World countries considering the fact that they also have many first-nature geographic advantages. Thus, I will now turn to an analysis of second-nature geography.
B. Second-nature Geography
Whereas Overman, Redding, and Venables defined first-nature geography as “the physical geography of coasts, mountains, and endowments of natural resources,” they define second-nature geography as “the geography of distance between economic agents.”[121] In other words, second-nature geography emphasizes the interaction between economic agents and the growth of regions rich with economic activity where people, companies and other entities come together for similar reasons (i.e. Silicon Valley, California; Bangalore, India). In their ground-breaking article “Economic geography and international inequality,” authors Stephen Redding and Anthony Venables (2004) state that “geographical location may affect per capita income in a number of ways, through its influence on flows of goods, factors of production, and ideas.” More specifically, the authors focus on first, “the distance of countries from the markets in which they sell output,” and, second, on “the distance from countries that supply manufactures and provide the capital equipment and intermediate goods required for production.” The underlying intuition beneath these two mechanisms come from the fact that both transport costs and other trade barriers act as a market access penalty on countries that find themselves farther away from their markets and suppliers. Consequently, firms within these distant countries can only pay relatively lower wages which result in stunted growth. In order to test their theoretical trade and geography model, Redding and Venables estimate “a structural model of economic geography using cross-country data on per capita income, bilateral trade, and the relative price of manufactured goods.”[125] The main tool used by these British economists is transport costs which ultimately forms a crucial part of their conclusion that an inverted U-shaped relationship exists between transport costs and agglomeration. agglomeration (a)
transport costs (t) - graph missing on blog
In this graph, transport costs are treated as exogenous. Different levels of transport costs correspond to varying levels of agglomeration (or spatial equilibrium). When transport costs are at the two extremes (very low, very high), people and firms tend to distribute themselves uniformly throughout a region for two related but opposite reasons. If transport costs are low, people and firms need not situate themselves close to their customers. Instead, they operate in a location that minimizes their costs. On the other hand, high transport costs correspond to people and firms moving close to their customers, some of which (i.e. farmers) are permanent fixtures throughout the region. These two patterns lead to dispersion. Between these two extremes, when transport costs are in the middle, people and firms tend to agglomerate because the forces that compel dispersion are weaker than the force of coming together.
With this conclusion in mind, I will now return to the article’s country data. In their article, Redding and Venables construct four figures that plot log GDP per capita against a different measure of log market access. Both Figures 1 and 4 show that France has both a higher log GDP per capita and better log market access than Algeria, Tunisia and Morocco.[126] This finding is not at all counterintuitive: France, who is one of the richest countries in the world, is located right in the heart of the European economic core area. Algeria, Tunisia and Morocco, on the other hand, are both poorer as countries and farther away from this core. Interestingly enough, all four countries are very close to the line-of-best-fit in both of these figures. Because of the way Redding and Venables have constructed their model, this finding suggests that income differences between France and the Maghreb can be explained entirely by differences in market access. Although I could conclude this study right here, I have decided to take a closer look at the data. In looking at the x-axis (market axis) in Figure 1, I see that both Finland and Israel lie in the same position as Algeria, Tunisia and Morocco. The distances between Helsinki and Rotterdam (1,553 kilometers) and Jerusalem and Rotterdam (3,356 kilometers) are in the same range as the distances between Algiers, Tunis and Marrakesh and Rotterdam. However, both Finland and Israel are considerably better off economically than the three countries of the Maghreb, even though they all have approximately the same market access. If market access was the answer, one would expect these five countries to have similar GDPs per capita. Yet, this is clearly not the case. In response to the findings of this article, I make three broad conclusions based on the relationship between second-nature geography and economic growth. First, France certainly provides a better environment for the interaction between economic agents than the Maghreb, primarily because of its favorable location in the heart of the West European economic core area. Second, although the Maghreb would clearly benefit from a shared border with a country withi Europe (i.e. the Netherlands), the Mediterranean Sea is not and has never been a substantial barrier to European market access. Third, the Maghreb is not as impeded by transport costs as other countries in the sample (i.e. Sub-Saharan Africa). Therefore, it’s likely that the current state of poverty in the Maghreb is slightly related to disadvantages in their second-nature geography, but to what extent would require further study.
Before I move on to other theories of economic growth in the net chapter, I would like to acknowledge a relatively new field of study called spatial econometrics. For example, in their working paper entitled “Geography Matters Too! Economic Development and the Geography of Institutions
”, Maarten Bosker and Harry Garretsen build upon the basic premise that institutions matter by showing that “the institutions of other (neighboring) countries exert a significant impact on a country’s own GDP per capita” (see conclusions of Bosker and Garretsen, 2006). I have chosen to omit an analysis of spatial econometrics from this study for the following reasons. First and foremost, authors like Diamond (1997) treat North Africa more so as part of the Eurasian continent than the African continent. In other words, it seems to be more appropriate to consider the Maghreb as neighbors to Spain, France and Italy than to Niger, Mali and Mauritania who lie beyond the tremendous natural barrier of the Sahara Desert. If I look at the Bosker and Garretsen article, I see that these authors do not consider these European countries as Maghrebi neighbors because they are separated by water (i.e. if not an island, a neighbor is one that physically shared a border with a country). Instead, the Maghreb’s neighbors are one another (i.e. Morocco – Algeria – Tunisia) and their neighbors across the desert to the south. This fact concerns me for three reasons. First, I argue these three countries share an institutional development consistent with French colonial rule. In this sense, they could be treated as a single entity (i.e. the Maghreb), and less so as neighbors that could influence each other by their institutional differences. Second, it fails to take into consideration the strong a long-running relationship between North Africa and its European neighbors across the Mediterranean. Considering this body of water has not been a considerable obstacle to trade between these regions for centuries, this omission may lead to an exaggerated effect of African neighbors. On a third and smaller point, these authors do not have information on Libya and, thus, only consider Algeria as a neighbor of Tunisia. Secondly, I feel confident that my previous analysis of first- and second-nature geography paints an accurate picture of the ability of these geography-based theories to explain income differences between France and the Maghreb. Clearly, France finds itself in a better geographical location at the center of Western Europe because it is surrounded by countries that have had healthy rates of growth since the beginning of Atlantic trading in the seventeenth century. Furthermore, the vast majority of French trade occurs across shared borders. On the contrary, Algeria, Tunisia and Morocco are not situated within a comparable economic core and do not even trade extensively amongst each other. Instead, they turn to their neighbors to the north across the Mediterranean Sea, as they have done for centuries, to conduct their economic endeavors. Yet, the separation between the Maghreb and its markets is not a great one by any means, especially compared to other countries in Africa and in the greater Southern Hemisphere. It will be interesting to see how the economic asymmetry between France and the Maghreb may be better explained as the field of spatial econometrics matures.
In conclusion, France’s advantage in its second-nature geography explains part, but not all, of its relative prosperity compared to the Maghreb. Therefore, we must examine other theories of economic growth to paint a more complete picture of the asymmetry that persists between these two regions.
Chapter IV: Theories of Institutions and Economic Growth
“Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice, in which the people do not feel themselves secure in the possession of their property, in which the faith of contracts is not supported by law, and in which the authority of the state is not supported to be regularly employed in enforcing the payment of debts from all those who are able to pay. Commerce and manufactures, in short, can seldom flourish in any state in which there is not a certain degree of confidence in the justice of government.”
[129] ― Adam Smith, Wealth of Nations (1776)
Within the complex study of differences in economic prosperity across countries, there exist three leading hypotheses: geography-, trade-, and institutions-based. As seen in the previous chapter, proponents of the geography-based theories contend that favorable (i.e. temperate) climates, plentiful natural resources, low disease burdens and advantageous location relative to markets and suppliers (as contributors to agricultural productivity and human capital) are the critical factors in explaining why some countries are better off than others. Scholars promoting this view include Diamond (1997), Bloom and Sachs (1998), Gallup, Sachs, and Mellinger (1998), and Redding and Venables (2004). However, my analysis of first- and second-nature geography’s effect on economic asymmetry between France and the Maghreb showed that this hypothesis is insufficient in this study.
Moving beyond the geography-based hypothesis, a second group of scholars tout the supremacy of international trade in explaining cross-country differences in economic prosperity. According to this camp, the more open a country is to trade, the more likely that country is to realize economic gains. However, three forces compel me to exclude an analysis of the connection between “openness” and economic asymmetry with regards to France and the Maghreb from this study. First, in a well-argued and convincing paper, Dani Rodrik and Francisco Rodriguez (1999) demonstrate the problems plaguing several leading studies that support the positive connection between increased economic “openness” and growth.
After dismissing each of these studies on account of their inadequate data (Dollar 1992), questionable indicators and instruments (Dollar 1992; Sachs and Warner 1995; Frankel and Romer 1999), inappropriate choice of estimation technique (Edwards 1998), and incomplete observations (Ben David 1993), Rodrik and Rodriguez state that they “know of no credible evidence – at least for the post-1945 period – that suggests that trade restrictions are systematically associated with higher growth rates.”
Second, another paper by Rodrik has influenced my decision to leave out trade from my analysis. In “Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development,” authors Rodrik, Arvind Subramanian and Francesco Trebbi (henceforth Rodrik
et al.) combine data from the major studies in all three leading theoretical groups (geography, institutions, and trade) and conduct a veritable super regression of all possible determinants of economic prosperity across countries. Having run these mega-regressions, the authors find that when controlling for institutions, “integration [their term for international trade/“openness”] has no direct effect on incomes.”
In other words, Rodrik
et al. (2004) find no connection between international trade and economic prosperity in both a historical and modern-day context.
This conclusion leads to the third reason why I am dismissing international trade as a crucial determinant of economic prosperity within this exercise. To date, there is no solid empirical evidence suggesting a strong and significant link between international trade and economic growth. Although various authors have attempted to confirm such a link, there are too many problems with these studies to merit an acceptance of a meaningful relationship between these variables. Therefore, I will not complete a comparative analysis of French and Maghrebi trade in this study.
The third and final hypothesis highlights the role of institutions (especially property rights and the rule of law) in determining what makes some countries rich and other countries poor. Although other scholars like North (1990), Engerman and Sokoloff (1997), and Hall and Jones (1999) have conducted extensive research based on the institutions-based thesis, I will focus on three interconnected studies by Daron Acemoglu, Simon Johnson, and James Robinson.
In their first article entitled “The Colonial Origins of Comparative Development: An Empirical Investigation,” Acemoglu et al. (2001) lay out the basic structure of their institutions-based argument founded on the following three premises. First, they argue that European colonizers chose one of two strategies when colonizing a country. On one hand, Europeans constructed “Neo-Europes” that were designed to replicate European institutions that provided clear-cut property rights and checks on state power. Examples of these so-called “settler colonies” include the United States, Canada, Australia and New Zealand. On the other hand, some colonies were transformed into “extractive states” that pumped resources from the colony to the home land and that lacked institutions to protect private property or to check power of a small group of elites. Examples of this type of colony include Mexico, Peru, and the Congo.
Second, Acemoglu et al. maintain that Europeans chose the colonization strategy that reflected the viability of the settlement. In colonies where the disease burden was substantial, the colonizers tended to construct an “extractive state.” Alternatively, colonies that provided a more favorable environment for settlement were converted into “settler colonies.” Third, the authors assert that the colonial institutional framework continued after the emancipation of the colony from its colonizer. As a result, “extractive states” tend to exhibit modern-day economies that create winners (the elites) and losers (the rest) while “settler colonies” now possess more equitable and successful economies. In order to further flesh out this argument, Acemoglu et al. (2002) completed a second study called the “Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution.” It is with this second article that I will begin to analyze the economic asymmetry between France and the Maghreb that exists today.
A. What is the “Reversal of Fortune?”
In their article “Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution,” Acemoglu
et al. (2002) argue that those countries colonized by Europeans in the past 500 years that were relatively rich in 1500 are now relatively poor and vice versa.
[133] The authors term this switch the “reversal of fortune.” Because France colonized Algeria in the early 19
th century and eventually continued in Tunisia (1881) and Morocco (1912), I believe an analysis of this argument may shed light on the relationship between these two regions and their economic paths.
The authors construct two figures that clearly illustrate their argument of a “reversal of fortune.” In Figure 1, we see a negative relationship between GDP per capita (PPP, 1995) and one of the two proxies the authors use to measure economic prosperity, urbanization in 1500.
[134] This figure shows us that as countries’ urbanization levels increase (and, therefore, economic prosperity increases) in 1500, their levels of GDP per capita decrease in 1995. The data cited by the authors on Algeria (DZA), Tunisia (TUN) and Morocco (MAR) confirms this “reversal of fortune” within these former French colonies. According to data converted from Eggimann to Bairoch-equivalent estimates, Algeria has a base urbanization estimate of 14.0 in 1500 signifying early economic success. This figure is between Tunisia’s base urbanization estimate of 12.3 and Morocco’s estimate of 17.8, both of which are similarly high. However, by 1995, Algerian, Tunisian and Moroccan log GDP per capita alike lagged well behind countries that had lower urbanization rates in 1500.
In Figure 2, the authors have demonstrated a similar inverse relationship between GDP per capita (PPP, 1995) and the other proxy for economic prosperity, population density in 1500.
[135] Simply stated, the less dense the population in 1500, the higher the GDP per capita in 1995. Once again, data on Algerian, Tunisian and Moroccan population density in 1500 (7.0, 11.7, and 9.08 respectively) indicates strong economies that deteriorated over the course of 500 years.
Having provided empirical evidence of a “reversal of fortune,” the authors develop an argument to explain why such a reversal happened. Before promoting their hypothesis of an institutions reversal, Acemoglu
et al. reject geography hypotheses like those mentioned in our last chapter that poor countries in the tropics suffer from adverse climatic, ecological and/or pathological features of their environments. The main premise of their rejection is the fact that these same countries were richer than their temperate counterparts 500 years ago.
[136] In fact, in an article proceeding “Reversal of Fortune,” Acemoglu goes as far to state that “although it is possible that the reversal may be related to geographic factors whose affects of economic prosperity may change over time..., there is no evidence of any such factor or any support for sophisticated geographic hypotheses of this sort.”
[137] Instead, the authors argue that European colonialism led to an institutional reversal that depended on the “differential profitability of alternative colonization strategies in different environments.”
[138] This institutions hypothesis connects strong social organization and well-defined institutions with an environment conducive to investment and economic growth. Using this hypothesis, Acemoglu
et al. make the following assertion about why a “reversal of fortune” occurred which serves as the crux of their article:
In prosperous and densely-settled areas, Europeans introduced or maintained already-existing extractive institutions to force the local population to work in mines and plantations, and took over existing tax and tribute systems. In contrast, in previously sparsely-settled areas, Europeans settled in large numbers and created institutions of private property, providing property rights to a broad cross-section of the society and encouraging commerce and industry.[139] In effect, those colonies that were more economically prosperous 500 years ago were those same colonies that witnessed the extraction of their economy and were ultimately condemned to a future of economic distress.
A final aspect of the “reversal of fortune” argument concerns the role of industrialization in economic development and prosperity and the timing and natural of the reversal. According in the authors, “the reversal is mostly a late eighteenth and early nineteenth century phenomenon, and is closely related to industrialization.”
In Figure IVB, Acemoglu
et al. use data from Bairoch
et al. (1982) to plot per capita industrial production for both countries with low rates of urbanization in 1500 (i.e. the United States, Canada, Australia) and countries with high rates of urbanization in 1500 (i.e. Algeria, Tunisia, Morocco, Mexico, Peru). An examination of this figure shows a dramatic increase in industrial production in those countries with low rates of urbanization in 1500 relative to those with high rates.
The authors continue their study of the relationship between the opportunity to industrialize and economic success during the nineteenth century by running a panel data regression. In this regression, the authors’ institutions variable is constraints on the executive from the Gurr Polity III dataset. To reflect the unlimited authority of a colonial power, they “assign the lowest score to countries still under colonial rule” in this period. The interpretation of this classification is unmistakable: colonial rule is inconsistent with industrialization which is the mechanism by which countries experience economic development. I will expand upon this link between industrialization and economic prosperity in the proceeding section.
B. Theoretical Application to France’s Colonization of the Maghreb
Having explained the “reversal of fortune” argument, I will now apply this theory to French colonization of the Maghreb. First, I will address Algeria’s curious status as an intermediate settler/extractive state. Then, I will focus on the reasons behind the construction of a modern economic infrastructure and the implications of delayed industrialization as the two major factors that caused the “reversal.”
i. Was Algeria a Settler Colony, an Extractive State, or Something in Between?
In order to classify Algeria in the context of Acemoglu
et al.’s study, I must first recall how the authors define these colonies. In “Colonial Origins of Comparative Development,” the authors state that “historical evidence supports both the notion that there was a wide range of different types of colonization and that the presence or absence of European settlers was a key determinant of the form colonialism took.”
In evaluating their argument, it appears that there is a sort of spectrum of colonization, with settler colonies on one side, extractive states on the other, and varying degrees of both types in the middle. With regards to the one extreme, Acemoglu
et al. refer to works by various historians who have “documented the development of ‘settler colonies,’ where Europeans settled in large numbers, and life was modeled after the home country.”
As for the other extreme, the authors define extractive states through the example of Spanish and Portuguese endeavors to extract gold from the New World. More specifically, they point to the establishment of “a complex mercantilist system of monopolies and trade regulations to extract resources from the colonies.”
But how does Algeria fit into these classifications? A look at the European (mainly French) settler population in Algeria shows the following figures: 109,380 in 1847, 250,000 in 1870, 553,000 in 1901, and 1,000,000+ in 1954.
From a purely mathematical point-of-view, it would seem obvious that Algeria was a settler colony as it clearly satisfies the aforementioned condition that “Europeans settled in large numbers.” However, such a classification is not as apparent as it might seem. If one compares the ethnic background of modern day Algerians against those of the other former settler colonies (i.e. the United States, Canada, Australia), one could not find much more of a difference. Today, the vast majority of Algerians come from Arab ancestry, or otherwise stated, from the native inhabitants of the Maghreb. Conversely, the great majority of Americans, Canadians and Australians are not descended from the native populations, but from the Europeans that had settled in the previous centuries.
But why do these telling demographic trends exist today? First, one must consider the comparative population densities of these four colonies. When the French marched into Algeria, they found urban centers and the fertile countryside packed with people. This was very different from what they and other European colonizers found in the New World and Australia, especially since the native populations of these countries where quickly reduced by what Jared Diamond famously refers to as European “guns, germs, and steel.” But what are the implications of these differing population densities? In the “Reversal of Fortune,” Acemoglu
et al. explain that “population density had a direct effect on settlements, since Europeans could easily settle in large numbers in sparsely-inhabited areas” like the United States, Canada and Australia.
Consequently, they “were more likely to develop institutions of private property…for the natural reason that they themselves were affected by these institutions (i.e. their objectives coincided with encouraging good economic performance).”
On the other hand, in densely-populated areas like Algeria, “there was often an existing system of tax administration or tribute, [and] the large population made it profitable for the Europeans to take control of these systems and to continue to levy heavy taxes.”
In recalling the actions of French
colons as described in Chapter II, this is precisely what happened. Significantly, Acemoglu
et al. identifies this behavior as extractive. Therefore, I find to be in a unique position as a relative intermediate case, albeit far more of an extractive state than a settler colony.
ii. The Purpose of Infrastructural Development
In Chapter II, Part C, I discussed the positive legacy of economic infrastructure in Algeria, Tunisia and Morocco. Although this would seem to project post-independence economic success for all three countries of the Maghreb, it is critically important to understand why the French had developed this infrastructure in the first place. In his magnum opus
The Making of Contemporary Algeria, 1830-1987, Mahfoud Bennoune explicitly states that “this infrastructure was determined by the logic of colonial economic development geared to the extraction of raw material and their export to Europe.”
[149] For the French, the primary function of Algeria was “to provide the French economy with raw materials and a substantial number of workers,” not to ensure long-term economic growth in Algeria.
[150] For example, one component of the basic infrastructure built by the French in the nineteenth century was “communication lines [that] were designed to provide vital services to the settlers, to facilitate the military and administrative control of the ‘natives’ and to integrate the various local communities into the market.”
Such an example illustrates the fact that the infrastructural development of Algeria existed primarily to ease the extractive processes developed by the French to transfer resources from Algeria to the
Metropole.
The interconnection between the development of infrastructure in Algeria and the
colon population is further evident when analyzing a specific consequence of the Algerian War of Independence. The war had a dual effect in terms of its cost in human lives: war deaths and the mass exodus of
colons back to Europe. Although estimates have been as low as 300,000 and as high as 1,000,000 dead in the war, “the true number probably lies in the region of 800,000.”
[152] About 2,000,000 Algerians who weren’t killed in the conflict were placed in internment camps and another 500,000 Algerians fled to neighboring Tunisia and Morocco.
[153] In addition to war deaths and displacement, the post-war period started with a huge mass exodus of
colons back to Europe. Described by some as “one of the greatest mass migrations of the twentieth century,” nearly 1,000,000 European settlers (90 percent) left Algeria for Europe.
[154] This exodus meant “almost all the entrepreneurs, managers, engineers, teachers, professors, doctors, dentists, technicians, highly skilled workers, the most experienced administrators and clerks” had left Algeria for Europe.
[155] The impact of the European departure on the Algerian economy is certain: every single sector was adversely affected by the virtual obliteration of its skilled human capital. Ironically, Algeria possessed one of the more advanced techno-economic and social infrastructure in Africa at independence, but had no one to run it.
Using infrastructural development to facilitate the movement of resources from colony to colonizer was not limited to Algeria. In Tunisia, infrastructural development “exemplified the privileging of
colons over Tunisians” by extending into regions “where Europeans were already acquiring land,” “expediting the movement of agricultural products to market,” and “binding the new protectorate to the French departments of Algeria” both strategically and militarily.
Furthermore, the financial burden of such economic development fell almost entirely on the Tunisians, as “the vast majority of state revenues…expended had come from Tunisian taxpayers.”
For example, when the
colons demanded new railroads into the countryside, the French officials “arranged for the Tunisian government to absorb virtually all the costs entailed in extending the Bône-Guelma’s main line to Bizerte, Sousse, Sfax, and Kairouan.”
In Morocco, Maghrebi scholar Jamil Abun-Nasr finds that infrastructural development was “designed for the needs of the Europeans.”
For example, he states that the “railway system was planned to follow French agricultural colonization and the development of the mining industry.”
Moreover, it is clear that Moroccan taxpayers paid a disproportionate share of the development of Morocco for a disproportionate share of the benefits:
The Moroccan taxpayer contributed the greater part of the cost of building modern roads from which he was unable to profit: of 91,000 cars plying the roads in 1953, 78,000 were owned by Frenchmen. For the irrigation schemes the French farmers profited more than the Moroccans, and of the electrical energy produced in 1953 seventy-three percent was consumed by the European factories, mines, and the railway system. Even in lighting, the share of Moroccans was disproportionate to their numbers since the countryside and about half the towns remained without electricity. At this point, I recall the tax schemes levied upon Maghrebi taxpayers during the colonial periods of all three countries (Chapter II, Part C). These two patterns, infrastructure for Europeans over Maghrebis and unbalanced tax schemes, correspond directly to Acemoglu et al.’s conclusion that the “equilibrium institutions [of “extractive” states] are likely to have been designed to maximize the rents of European colonists, not to maximize long-run growth.” In fact, the occurrence of such Magrebi-paid infrastructural development is very “extractive” in nature. In the words of Acemoglu et al., extractive institutions were designed to: directly extract resources, to develop plantation and mining networks, or to collect taxes. Notice that what is important for our story is not the ‘plunder’ or the direct extraction of resources by the European powers, but the long-run consequences of the institutions that they set up to support extraction. Considering the nature of infrastructural development and the accompanying tax schemes, it is easy to see that colonial Algeria, Tunisia and Morocco were all highly characteristic of the so-called “extractive” states.
iii. Missing Industrialization
Numerous Maghrebi scholars have found that French colonial rule in the Maghreb was synonymous with the lack of industrialization within the region (see, for example, the conclusions of Bennoune, Anderson and Pennell).
I will demonstrate such lack of industrialization during the colonial period by briefly considering the situation in Algeria. In returning to the role of the Algerian colony, “the principal function of the colonial economy was to provide the French economy with agricultural and mineral raw materials.”
For example, iron ore exports from Algeria to Europe (mainly France) rose from one million tons in 1920 to 3.4 million tons in 1950.
Similarly, by 1954, “colonial agriculture exported 40 percent of its cereals, 90 percent of its wine and 70 percent of its fruits and vegetables to Europe.”
Such agricultural output didn’t even decrease during the heightened tensions of the 1950s and the war: by 1960, “despite the fact that the number of French troops in Algeria exceeded 600,000, 48 percent of total agricultural output was still exported to the developed countries, primarily France.”
In exchange for these exports, all the capital required for these economic endeavors were imported from Europe. In 1960, for example, “of the 4,885 tractors imported from abroad, 60.5 percent came from France, 21.5 percent from Great Britain and the rest from the other developed countries.”
But why would France hinder industrialization in the region? Wouldn’t an industrialized Maghreb be more profitable in the long run than an unindustrialized one? To answer these questions, I recall the power of French commercial interests in Algeria, Tunisia and Morocco. With such a significant market for industrial goods, “‘Metropolitan’ interests that benefited from this situation opposed the establishment of industry” in the Maghreb and banded together to protect their favorable economic position. In fact, in a preliminary report written by an official French commission developed to draft a “development plan” in Algeria, the group reported that:
Algerian industry is constituted by industrial islets that are technically or geographically isolated from one another; the multiplier or accelerator effects that the economists attribute to industrial development are in the current state almost nil. The intermediary demand exerts its effects outside. The bulk of the commercial import networks are geared to export; in many cases, the interests of the importers and exporters constitute serious obstacles to industrial development. As a result of this missing industrialization, the mass migration from the countryside corresponded with increasing stress in the city. For instance, within cities, there were serious housing shortages and rampant unemployment leading to the emergence of shanty towns across around the major urban centers. Therefore, at independence in 1962, Algeria “found itself a country relatively well endowed with a basic infrastructure, possessing a diversified resource base, faced with a rapidly growing population (the bulk of which was either jobless or underemployed and hence condemned to live in expanding rural slums and urban shanty towns), and the inheritor of an underdeveloped economy characterized by a sluggish agriculture and the absence of basic industry.”
Since the “reversal” is “mostly a late eighteenth and early nineteenth century phenomenon [that] is closely related to industrialization,” France’s inability to facilitate industrialization within the Maghreb further supports my assertion that French rule in the region condemned it to a future of economic hardship. Instead, the French exhibited the type of behavior consistent with the absence of executive constraints used by Acemoglu
et al. (i.e. “the elites may want to block investments in new industrial activities, because it may be these outside groups, not the elites themselves, who will benefit from these new activities.) The reasoning behind missing industrialization in the Maghreb completes my argument that France transformed Algeria, Tunisia and Morocco into “extractive states” during colonial rule.
iv. Criticisms of the Acemoglu et al. Argument
Although the Acemoglu et al. argument has done very well in the battlefield of academia since its publication, there are a few drawbacks that must be considered. Most significantly, the authors group the first (1500-1800) and second (1885-1950) European waves of colonization into one, all-intensive event. Yet, this grouping overlooks the fact that there were significant differences in these two waves with regards to geographical focus and economic focus of the colonizing countries. If one considers the examples and the mechanics of the Acemoglu et al. argument, it seems most in line with the events of the first European wave of colonization. During this wave, pre-industrial Europe was fueled by its mercantilist pursuit of wealth accumulation into the New World, India and Southeast Asia, and Australasia. Because of mercantilism, Europeans where faced with an important question upon arrival in a new territory: Which colonization strategy is the most profitable? In regions that were densely-populated, featured considerable disease burdens, and/or desirable natural resources (i.e. gold, sugar), Europeans chose to institute extractive states. Examples of this type of colony include most of Latin America, the Congo, and Indonesia. In regions that were scarely-populated, featured less of a disease burden, and/or had fewer desirable natural resources, Europeans created “Neo-Europes” modeled on their home countries to protect property and maintain the stability of the colony. Examples of so-called settler colonies include the United States, Canada, Australia, and New Zealand. These patterns of colonization within the first wave of European colonization are correspond directly with the arguments made by Acemoglu et al. in all three of their articles on the subject.
Termed “New Imperialism,” the second wave of European colonization differed substantially from its predecessor. Instead of referring to the “zero-sum game” of the “the circle of commerce,” scholars refer to this second wave with phrases like “era of empire for empire’s sake,” “the great adventure,” and “the scramble for Africa.” This New Imperialism was marked by the race to grab as much territory as possible. Because they had previously entered the New World, India and Australasia, the brunt of the second wave of European colonization fell on the African continent. However, instead of facing the relative simple incentives based on mercantilism as seen before, Europeans now had to consider the expansion of markets and the balance of power back home in addition to the other determinants of colonial settlements. These new considerations, which muddled the decision to implement extractive states versus settler colonies, stemmed from a newly industrialized Europe. Unfortunately, Acemoglu et al. do not adjust their argument to reflect these two rather distinct colonization patterns, nor for advances in disease eradication around the world. In the worst-case scenario, the effectiveness of their instrument for institutions (settler mortality) could be significantly diminished by these omissions, and, in fact, scholars like Olsson (2005) have come to such a conclusion.
Nevertheless, I strongly believe that the Acemoglu et al. argument succeeds in explaining the reasons for economic asymmetry between France and the Maghreb. During the colonial period in the Maghreb (especially Algeria), the French engaged in land expropriation, resource extraction, and disproportionate taxation to the benefit of the Europeans at home and abroad and at the expense of the Maghrebis (recall Chapter II). Because of these actions, I maintain that it is entirely appropriate to apply Acemoglu et al.’s conclusions to this study.
C. Connecting the “Reversal” with Post-Independence Economic Instability
After having argued that a “reversal of fortune” occurred in the Maghreb during colonial rule, I must now explain the connection between this event and the economic instability that persists in this region to this day. I find the third article in the Acemoglu
et al. series to be a good starting point for this analysis. In “Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth,” Acemoglu, Robinson, Johnson and Yunyong Thaicharoen (2003) expand upon their analysis of institutions and economic prosperity by documenting “a strong and robust relationship between the historically-determined component of postwar institutions and volatility (as well as severity of economic crises and economic growth).”
The main argument of this article is as follows: “in institutionally-weak societies, elites and politicians will find various ways of expropriating different segments of the society, ranging from microeconomic to various macroeconomic policies,...[and] it is the presence of this type of expropriation and the power struggle to control the state to take advantage of the resulting rents that underlie bad macroeconomic outcomes and volatility.”
Conducting a series of regressions to test this argument, the authors conclude that countries “that inherited worse (“extractive”) institutions from European colonial powers are much more likely to experience high volatility and severe economic crises.”
A fascinating continuation of their previous studies, “Institutional Causes, Macroeconomic Symptoms” challenges the standard macroeconomic assertion that charges bad macroeconomic policies for economic volatility. To support this claim, the authors study the connection between macroeconomic policies and volatility by creating “a simple measure of cross-country differences in volatility; the standard deviation of the growth rate of per capita output [baseline period 1970-1997, post colonial era].”
To this measure, the authors add a measure for “severe crises” which “calculates the largest drop in output for every country for 1970-1997 as a proxy for the severity of the most important crises” plus “average growth as a measure of overall economic performance” [see Appendix A2].
Having defined the variable for volatility, Acemoglu
et al. had to find the appropriate counterparts for macroeconomic policies. Three variables stood out as having “the most robust effect on our measures of economic performance and volatility:” the average size of government (the ratio of government consumption to GDP), log average rate of inflation, and exchange rate overvaluation.
When the authors tested the relationship between these two sets of variables (see Figures 2, 3, 4), they found exactly what they expected: volatility is positively correlated with economies featuring large government sectors, high inflation rates, and overvalued exchange rates. The findings led Acemoglu
et al. to answer the central question in their study that asks “do these correlations reflect the causal effect of bad macroeconomic policies on economic volatility and performance or are they capturing the effect of institutional factors on economic outcomes.”
Before constructing and carrying out their empirical strategy, Acemoglu
et al. provide six theories as to why they expect countries that were “extractive” colonies would now experience greater economic instability. First, they state that “in institutionally-weak societies, there are few constraints on rulers.”
Similarly, their second theory is that a “lack of effective constraints on politicians and politically powerful groups implies that there are greater gains from coming to power, and correspondingly, greater losses from not controlling political power – thus, overall greater ‘political stakes.’”
As a result of these factors, newly empowered rulers make every effort to “redistribute assets and income to themselves, in the process creating economic turbulence.”
It is important to recall the discussion of the link between industrialization and constraints on executives that appeared in the second article “Reversal of Fortune” and that I mentioned earlier in this chapter. These same principles can be applied to this argument that current volatility stems from an “extractive” past.
The remaining four theories are as follows: weak institutions mean that “(3) economic cooperation may have to rely on ‘trust’ or, more explicitly, on cooperation supported by repeated game strategies; (4) contractual arrangements will be more imperfect, making certain economic relationships more susceptible to shocks; (5) politicians may be forced to pursue unsustainable policies in order to satisfy various groups and remain in power; [and] (6) entrepreneurs may chose sectors/activities from which they can withdraw their capital more quickly, thus contributing to potential economic instability.”
To distinguish between the effects of institutional differences and differences in macroeconomic policies on macroeconomic performance (i.e. volatility and crises), the authors test the following econometric relationship:
Xc, t-1, t = Q’c, t-1, t • α + β • Ic, t=0 + Z’c, t-1, t • γ + θ • ln yc, t-1 + εc, t-1, t where:
Xc, t-1, t is the macroeconomic outcome of interest for country c between times t and t-1 (three outcomes are overall volatility (standard deviation of GDP per capita growth), severity of crises (worst output drop), average per capita growth);
Q’c, t-1, t is a vector of macroeconomic policies for country c between times t and t-1 (three measures of macroeconomic policies are average size of government consumption, inflation, and real exchange rate overvaluation);
Ic, t=0 is our measure of institutions at the beginning of the sample (constraint on the executive variable from the Polity IV dataset, 1-7, Appendices A3, A4, A5),
Z’c, t-1, t is a set of other controls; and
ln yc, t-1 is the log of initial income per capita.
As with the regressions in their previous two articles, Acemoglu et al. use Two-Stage Lest Squares (2SLS) to estimate the above equation to address issues of endogeniety, reverse causality and omitted effects that potentially skew the Ordinary Least Squares (OLS) results. The instrument chosen to exploit the historically-determined component of institutions is the same instrument used in the other two studies: settler mortality.
The results from the regressions “suggest that the historically-determined component of institutions has a first-order effect on volatility, and neither inflation nor government consumption [nor the other macro variables studied] seem to be the main mediating channel.”
In turn, the authors interpret this suggestion by stating that “a fundamental determinant of thirty-year volatility differences is institutional difference across countries, and that institutional differences create economic instability though a variety of microeconomic channels as well as the often-emphasized macroeconomic channels.”
Furthermore, Acemoglu
et al.’s results confirm a significant link between institutions and the severity of crises as well as institutions and weaker growth.
With these interpretations in mind, I will now examine precise macroeconomic data on France and the Maghreb as shown in the Penn World Tables
:
| YR | | | | | | | | |
DZA | 1960 | 10800.00 | 4.9371 | 2.14 | 586.07 | 76.79 | 29.81 | 21.30 | n/a |
DZA | 1970 | 13746.00 | 4.9371 | 1.99 | 879.01 | 71.98 | 21.54 | 13.53 | 2.773 |
DZA | 1980 | 18669.17 | 3.8375 | 2.36 | 3688.59 | 60.98 | 20.95 | 14.07 | 3.832 |
DZA | 1990 | 25010.00 | 8.9575 | 5.08 | 4361.65 | 63.36 | 16.50 | 21.94 | 1.312 |
DZA | 1995 | 28058.00 | 47.663 | 16.53 | 4245.03 | 62.44 | 12.93 | 28.33 | -2.560 |
DZA | 2000 | 30399.25 | 75.260 | 21.61 | 6106.91 | 46.21 | 9.78 | 23.59 | 1.284 |
TUN | 1961 | 4277.37 | 0.4199 | 0.14 | 594.57 | 65.97 | 18.19 | 8.98 | n/a |
TUN | 1970 | 5127.00 | 0.5249 | 0.18 | 800.72 | 67.83 | 22.24 | 12.69 | 2.706 |
TUN | 1980 | 6384.00 | 0.4049 | 0.21 | 2670.57 | 74.32 | 18.15 | 12.89 | 5.396 |
TUN | 1990 | 8156.00 | 0.8783 | 0.31 | 4307.42 | 77.36 | 14.98 | 14.71 | 1.498 |
TUN | 1995 | 8957.50 | 0.9457 | 0.36 | 5343.95 | 76.85 | 12.78 | 14.45 | 2.926 |
TUN | 2000 | 9563.50 | 1.3707 | 0.39 | 7130.15 | 78.56 | 13.29 | 11.70 | 3.762 |
MAR | 1960 | 11626.00 | 5.0605 | 2.96 | 299.96 | 70.71 | 13.48 | 14.93 | n/a |
MAR | 1970 | 15310.00 | 5.0605 | 2.01 | 651.37 | 72.24 | 18.23 | 12.60 | 5.870 |
MAR | 1980 | 19382.00 | 3.9366 | 2.26 | 1692.16 | 73.58 | 17.65 | 20.06 | 2.788 |
MAR | 1990 | 24043.00 | 8.2423 | 2.94 | 3014.04 | 78.54 | 14.05 | 17.02 | 1.728 |
MAR | 1995 | 26386.00 | 8.5402 | 3.17 | 3362.47 | 81.32 | 11.29 | 17.00 | 0.826 |
MAR | 2000 | 28705.00 | 10.626 | 2.88 | 4299.24 | 76.12 | 12.22 | 17.57 | 0.141 |
FRA | 1960 | 46825.65 | 4.9371 | 3.56 | 1853.38 | 54.97 | 26.98 | 16.61 | n/a |
FRA | 1970 | 52040.80 | 5.5542 | 4.17 | 3764.12 | 53.31 | 30.00 | 16.87 | 4.804 |
FRA | 1980 | 55226.50 | 4.2256 | 5.66 | 9214.14 | 66.37 | 27.99 | 8.08 | 3.070 |
FRA | 1990 | 58026.10 | 5.4453 | 6.56 | 17402.55 | 64.81 | 28.05 | 8.12 | 2.038 |
FRA | 1995 | 59326.40 | 4.9915 | 6.60 | 19791.48 | 67.07 | 23.05 | 8.51 | 0.322 |
FRA | 2000 | 60431.20 | 7.1198 | 6.46 | 23613.76 | 66.37 | 23.82 | 8.39 | 1.898 |
In looking at the data, it is clear volatility in the exchange rate from independence to the year 2000 in the Maghreb (particularly, Algeria). In Algeria, for instance, the exchange rate in 1970 was 4.9371DZD (Algerian dinar) to 1USD. By 2000, the exchange rate had exploded to a whopping 75.260DZD to the dollar. Similarly, while the Tunisian dinar moved from 0.4199TDN per 1USD in 1970 to 1.37TDN per 1USD in 2000, the Moroccan dirham went from 5.0605MAD to 10.626MAD per 1USD during the same period. When compared to movement of the French franc, these currencies exhibit much more volatility between 1970 and 2000.
Second, the size of the government as measured by the government share of GDP (CC) shows that Algeria, Tunisia, and Morocco all have larger government sectors than France (8.39% in 2000). Once again, Algeria possesses the largest percentage at 23.59% in 2000, followed by Morocco (17.57%) and Tunisia (11.70%). Third, although the economic growth figures are relatively similar for all four countries in all five time periods, Algeria exhibits substantial negative growth in the period 1990-1994 (-2.560%). Furthermore, the most recent period (1995-2000) has seen almost zero growth for Morocco (unlike the other three countries).
After examining this data, I return to the argument made by Acemoglu et al. in “Institutional Causes, Macroeconomic Symptoms.” In their article, the authors found that volatility is positively correlated with large government sectors, high inflation rates, and overvalued exchange rates. Looking at both exchange rates and government size data above, it is easy to say that a strong case can be made that all three countries of the Maghreb (and Algeria in particular) have experienced post-independence macroeconomic instability. Furthermore, Acemoglu et al. would contend (as do I) that post-independence economic instability comes primarily from the type of “extractive” institutions developed by the French during colonial rule, and not totally from poor macroeconomic policies.
●
Both the Maghreb’s pre-colonial economic success and the subsequent actions of France in the region are in complete alignment with Acemoglu
et al.’s assertion that “European colonialism not only disrupted existing social organizations, but led to the establishment of, or the continuation of already existing, extractive institutions in previously prosperous areas.”
[198] In effect, the elimination of the Maghreb’s pre-colonial socio-economic system illustrates what these authors claim to be an “institutional reversal.” Bestowed with pre-colonial economic prosperity, the Maghreb attracted France with its bevy of raw materials and large labor supply. In turn, France began to implement extractive policies as soon as they crossed the Algerian border in 1830 because, as Acemoglu
et al. would argue, such behavior was the more profitable choice.
[199] All things considered, I maintain that a “reversal of fortune,” followed by subsequent
macroeconomic instability, is the primary reason for the current asymmetry between France and the Maghreb.
Chapter V: How to Start Reversing the “Reversal”
“How much guidance do our results provide to policymakers who want to improve the performance of their economies? Not much at all.” ― Comment in conclusion, Rodrik et al. (2004)
There are two certainties in the quest to understand the tremendous differences in income across countries: one, there are few questions in the field of economics more important; and two, no one knows exactly how to systematically raise the incomes of these poor countries to the benefit of their citizens. However, I can identify the favored paths towards growth as promoted by various scholars. First, proponents of first-nature geography theories support assistance from those countries with favorable geographic conditions to those who aren’t so lucky. For example, Gallup et al. suggest the following broad policy implications based on their findings:
First, we should give heightened scrutiny to the special problems of landlocked countries, and hinterland populations within coastal economies…Second, policy makers should examine the likelihood and desirability of large-scale future migrations from geographically disadvantaged regions…Third, to the extent that the arguments in this paper are correct,…we require a more urgent look at population policy, [and] fourth, the policy community should re-examine the balance of aid between policy-based lending to individual economies, which is the currently popular form of aid, and greatly enhanced aid for basic science on tropical agriculture and tropical public health. To the extent a country suffers from disadvantageous first-nature geography, I find these suggestions to be useful. Yet, in the case of the Maghreb, a region that does not exhibit weaknesses in its first-nature geography, these implications shed no light on how to increase national incomes. Moreover, Redding and Venables (2004) and Bosker and Garretsen (2006) refrain from providing ways by which countries with comparatively disadvantageous second-nature geography can overcome these challenges.
Second, and more connected to my findings, proponents of the institutions-based theories of economic growth also suggest very general policy implications. For instance, Acemoglu et al. (2001) state that their “results indicate that reducing expropriation risk (or improving other aspects of the ‘cluster of institutions’) would result in significant gains in income per capita.” Still, immediately after stating this, they add that the results “do not point out what concrete steps would lead to an improvement in these institutions.” Similarly, Rodrik et al. (2004) find that “obviously, the presence of clear property rights for investors is a key, if not the key, element in the institutional environment that shapes economic performance.” But, having made this statement, the authors continue: “But nothing is implied about the actual form that property rights should take…We cannot even necessarily deduce that enacting a private property-rights regime would produce superior results compared to alternative forms of property rights.” In short, better institutions make for higher incomes, but the method to achieve this increase remains unclear. Admittedly, there are a myriad of suggestions I could make to improve the lives of the average Maghrebi. In considering this very important goal, I began thinking about what factors prevent the Maghreb from achieving economic success. First, I noticed extremely high unemployment rates in each of the three countries: 22.5% in Algeria, 13.5% in Tunisia, and 10.5% in Morocco (2005).
Economic theory (and common knowledge) states that high unemployment is not a good thing. When a person is unemployed, that person often is isolated from society, faces mental stress, and is unable to pay for basic necessities, much less any type of luxury good. In turn, low unemployment reduces the number of impoverished citizens and generally corresponds to higher qualities of life. Second, I looked at data on the region’s population below the poverty line. For this economic indicator, both Algeria and Morocco featured figures that were unsettling – 25% for Algeria and 19% for Morocco (2005).
Perhaps less surprising was Tunisia’s lower figure of 7.4% (2005), which is consistent with its higher GDP per capita (see Introduction). By definition, these people who live below the poverty line (i.e. poverty threshold) have no disposable income, and, therefore, find it very difficult to afford the goods needed to survive.
With these figures bouncing around in my brain, I found myself questioning once again how it could be possible that a region so close to Europe could be doing so poorly. And then it hit me. This region, like southern Spain, France, Italy, and Greece, shares a beautiful and vast (almost 4000 kilometers) coastline on the Mediterranean Sea. Having lived
in both France and the Netherlands, I know from firsthand experience that many Europeans love to travel in the sunny south. I’m also aware of the recent explosion of European tourism in another Muslim majority country with access to the Mediterranean: Turkey. In 1994, tourism pumped 4.3 billion USD into the Turkish economy. Just ten years later, that number would jump to an astounding 15.9 billion USD (2004). According to the Turkish Culture and Tourism Ministry Undersecretary Mustafa Isen, “'Turkish tourism grew 26 percent in 2004 and 22 percent in 2005. This means approximately a 50 percent growth in two years. Although World Tourism Organization envisaged that Turkey would host 17 million tourists in 2010, this figure already reached 17.5 million in 2004 and 22 million at the end of 2005.” During the same time, 662,000 jobs have been created as tourism in Turkey has increased. The World Tourism Organization (UNWTO/OMT) is a specialized agency of the United Nations that “plays a central and decisive role in promoting the development of responsible, sustainable and universally accessible tourism, with the aim of contributing to economic development, international understanding, peace, prosperity and universal respect for, and observance of, human rights and fundamental freedoms.” According to this organization, tourism “has become one of the world’s most important sources of income” as it “stimulates enormous investment in infrastructure, most of which also helps to improve the living conditions of local people,” and “provides governments with substantial tax revenues.” Furthermore, this organization has developed an initiative called ST-EP (Sustainable Tourism-Eliminating Poverty) that “develops sustainable tourism as a force for poverty elimination.” Algeria, Morocco and Tunisia are all Member States of the UNWTO and, thus, are active in this important organization.
But how can tourism be measured? What are the most attractive factors in the industry? In his article “European Market for African Destinations,” S. Nyaruwata researched the competitiveness of Zimbabwean tourism compared to other African destinations by measuring the following 23 factors:
(1) suitable tourist accommodation (13) availability of airfare to destination
(2) friendliness towards visitors (14) reliability of air service
(3) sightseeing (15) reliability of domestic transport
(4) beaches (16) price of holiday [vacation]
(5) wildlife viewing (17) ‘value for money’ destination
(6) general tourist attractions (18) popularity of destination
(7) recreational and sports facilities (19) effectiveness of NTO/ministry [tourist]
(8) shopping for tourists (20) frequency of receipt of promotional
(9) climate literature
(10) cleanliness (21) usefulness of literature received
(11) courtesy of officials (22) tourists personal property safety
(12) professionalism of hotel interests (23) political stability
in dealing with tour operators
Fortunately for the Maghreb, these three countries are blessed with warm Mediterranean weather, beautiful sand beaches on the sea, Roman and Ottoman ruins, pre-established travel routes to and from Europe (both by sea and by air), and comparatively low prices compared to Europe. To say that tourism is non-existent in the Maghreb would be wrong, for both Tunisia and Morocco count on tourism as a major revenue source in their economies. What can be said is that these industries remain in their infancy and there is an extraordinary opportunity for expansion and improvement. What the Maghreb should focus on is the following. First, these countries should invest in quality tourist accommodations (i.e. hotels, apartments, resorts) to attract Europeans who are used to First World amenities. This could be achieved through direct investment or through economic incentives (i.e. tax cuts). Further incentives should be given to both local and international retailers from the Maghrebi governments to encourage a wide selection of stores to open up in tourist areas. Second, these countries should provide airtight security measures to protect tourists from crimes, including theft, rape, and kidnapping. Unfortunately, there is a legacy of such crimes within this region and tourists must be assured of their personal safety at all times. Third, once these countries have constructed the appropriate level of tourist-related infrastructure, their governments should engage in aggressive marketing in Europe to attract potential customers who are relatively unfamiliar of the region’s attractions. For instance, the governments could subsidize cheap vacation specials and other travel incentives to lure Europeans to their shores. Once there, the tourist industry should attain a certain level of hospitality to ensure repeat visitors. If these countries play their cards right, they could soon find themselves competing with Spain, France, Turkey and Greece for a share of the enormous pie that is European tourist euros. As a result, these countries should witness a decrease in their unemployment rates and a subsequent reduction in the amount of people living below the poverty line. Tourism is one of many ways by which the Maghreb can begin the process of recovery.
●
In this thesis, I have analyzed the asymmetric relationship between France and the Maghreb in the context of their comparative history and through economic growth theories. First, I evaluated the main socio-political and socio-economic consequences of French colonization from the invasion of Algiers in 1830 to the end of the Algerian War of Independence in 1962. Having discussed the colonial period, I turned to an analysis of economic growth theories including those of first- and second-nature geography and the “reversal of fortune” in order to determine why France in currently so much richer than Algeria, Tunisia and Morocco. Using this theoretical approach, I concluded that although some elements of second-nature geography may contribute to this asymmetry, the biggest reason for the persisting asymmetry comes from the implementation of extractive institutions by France in the Maghreb as discussed by Acemoglu et al. With this finding in mind, I suggested the Maghreb focus on enriching their tourism industries to alleviate the pressures of unemployment and poverty.
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